TMI Blog2022 (8) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... and sundry debtors. Further contra ledger of sundry creditors also filed. Similarly, the assessee enclosed list of shareholders with shareholding pattern in assessee s company with copy of the ledger account, copy of the Income Tax Return and copy of the bank statement were submitted to the Assessing Officer vide Exhibit-H. It is further seen on these documents were electronically uploaded by the assessee in reply to the 143(2) notice, the A.O. having been satisfied with the explanation offered by the assessee. AO has accepted the explanations and completed the assessment order u/s. 143(3) of the Act. It is not the case of the assessee that the A.O. has not conducted necessary inquiry, verification before passing the assessment order. The assessing officer has verified the share application money which were being routed through banking channels and the respective Income Tax Return by the investors were also been verified by the Assessing Officer. Similarly, on the unsecured loans the same were received by the assessee company through banking channels by way of cheques and the bank statements were also been produced before the Assessing Officer for verification along with Retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 09.10.2017 claiming a loss of Rs. 6,25,62,558/-. The Return of Income was processed u/s. 143(1) of the Act and then taken up for complete scrutiny assessment to examine the followings: 1) Whether outward foreign remittance is from disclosed sources and appropriate withholding and reporting obligation have been complied with; 2) Whether the share capital is genuine and from disclosed sources; 3) Whether receipt of foreign remittance has been correctly offered for tax; and, 4) Whether sundry creditors are genuine. 2.1. Notices u/s. 143(2) and 142(1) have been issued to the assessee through ITBA-Assessment portal. The assessee filed its submission through online. It is noticed by the A.O. from ITS data that the assessee has received interest income on fixed deposits amounting to Rs. 4,01,458/- whereas the same receipt is shown at Rs. 59,318/- by the assessee. Therefore the difference of Rs. 3,42,140/- being the interest income received on fixed deposits is added as the taxable income and thereby determined the assessed income as Rs. 4,01,460/- and demanded tax thereon. 2.2 This assessment order was being verified by the Ld. PCIT. It is found that 1,80,09,970/- eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Sheet Given 1 Bhavin N Bhila 50,00,000 0 2016-17 240930 0 Limited No No 2 dhansukhbhai jadhavbhai Kasundra 6500000 7000000 2016-17 297850 491760' No YES YES 3 NileshR Makadia 5000000 11950000 2016-17 388370 738612 YES No No 4 Sapna Vipul Shah 200000 3000000 2016-17 405460 20454 YES YES No 5. Viral C Dhodasara 5000000 21249700 2016-17 748870 558666 illegible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashekar 0 11500000 2016-17 727260 0 Yes No No 17. Vasantiben Makadia 0 10000000 2016-17 200830 62144 Yes No YES 18. Chandresh Ratilal Patel 0 19500000 No No No No No No 19. Falguni H Padalia 0 2000000 2016-17 411160 0 Limited No YES 20. Hashmukhbhai L. Fuitariya 0 7000000 2016-17 274130 336402 YES No YES 21. Jayeshbhai Pravinbhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment on four points, the reasons mentioned does not include verification of unsecured loans, therefore A.O. was not required to verification the unsecured loans. However the assessee company submitted the evidences to substantiate the unsecured loans taken from various parties. The loan parties are the Relatives and family members of the Director of the assessee company and also belong to the same community. For this reason, even though interest has not been paid on the unsecured loans, due to this being the first year of the assessee company. Regarding the allegation of the bank statements of shareholders are not visible or are incomplete, unsigned. The assessee replied that complete details have been submitted to the A.O. during the course of assessment proceedings by uploading the same. This alone would not be legal ground to initiate revision proceedings u/s. 263 of the Act especially when the assessee submitted every details before the Assessing Officer. However a hard copy of all the documents related to the shareholders are submitted before Ld. PCIT. The next allegation of some of the shareholders have invested in assessee company which is more than 10 to 30 times of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be noted that the assessee case was selected for complete scrutiny mainly to examine whether the share capital introduced by assesse was genuine, and also from disclosed sources and whether the sundry creditors were genuine. In this connection it may be noted that on perusal of assessment record as also very specifically pointed out in show cause notice, apart from mere filing of balance sheet, no explanation of any share holder is available on record explaining the nature and source of investment recorded in the books of the assessee company. It was the duty of the A.O. to have properly verified the identity, creditworthiness as also genuineness of all the share holders and creditors who have introduced their money during this financial year. However the A.O. has not conducted any inquiry to this effect and In fact simply accepted the assessee's submission. Therefore, it is a case where assessment has been completed without any inquiry on the points for which the case was selected for scrutiny. 