TMI Blog2021 (9) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... planation and evidences w.r.t. source of amount received by the company from three. Assessee had already submitted complete addresses of all the three shareholders as also their Permanent Account Number (PAN) which is the best evidence to prove the identity of a shareholder, in the records of AO itself. Moreover, all the transactions with all the shareholders were admittedly made through banking channels only. Thus, their identity is fully established. The genuineness of the transaction is fully established inasmuch as all the borrowings were made through account payee cheque only and the same was duly verified by the AO from the bank statement of the assessee company filed before him, wherein the fact and the receipt of the subjected amount towards the allotment of share, was clearly visible and was duly verified by the AO. Apart from the bank statement, the AO was also having the ledger accounts of the bank in the account books maintained by the assessee and produced before him as also through the confirmation of all the three shareholders containing complete details i.e. the amount, date, cheque number etc. It is not the case of the revenue that the borrowing was made in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Mahendra Gargieya(Adv.) And Shri Devang Gargieya (ITP) For the Revenue : Shri B.K. Gupta (Pr.CIT-DR) ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. Pr.CIT, Udaipur dated 11/02/2021 passed U/s 263 of the Income Tax Act, 1961 (in short, the Act) for the A.Y. 2016-17. The assessee has raised following grounds of appeal: 1. The Ld. Pr. CIT, seriously erred in law as well as on the facts of the case in invoking the provisions of Sec. 263 of the Act and therefore, the impugned order dated 11.02.2021 u/s 263 of the Act kindly be quashed. 2. The ld. Pr. CIT seriously erred in law as well as on the facts of the case in assuming jurisdiction u/s 263 of the Act without recording a specific and categorical finding that the subjected assessment order passed u/s 143(3) dated 16.11.2018 is erroneous and prejudicial to the interest of the revenue, in absence of which the entire proceedings u/s 263 is vitiated. Therefore, the impugned order dated 11.02.2021 u/s 263 of the Act kindly be quashed. 3. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the impugned finding that the assessment order passed u/s 143(3) 16.11.2018 was erroneous and prejudicial to the interest of the revenue to the extent of short assessment of ₹ 3,11,400/-, deserves to be completely quashed and set-aside. 7. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the assesse is a Private Limited Company, derived income from grading, cleaning and storage of agriculture commodity. The assessee had filed its return of income for year under consideration on 14.10.2016 declaring total income of ₹ 2,07,940/- and book profit declared at ₹ 2,15,690/- u/s 115JB(2) of the Act with tax including interest of ₹ 41,100/ u/s 115JB(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny by CASS under Limited Scrutiny for the reason that Whether the funds received in the form of share premium are from disclosed sources and have been correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share capital and share premium. The assessee company submitted confirmation of share transaction account on 22.10.2018. The assesse company had also submitted acknowledgement of ITR showing income of ₹ 10,72,700/-, ₹ 5,23,430/- and ₹ 5,26,550/- in the cases of Smt. Chelna Devi Jain, Sh. Manohar Lal Shah and Sh. Dharm Chand Jain and whereas they had made the investment of ₹ 30,08,500/-, ₹ 17,34,000/- and ₹ 52,57,500/- respectively. But the assessee company had neither submitted its own bank account nor the bank accounts of the persons who had made investment in shares. Again, the assessee company had also not submitted capital account of the investors. Again, none of the investors produced the bank statements to establish the source of funds for making such a huge investment in the shares, even though they were declaring a meager income in the returns. Thus, the assessee company failed to discharge the onus by filing cogent evidence for creditworthiness of the investors and genuineness of transactions. The share application money received by the assessee company during the year has not been subject to examination on the triple tests of identity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such verification on this issue and in case of any discrepancy, appropriate action may be taken as per law. 7. Here, it is useful to refer to the Explanation-2 below section 263(1) inserted w.e.f. 01.06.2015 by Finance Act, 2015, which provides that: x x x x 8. The assessment order u/s 143(3) of the I.T. Act for the A.Y. 2016-17 dated 16.11.2018 was passed by the AO in this case, without making proper enquiries or doing