TMI Blog2021 (12) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... ils as discussed above. In that view of the matter, it cannot be said that the ld. PCIT travelled outside the assessment order passed u/s 147 of the Act, which vitiated the revisionary order. The assessee, situated in Aurangabad, received loans running into crores from certain companies based in Kolkata or Mumbai, that were neither in the financing business nor had any past business dealings with the assessee. No question was asked by the AO as to how the assessee came into contact with them, the answer to which was neither given to the ld. PCIT nor has it come up before the Tribunal. AO issued notice u/s 133(6) to such parties. Most of them did not respond and the AO chose to accept the genuineness of the loan creditors without proceeding further as per law, rather, by recording to the contrary in the assessment order.Most of the companies which replied and filed their Balance sheets etc. had shown to have received huge share premium on issue of share capital without any justifiable valuation. Such companies had declared nominal profit running into thousands or a few lakhs, but the share premium was in crores. These companies were prima facie shell or penny stock companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of land development, real estate dealings and allied activities. A return was filed declaring total income of ₹ 41.02 crore, which was set off against brought forward losses. The assessee also showed liability u/s 115JB of the Act at ₹ 9.13 crore. The assessment was completed u/s.143(3) r.w.s.147 of the Act on 26-03-2013, making solitary addition of ₹ 6,25,000/- on account of denial of deduction u/s.80G. The ld. PCIT observed that the assessee accepted huge loans from certain parties, mainly from Kolkata, for which no proper verification was done by the AO as to their capacity, human probability as to how the Kolkata based parties came to be known to the assessee for advancing loans. Regarding certain other loans from eight parties, the ld. PCIT observed that most of them were penny stock companies having received huge premiums in the first year of their existence, which were providing accommodation entries. Considering the fact that the assessee furnished only certain confirmations from these parties without the respective bank account statements, copy of returns of income, he opined that it did not establish the genuineness of the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account and disallowed the same. Ergo, it is clear that the AO did not discuss in detail about the issues that have been taken note of by the ld. PCIT in the impugned order. It is true that an assessment order need not have discussion about all the aspects of the assessment on which the AO gets satisfied. But, there must be material to indicate that the AO did enquire about the relevant issues concerning the assessment and got satisfied with the explanation tendered by the assessee in the same way in which a person reasonably instructed in law will do. Anything short of that renders the assessment order erroneous and prejudicial to the interest of the revenue giving a valid jurisdiction to the CIT to revise the same u/s 263 of the Act. 4. We start with the first issue, namely, acceptance of loan by the assessee from the following Kolkata parties, as have been tabulated by the ld. PCIT on page 1 of the impugned order: Sr. No. Name address of the party Loan amount Date 1 Gitabali Merchants Pvt. Ltd., 3, Saklat Place, Kolkata-700072 ₹ 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee received a loan of ₹ 25.00 lakh from each of the four parties, totaling ₹ 1.00 crore. Confirmation of the first party, namely, Gitabali Merchants Pvt. Ltd., Kolkata was furnished to the AO. Thereafter, the AO issued notice u/s.133(6) of the Act to this party seeking details of loan, balance sheet, copy of bank account from where the loan was advanced etc. No response was received from the loan creditor. Despite this, the AO did not consider it expedient to investigate the matter further or at least to confront the assessee with this fact and promptly completed the assessment accepting it to be a genuine loan creditor. 7. The next party is Glorious Holding Pvt. Ltd., Kolkata for which the assessee furnished confirmation to the AO. The AO issued notice u/s.133(6) to this party seeking similar details. No reply was received and still the AO proceeded to frame the assessment accepting the creditor as genuine. Similar is the position regarding most of the remaining creditors tabulated above. Loan totaling up to ₹ 2.35 crore on various dates between 04-10-2006 to 13-11-2006 were received by the assessee from the above Kolkata parties, for which the AO did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,300/-. This company had made investments of ₹ 7.68 crore in shares for which it received share premium of ₹ 8.55 crore. This is the first year of the operations of the company and it claimed to have received such huge share premium. The AO did not notice any of the adverse features and accepted the transaction as genuine. 13. Aakanksha Advisory Services Pvt. Ltd. is again a Kolkata based company. From its reply, the ld. PCIT observed that this company showed profit of ₹ 18,843/- but had made investment of ₹ 4.60 crore in shares. During the very first year of its operation, the company had shown to have managed huge share premium. For this party also, the AO did not find out anything amiss and accepted the genuineness of transaction. 14. Luckyprime Dealer Pvt. Ltd. is again a Kolkata based company. The ld. PCIT observed from the details furnished that it showed net profit of ₹ 19,038/- and declared Investments of ₹ 2.93 crore with receipt of share premium of ₹ 4.40 crore. The AO did not notice any such factor and accepted the genuineness of the transaction without conducting any enquiry. 