16. It is settled law that any order is passed by the AO without conducting proper inquiry is deemed to be erroneous order and prejudicial to the interest of revenue. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. 18. Keeping in view the above facts, I hold that the assessment order dtd. 26.12.2018 finalized by the assessing officer is erroneous and prejudicial to the interest of revenue within the meaning of sec 263 of the l.T. Act and hence the order passed by the assessing officer is hereby set aside. The AO is directed to frame the assessment order afresh after conducting indepth inquiries in respect of share capital, share premium as also sundry creditors shown during the period under consideration. The AO is also directed to properly consider the observations and discussions on these issues made in the above paras and complete the assessment after giving proper opportunity of being heard to the assessee. 3. Aggrieved against the impugned revision order, the assessee before us raising the following Grounds of Appeal: 1. Ld. Pr. CIT, Rajkot - 1 erred in law and on facts revising a scrutiny assessment order which is neither erroneous nor prejudicial to the interest of revenue. 2. This action of Id. Pr. CIT revising an order passed by AO raising relevant queries and extensive verification of the details submitted during assessment by the appellant is without any j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest was received paid and also interest account. 11. Complete name and address of Sundry Creditors and Sundry Debtor having outstanding balance as on 31/03/2016 along with copy of account. 4.1. The assessee vide its reply dated 28-10-2018 which is available at page no. 43 of the Paper Book held as follows: 6. Complete and Exhaustive details of Unsecured Loan: a. Details of Unsecured Loans remained outstanding at the end of previous year are as under: Sr. No. Name O/s. Amount as on 31.03.2018 1 Bhavin N Bhiia 5000000 2 Dansukhbhai 3 Kasundra 6500000 3 Nilesh R Makadia 5000000 4 Sapna V Shah 200000 5 Viral C Godasara 5000000 9. No interest received from parties and paid to parties during the year under consideration. 11. Name and address of sundry Creditor and Sundry debtors along with statement are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 670,877 22 P. K. Minerals-Rajasmand 72,038 23 .R. D. Mines Minerals-Bikaner 651,960 24 Tiishika Mines Minerals-Nagaur 127,912 25 Satyam Marketing-Morbi 411,815 26 Shree Construction Co-Bikaner 17,748 27 Shree Radhey Minerals-Ajmer 36,783 28 Shri Shyam Grinding Mill-Jaipur 278,298 29 Snf (India) Pvt Ltd-Vishakapatnam 749,260 30 .Soil Mines Minerals-Morbi 203,530 31 Sugan Minerals-Pali 25,165 32 Vijay Chand Daga Company-Bikaner 139,882 33 Patel Shipping Agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 Nifkenth Tractor Agriculture-Morbi 300,000 58 Omtkar Electricals-Morbi 1,331,270 59 Par Techno-Heat Private Limited-Ahmedabad 306,000 60 P. Prabhudas Engineering Pvt. Ltd-Rajkot 172,370 61 Ptafeant Gears - Ahmedabad 279,726 62 Royal Battery Service-Morbi 79,889 63 Sacmi Engineering India Pvt Ltd-Ahmedabad 727,239 64 SaiilSJesels Pvt. Ltd-Rajkot 23,888 65 Shiwkran Dlgitek Pvt. Ltd-Ahmedabad 121,380 66 Shiwkewn Microweigh Products-Ahmedabad 13,052 67 Sunrobo Energy System - Morbi 173,565 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 800,000 800,000 0.44% 6 Hasmukh Laljibhai Fultariya 0 7,000,000 7,000,000 7,000,000 3.89% 7 Jayeshbhai Pravinbhai Panara 0 4,5000,000 4,500,000 4,500,000 2.50% '8 Jeetendra Ramvadh Rai 0 400,000 400,000 400,000 0.22% 9 Mahadev Bhai Laljibhai Adroja 0 3,200,000 3,200,000 3,200,000 1.78% 10 Natvarlal L. Bhila 0 4,000,000 4,000,000 4,000,000 2.22% 11 Nilesh R. Makadia 50000 11,950,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,249,700 11.80% TOTAL 100,000 180,099,700 180,099,700 180,099,700 100.00% Copy of Ledger account and copy of ITR and Computation of Income with Copy of bank statement attached herewith as EXHIBIT H. Justification for not complied with notice u/s. 142(1) served on us dated 18.07.2018 We would humbly like to draw your kind attention to the fact that we did not received any u/s 142(1) of Income Tax Act, 1961, issued by your good selves on 18.07.2018. It is only upon the receipt of another notice, we become aware about the aforesaid notice. It is not ignorance or willful object to non-comply from our side. 4.3. The ld. Senior Counsel submitted there were proper and detailed enquiries conducted by the Assessing Officer by issuing notice u/s. 142(1) and 143(2) and in reply the assessee furnished details with evidences to the queries raised by the Assessing Officer. Therefore the revision proceedings initiated by the Ld. PCIT is against the provisions of Section 263 of the Act and relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court held as follows: Section 69A, read with section 263, of the Income-tax Act, 1961- Unexplained money (Revision) Block period 1-4-1996 to 25-7-2002 Assessee was subjected to black assessment proceedings during such proceedings, Assessing Officer found that there was introduction of amount in capital account of assessee Further, assessee had received loan from his brother With respect to introduction of capital, assessee had pointed out that he