any verification of the issue of Large share premium received by the assessee company during the year and the applicability of Section 56(2)(viib) andany other relevant section as discussed in preceding paras, despite being the fact that this was the sole reason for scrutiny selection. Hence, assessment order u/s 143(3) of the I.T. Act for the A.Y. 2016-17 dated 16.11.2018 has thus been rendered erroneous and prejudicial to interest of revenue on the issue of non-verification Large share premium received by the assessee company during the year and the applicability of 56(2)(viib) and any other relevant section of the Income Tax Act. The same is therefore set-aside / cancelled and restored back to the file of AO on this issue, in view of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). 1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that: Ratio of these cases fully apply on the facts of the present case in principle. 2. Due application of mind: 2.1 It is submitted that the AO had raised very specific and directly relevant queries/called for explanation and evidences w.r.t. the identities and creditworthiness genuineness of the receipts towards the share premium of ₹ 1.08 Cr and applicability of of S.56(2)(viib); to the extent he was supposed to act in law. 2.2 This is also evident from queries raised and the replies given thereto, reproduced hereunder: 2.2.1 Through the Notice/s u/s 143(2) dated 12.08.2017 (PB 4-8), thereto called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources . 2.2.3 The AO again issued a notice u/s 142(1) dated 09.09.2018 (PB 12- 13) calling for explanation, directly on the issues in hand, as under: Particulars of Accounts and/or documents required. 1. To explain with supporting documents that whether the funds received in the form of Share Premium are from disclosed sources and have been correctly offered for tax. 2. To prove the genuineness to transactions with proving the identity of persons and explain their creditworthiness regarding receipts of share capital and share premium. 3. To explain and justify with supporting documents that whether the provisions of section 56(2)(viib) of the Income-Tax Act, 1961 read with rule 11UA(2) of the Income-Tax Rules, 1962 are not applicable on receipts of Share Premium. 4. On perusal of your submissions and documents, it is noticed that FMV of unquoted shares which allotted during the year under consideration is come at ₹ 57.67 against calculating by you of ₹ 60 in terms of procedure provided under rule 11UA(2) of the Income-Tax Rules, 1962 i.e., A-L/PE*PV = (7231418-733000)- (64254+1111000+491891)/935000*10. Thus, there is a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded on various occasions along with the AR CA Sumit Chittora on as many as nine dates mentioned on the first page of the subjected Assessment Order. Needless to say that, during the course of personal hearing, there is always an exchange of oral information by way of discussion. The AO once have been raised regular queries discussed the issues of identity and creditworthiness of the shareholders and the genuineness of the transaction and the AR explained him, in a great detail w.r.t financial capacity of the three shareholders. It cannot be presumed that a quasi- judicial authority having raised the relevant queries would not have asked anything from the AR during the course of the personal hearing and remained a silent spectator. More particularly, when all the shareholders were regular IT assesses with PAN no. and after discussion with them, he was having the authority and a technical infrastructure to look into the assessment record of this year as well as the preceding year along with the enclosures filed with or within the ROI by the concerned shareholder. Thus, unless there was something negative available on record or so alleged by the Ld. CIT, his attempt to find fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng nature of judgment-Decision of the jurisdictional High Court-Where the decision of the jurisdictional High Court has not been set aside or at least has not been appended from it would be binding-In view of this CIT proceeding on the basis of the High Court other than jurisdictional High Court on the basis that jurisdictional High Court was erroneous and that the AO who had acted in terms of the High Court s decision had acted erroneously, was not justified 4.1 Accordingly, it is submitted that AO raised very specific and directly relevant queries/called for explanation and evidences w.r.t. source of amount received by the company from three shareholders (as indicated in the table here in above), means to the extent he was supposed to act in law and in accordance with the above decisions. 