15. Corbal Suppliers Pvt. Ltd. is agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chose not to exercise the statutory power vested in him for performing his duty of completing the assessment as per law. The ld. PCIT rightly reviewed the position from the details furnished by some of the loan creditors in concluding that these were penny stock companies engaged in providing the accommodation entries. These companies were used as vehicles for routing the unaccounted income. The above circumstances strongly warranted a thorough probe at the end of the AO, which was given a quiet burial at the AO s end by accepting the genuineness of the transactions. 17. There can be three broad situations rendering an assessment order erroneous amenable to revision, viz., (i) where the AO does not initiate any enquiry at all and completes the assessment; (ii) where the AO initiates enquiry but leaves it in between and passes the order; and (iii) where the enquiry is conducted and still the assessment is framed without drawing any logical conclusion from the material gathered during the course of enquiry. The above three situations bring the matter within the ambit of cases of nonapplication of mind by the AO. The Hon ble Supreme Court in Malabar Industrial Co. Ltd. VS. CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme Court held that it was a fit case of exercise of suo motu revisionary power because the AO did not investigate the matter correctly. 18. The ld. AR also took up such a contention as was taken in the case of Amitabh Bachchan (supra) that the order passed u/s.147, which was subjected to revision, was confined only to disallowance of deduction u/s.80G and the ld. PCIT ought not to have considered other issues for holding the assessment order to be erroneous and prejudicial to the interest of the Revenue. We are not convinced with the submission. The opening part of section 147 categorically provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section. Thus, it is evident that section 147 duly empowers the AO to make addition on any other income chargeable to tax which escaped the assessment and comes to his notice during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the genuineness was carried out. The CIT revised the assessment orders. The appeals came up for consideration before the Kolkata Tribunal in a batch of hundreds of appeals, which got disposed off the lead order in Subhlakshmi Vanijya (P) Ltd., and others Vs. CIT (2015) 155 ITD 171 (Kolkata). The assessee therein also took the plea before the Tribunal that it was a case of inadequate enquiry and not no enquiry and hence was beyond revision. Rejecting such contention, the Tribunal held that in the given circumstances it could be easily classified as a case of no enquiry and not inadequate enquiry . When the matter travelled to the Hon ble High Court, this view got the imprimatur. The assessee s SLP has since been dismissed in Rajmandir Estates Pvt. Ltd. Vs. PCIT (2017) 391 ITR (St.) 233 (SC). In view of the foregoing discussion, we are satisfied that the facts of the instant case are not materially different from the case of Rajmandir Estates Pvt. Ltd.(supra) in so far as this aspect is concerned . Respectfully following the precedent, we jettison this contention. 21. The next issue raised by the ld. AR was that section 68 could not have been invoked in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order that the relevant information was called for and verified and most of the parties submitted the relevant information in response to the notices issued u/s.133(6) of the Act. In the hue of the foregoing discussion, we are fully satisfied that there was utter failure on the part of the AO to conduct enquiry in respect of huge loans received by the assessee from various parties thereby rendering the assessment order erroneous and prejudicial to the interest of the Revenue justifying the exercise of revisionary power u/s 263 of the Act. 24. In view of the fact that the revision is validated on the issue of unsecured loans received by the assessee, there is no point in discussing the other issues taken note of by the ld. PCIT for revising the order. If the revisionary order is valid on even one of the issues, the order stands and justifies the revision. All the grounds espoused by the assessee in the appeal also assail the justification of passing the revisionary order in general without reference to any particular issue. Once it is held that the AO failed to apply his mind to the issue of unsecured loans which ought to have been done in the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42240000 8 Rajrath Merchants Pvt. Ltd. 753994 9 Shri Tulsi Buildcon 25000000 10 Skyline Tracom Pvt. Ltd. 1004143 11 Surana Reality 1500000 12 Swadist Sweets Pvt. Ltd. 3016570 13 TAC Technosoft Pvt. Ltd. 4155441 14 Tigerstone Trading Pvt. Ltd. 7000000 15 Trishala Vyapar Pvt. Ltd. 753994 16 Varun Developers 10000000 17 Yogeshwari Enterprises 5000000 18 Shri Tulsi Buildcon 25000000 28. For this year again, the assessee furnished confirmations in the same way in which it was done for the assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Premchand Realtors Pvt. Ltd., Aurangabad, with balance payable at ₹ 4.22 crore. No confirmation in respect of this party was filed before the AO. Neither the AO demanded any confirmation nor issued any notice u/s 133(6) of the Act but accepted it as genuine. 35. Another party is Shri Tulsi Buildcon, Aurangabad from whom a sum of ₹ 2.50 crore was received. No confirmation was got filed from this party for proving the validity of the transaction. The AO did not act and accepted it as genuine. 36. Another sum of ₹ 1.00 crore was received from Varun Developers, Pune, whose confirmation has been placed at page 154 of the paper book. No interest was paid on such amount despite the fact that the assessee did not have any prior business dealings with it. Similar is the position regarding other loans as well. 37. The AO accepted the genuineness of all the unsecured loans running into several crores notwithstanding the fact that some of them even did not respond to his notices issued u/s.133(6) of the Act and others who furnished replies had such facts which strongly suggested a further probe, which the AO failed to make. It is again a case of non-applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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