was an NRI for over two years and he had made foreign remittances over a period of time As regards unsecured loan received from his brother, assessee pointed out that he was running a successful business of trading, was engaged in various commercial and non-commercial activities and he was man of standing and means Assessing Officer accepted explanation of assessee and did not make any addition in respect of those amounts whether once Assessing Officer carried out details inquiries, it was not open for Commissioner to reopen issues on mere apprehension and surmises- Held, yes whether, therefore, Tribunal was justified in setting aside impugned revisional order- Held, yes. 4.6. The Co-ordinate Bench judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th copy of the Ledger account, Income Tax Return of the respective parties, computation of income, balance sheet, Profit and Loss account were enclosed. The assessee also replied that no commercial production is started during this assessment year, therefore raw material on purchased is shown as closing stock in the books of accounts and no other expenses debited in the profit and loss account. The assessee also further submitted name and addresses of the sundry creditors and sundry debtors. Further contra ledger of sundry creditors also filed. Similarly, the assessee enclosed list of shareholders with shareholding pattern in assessee s company with copy of the ledger account, copy of the Income Tax Return and copy of the bank statement were submitted to the Assessing Officer vide Exhibit-H. It is further seen on these documents were electronically uploaded by the assessee in reply to the 143(2) notice, the A.O. having been satisfied with the explanation offered by the assessee. The Assessing Officer has accepted the explanations and completed the assessment order u/s. 143(3) of the Act. It is not the case of the assessee that the A.O. has not conducted necessary inquiry, verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. It is further emphatically stated that when an Income- tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree it cannot be treated as an erroneous order and prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law . 6.3. In this context of the present case, applying ratio of the above referred judgments, the scope of the Commissioner s power of revision u/s. 263 of the Act would be, when the Assessing Officer conducts no inquiry or proper inquiries or does not apply his mind to the legal issues arising out of the material on record, the revisional powers would be available. On the other hand, if the Assessing Officer has conducted proper inquiries and come to legal conclusions which are plausible, the Ld. PCIT would not be justified in invoking revisional jurisdiction directing further inquiries or taking a different view. In the present case, the Assessing Officer has issued a detailed notice u/s. 142(1) calling for various details from the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be dismissed Held, Yes in favour of assessee. (2) CIT vs. Reliance Communication Ltd. [2016] 76 taxmann.com 226 (SC) Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credits (FCCBs) - Assessee raised funds by way of FCCBs during year under consideration - Assessing Officer completed assessment accepting income declared by assessee - Commissioner noticed that no investigation was carried out by Assessing Officer to establish name and address, genuineness and creditworthiness of actual subscribers to FCCBs in terms of section 68 - He thus passed a revisional order setting aside assessment - Tribunal noted that Assessing Officer had made detailed enquiries about aforesaid aspect and mere fact that he did not make any reference to said issue in assessment order, could not make said order erroneous and prejudicial to interest of revenues - High Court by impugned order held that finding recorded by Tribunal being a finding of fact, no substantial question of law arose therefrom - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 11] [In favour of assessee. (3). CIT Vs. Well Wisher Construction (P.) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 31 (SC). Section 69A, read with section 263, of the Income-tax Act, 1961 Unexplained moneys (On-money receipts) Pursuant to search proceedings, assessee filed its return declaring certain unaccounted income Assessing Officer completed assessment by making addition of said amount to assessee s income Commissioner passed a revisional order under section 263 on ground that Assessing Officer had not carried out detailed inquiries which included assessee s on-money transactions Tribunal thus set aside revisional order passed by Commissioner High Court upheld Tribunal s order Whether, on facts, SLP filed against decision of High Court was to be dismissed Held, yes in favour of assessee. (6) CIT vs. Amit Corporation [2012] 21 taxmann.com 64 (Guj.). Section 263 of the Income-tax Act, 1961 Revision Of orders prejudicial to interest of revenue Whether when, during course of framing of assessment, Assessing Officer had access to all records of assessee, and after perusing said records, he framed assessment, said assessment could not be re-opened in exercise of revision power under section 263 for making further inquiries- Held, yes in faovur of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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