4.2 As apparent from the record, it is very clear that the Assessee had discharged the burden, by satisfying all the three conditions, as under: 4.2.1 Identity Established: The facts are not denied that the assesse had already submitted complete addresses of all the three shareholders as also their Permanent Account Number (PAN) which is the best evidence to prove the ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k account maintained with SBBJ having no 61264902049 on dated as under: Date Amount in Rs. 18.12.2015 7,71,000 28.01.2016 9,63,000 Total 17,34,000 Shri Dharm Chand Jain, PAN ABRPJ4861E S.No. Name of share-holder No. Of shares issued during the year Amount of total shares 3 Shri Dharm Chand Jain 87,625 52,57,500 The payment received by the company in its Bank account maintained with SBBJ having no 61264902049 on dated as under: Date Amount in Rs. 18.12.2015 23,37,000 28.01.2016 29,20,500 Total 52,57,500 4.2.3 Capacity Proved: Further the creditworthiness of the shareholders also stands full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the three aspects relevant for S.68. INCOME DETAILS OF Smt. CHELNA DEVI (PAN: AGTPJ3772H) HEAD ASSESSMENT YEAR 2016-17 2015-16 2014-15 2013-14 2012-13 Gross Total Income 12,23,031 11,75,948 10,57,444 6,09,139 5,48,768 Manohar Lal Jain: He is also an old and re gular income tax assesee. This fact can be verified from the PAN Card data. The ROI was filed showing gross total income of ₹ 6,74,581/- and total income of ₹ 5,23,430/- for A.Y. 2016-17. He also declared agricultural income of ₹ 1,50,000/-. He is also running a proprietary in the name of the M/s Om Tractor Agencies since 2008. He has been regularly showing substantial agricultural income in the past, this capital was of 1.19 cr. A look on the income declared in the preceding four years will show that declared income ranging between ₹ 7,00,000/- to more than ₹ 9,00,000/- and agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,48,703 6,04,222 4,22,501 Profit from Firm (Exempt Income) 96,956 29,204 60,959 71,242 65,550 Total 7,76,055 6,72,634 6,09,662 6,75,464 4,88,051 Therefore, the allega tion and the expectation of the Ld. CIT from the AO acting as quasi-judicial authority, examine the receipts in context with the S. 68 and requiring he assesse to prove the credit to the hilt, is clearly beyond the scope of S. 263, in as much as he was supposed, only to the extent of examination of the fact that the amount so received towards the share premium was not from undisclosed sources (if one strictly go by the reason of selection for limited scrutiny) or to examine the conditions as per RHC decisions. Thus, when AO has acted according to the judicial guideline and the principles propounded by the Hon ble Rajasthan High Court the AO could not venture to follow the binding decisions. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , requires the AO that the explanation offered by the assesse company for the amount credited towards share application money, premium etc. shall be deemed not satisfactory unless the shareholder does not offer explanation on the nature and the source of the sum credited and such explanation in the opinion of the AO is not found satisfactory. In the peculiar facts of this case, the AO was not supposed to deem the explanation offered by the assesse as unsatisfactory because the assesse had explained the nature and the source to the satisfaction of the AO and there was no evidence, information or anything else indicating that more enquiry was warranted. Hence, the principle propounded by the Hon ble Rajasthan High Court in the case of Smt. Harshila Chordiya (Supra) still holds goods in as much as the Proviso broadly states what S. 68 states. In fact, first proviso was inserted to annul the argument that receipts towards share allotment, premium etc. are as of capital nature to avoid the application of S. 68 w.r.t such receipts. Therefore, the ratio laid as above held good in present case also and this law of land having been available on the date of the passing of the Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and AO has accepted the contention of the assessee that no expenditure was attributable to the exempt income during the relevant assessment year-Thus, while recording the said finding, the AO has taken one of the plausible views in allowing the claim of the assessee-Therefore, CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry-Order passed by the CIT was not sustainable in law hence, the Tribunal rightly set aside the impugned order of the CIT. The ld. CIT is completely silent on this aspect. 7.1 Beyond the scope of enquiry contemplated u/s 263: The scope of enquiry in the present case was limited to the extent of the issues made a basis for selection of the case. The admitted fact was that the case was selected for limited scrutiny so as to examine whether the funds received in the form of share premium are from disclosed sources and have been correctly offered to tax (and not large share premium received during the year verify applicability of sec 56(2)(viib) or any other relevant section) as per notice issued u/s 143(2) dated 12.08.2017 (PB 4-7). It is also a fact available on record that limited scrutiny was not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2. Supporting Case Laws: The law is well settled that in the limited scrutiny assessment, the AO can be expected to make enquiry only to the extent of the reason/ basis of selection of the case for the limited scrutiny and the CIT cannot invoke S. 263 on the issues which were not made basis for selection of the case. 7.2.1 Kindly refer Mahendra Singh Dhankar (HUF) vs. ACIT, (2021) 35 NYPTTJ 458 (Jp) (DPB 34-43) 7.2.2 In CIT v/s Smt. Padmavathi (2020) 4 NYPCTR 682 (Mad) 7.3.3 In Su-Raj Diamond Dealers (P) Ltd. v/s PCIT (2020) 203 TTJ (Mumbai) 137 (DPB 44-50) 7.3.4 In Nayek Paper Converters vs. ACIT (2005) 93 TTJ (Cal) 8.1 Applicability of S.56(2) (viib): The Ld. CIT also alleged that the AO did not make enquiries and verification on the issue of large share premium received by the assesse and the applicability of S.56(2)(viib) and other relevant sections even though this was not the reason for scrutiny selection. 8.2 Alternatively and without prejudice to above, even otherwise on merits, there has been due and proper application of mind in as much as the Ld. AO raised directly relevant queries (as stated above) which were d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (1996) 134 CTR 145 (Raj). (DPB 51-54) 11.2 CIT v/s Ganpat Ram Bishnoi (2005) 198 CTR (Raj) 546 (DPB 55-58) 11.3 Gabriel India Ltd. [1993] 203 ITR 108 (Bom), 11.4 Elder IT Solutions (P.) Ltd. vs CIT [2015] 59 taxmann.com 232 (Mumbai - Trib.) 11.5 Rajmal Kanwar v. CIT-I [2017] 82 taxmann.com 119 (Jaipur - Trib.) 11.6 Abdul Hamid v. Income-tax Officer [2020] 117 taxmann.com 986 (Gauhati - Trib.) 11.7 CIT v/s Vikas Polymers 341 (2012) ITR 0537 (Del) In view of the above submissions and the Judicial Guideline, the impugned order passed u/s 263 deserves to be quashed. The above submissions are based on the facts information made available and as per instructions of the appellant. 6. On the other hand, the ld CIT-DR has relied on the order passed by the ld. Pr.CIT. 7. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. As per facts of the present case, we noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (2000) 243 ITR 83 (SC). We also draw strength from the decision of the Hon ble Supreme Court in the case of CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it was held that: The phrase prejudicial to the interests of the Revenue in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law. 8. It is submitted by the ld. AR that the AO had raised very specific and directly relevant queries/called for explanation and evidences w.r.t. the identities and creditworthiness genuineness of the receipts towards the share premium of ₹ 1.08 Cr and applicability of S.56(2)(viib); to the extent he was supposed to act in law. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are available at page No. 8 of the paper book, as under: With reference to the above subject it is submitted that the shares have been issued in the form of share premium from disclosed sources . It is submitted that the net worth of the Company as on 31.03.2015 is ₹ 55,47,060/- and estimated profit upto the date of issue of shares was ₹ 62,940/-, hence total net worth of the Company deemed is ₹ 56,10,000/-.Total 93,500 shares have been issued. Book value of the share was ₹ 60/- and the Company has issued Rights Issue as per book value of the Company. 10 rupees face value shares has been issued at the premium of ₹ 50/- i.e. @ ₹ 60/- per share, hence as per book value the Rights Issue has been allotted. We want a personal hearing the case and do not want E-proceeding facility through our account in e-filing website of the Income Tax Department. We opted out e-assessment proceedings. 10. Thereafter, in notice u/s 142(1) dated 25.06.2018, which are at page No. 9-11of the paper book, the AO raised more queries on the issue in hand as under: 3. To furnish copy of Directors and Auditors Report with financial statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te name and PAN of all the three shareholders. To prove their genuineness, the assesee also submitted copies of ITR acknowledgements (PB 29-40) and the confirmations duly signed by them (PB 43-45), to whom the shares were allotted. The assesee also submitted justification behind the premium @ ₹ 50/- per share charged as under: 1 That we have allotted the shares on premium as per following calculation: Net Assets Value as on 31.03.2015 : 72,31,418.00 Less: Liabilities : 4,91,891.00 : 11,73,787.00 16,65,678.00 5565740/ 93500 = 59.53 as on 31.03.2015 and as per fair market Value which is ₹ 60/- per share. x x x x As per calculation we have taken the premium as per value of the shares i.e. face value is ₹ 10 per share and premium of ₹ 50/- per share hence total value is ₹ 60/- per share and there is no tax liability on share premium as they are from disclosed sources. The assesse also submitted the copy of bank state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e binding-In view of this CIT proceeding on the basis of the High Court other than jurisdictional High Court on the basis that jurisdictional High Court was erroneous and that the AO who had acted in terms of the High Court s decision had acted erroneously, was not justified In view of the above, we observed that the AO raised very specific and directly relevant queries/called for explanation and evidences w.r.t. source of amount received by the company from three. 12. We also observed that the facts are not denied that the assesse had already submitted complete addresses of all the three shareholders as also their Permanent Account Number (PAN) which is the best evidence to prove the identity of a shareholder, in the records of AO itself. Moreover, all the transactions with all the shareholders were admittedly made through banking channels only. Thus, their identity is fully established. The genuineness of the transaction is fully established inasmuch as all the borrowings were made through account payee cheque only and the same was duly verified by the AO from the bank statement of the assesse company filed before him, wherein the fact and the receipt of the subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87,625 52,57,500 The payment received by the company in its Bank account maintained with SBBJ having no 61264902049 on dated as under: Date Amount in Rs. 18.12.2015 23,37,000 28.01.2016 29,20,500 Total 52,57,500 13. We also observed from perusal of the record that the creditworthiness of the shareholders also stands fully established inasmuch as the direct source of the amounts given was the income declared year to year by the respective shareholders in their return of income (accumulated savings) and loan taken from outsider but finally deposited in the respective bank accounts by the shareholders. The assessee not only submitted their PAN no. but also provided copies of acknowledgement of filing return of income which contains the computation of total income. The AO directly inquired deeper into the assessment record of the concerned shareholder on the portal of income tax department with reference to the respective PAN no. given by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three shareholders and also must have been considered by the respective AO/s. Therefore, it cannot be doubted that this was undisclosed income of the assesse company which might have been introduced through bogus credits so that the AO must have made enquiries to prove otherwise of what was apparent on the face. Therefore, the level of the proof required in a normal case of cash credit u/s 68 could not have been blindly applied and expected of the AO to have the same degree of proof in the peculiar facts of this case (though assesse did furnish the requisite details and the evidences) and the AO also did whatever it was supposed in the law to satisfy the requirement of S.68. No doubt, a proviso was inserted which, requires the AO that the explanation offered by the assesse company for the amount credited towards share application money, premium etc. shall be deemed not satisfactory unless the shareholder does not offer explanation on the nature and the source of the sum credited and such explanation in the opinion of the AO is not found satisfactory. In the peculiar facts of this case, the AO was not supposed to deem the explanation offered by the assesse as unsatisfactory beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not, by itself, give occasion to Commissioner to pass order U/s 263, merely because he has a different opinion in matter; it is only in case of 'lack of inquiry' that such a cause of action can be open. In the case of CIT vs. Chemsworth Pvt. Ltd. (2020) 275 Taxman 408 (Kar), it was held that: Revision-Erroneous and prejudicial order-AO taking plausible view-AO completed the assessment without considering expenditure which was not allowable under s. 14A-CIT held that non-consideration of disallowable expenditure under s. 14A was erroneous and is prejudicial to the interest of the Revenue-Not correct-CIT has held hat the enquiry conducted by the AO was inadequate and has assumed the revisional jurisdiction-Assessee has filed all the details before the AO and AO has accepted the contention of the assessee that no expenditure was attributable to the exempt income during the relevant assessment year-Thus, while recording the said finding, the AO has taken one of the plausible views in allowing the claim of the assessee-Therefore, CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry-Order passed by the CIT was not sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allegation of the Ld. CIT appears to be factually incorrect. On the first page of the Impugned Order also, he wrongly narrated the basis of the selection of the case under CASS under limited scrutiny for the reason Large share premium received during the year (verify applicability of S. 56(2)(viib) or any other relevant section. It has not known where from the Ld. CIT has adapted this reason of selection. Therefore, on the face of the record, no fault could be find in the subjected assessment order on this aspect. Thus, on this aspect also the AO could not have proceeded to examine the application of S. 56(2)(viib) and S. 263 could not have been invoked. We draw strength from the decision in the case of Mahendra Singh Dhankar (HUF) vs. ACIT, (2021) 35 NYPTTJ 458 (Jp) wherein it was held that: Revision-Erroneous and prejudicial order-Limited scrutiny assessment-Case of the assessee was selected for limited scrutiny under CASS on account of mismatch of sales turnover as reported in audit report, ITR, AIR and CIB data- AO issued notice under s. 143(2) and enquired about the issues under consideration-Being satisfied, the AO completed the assessment under s. 143(3) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses incurred for stamp duty and other charges-Source of funds was verified and the AO was satisfied with the same-Principal CIT while invoking his power under s. 263, faults the AO on the ground that he did not make proper enquiry-It is not clear as to what in the opinion of the Principal CIT is proper enquiry -Further, merely because the guideline was higher than the sale consideration shown in the deed of conveyance, cannot be the sole reason for holding that the assessment is erroneous and prejudicial to the interest of revenue In the case of Su-Raj Diamond Dealers (P) Ltd. v/s PCIT (2020) 203 TTJ (Mumbai) 137, it was held that: Revision-Erroneous and prejudicial order-Lack of proper enquiry vis-a-vis case selected for limited scruting under CASS-As per CBDT Instruction No. 20 of 2015, dt. 29th Dec., 2015, scrutiny in cases selected through CASS is to be confined only to the specific reasons/issues for which the case has been picked up for scrutiny-However, the case may thereafter be taken up for complete scrutiny with the approval of the administrative Principal CIT/CIT, where it is felt that apart from the CASS information there is potential escapement of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT in para 3 pg 4 of the Impugned Order. In addition, thereto, the assesse also submitted a report of the expert dated 10.10.2015 under Rule 11UA which are at page Nos. 46-58 of the paper book which fully justified charging premium @ ₹ 50 per share. Hence, the AO was fully justified in not applying in S. 56(2)(viib). There appears no valid basis to compute excessive value of ₹ 1.73 per share which is not supported by any expert report but mere suspicion. In other words, it was nothing but a substitution of opinion by the Ld. Pr.CIT. Therefore, on this aspect also the subjected assessment order could not be covered u/s 263 as it was neither erroneous nor prejudicial to the interest of the revenue. He also got valuation done u/r 11UA by expert which is binding upon AO, as held in Rameshwaram Strong Glass Pvt Ltd vs. AO 195 TTJ465 (Jp). The allegation of the Ld. CIT that various evidential documents were furnished itself goes to show that the AO did not make requisite enquiries, is not a good basis to invoke S.263 and is mere suspicion and substitution of opinion. Moreover, once all the details were made available before the CIT, he should not have decided the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the AO is contrary to the law as well as facts emerging from the records. However, the Commissioner has not given any such finding and restored the matter to the record of the AO which is not permissible as per the provisions of section 263 when the AO has conducted the enquiry and allowed the claim of the assessee on the basis of the examination of the record as well as the parties in person. We further note that the assessee has also filed the bank statements of these companies showing the transaction of payment of share premium as well as loans to the assessee. The transactions were also reflected in the return of income filed by these companies, therefore, in any case if the Department has any doubt about the genuineness of arranging the funds by these share applicant companies, the enquiry and investigation should have been conducted in those cases as held by the Hon'ble Delhi High Court in the case of Lovely Exports (P.) Ltd. (supra) which has been confirmed by the Hon'ble Supreme Court by dismissing the special leave petition filed by the Department. Considering the totality of facts and circumstances, facts of the present case and as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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