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TMI Blog2022 (9) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Pr. Commissioner of Income Tax as per his order passed on 26.09.2016 and therefore such order cannot be treated as erroneous and accordingly prejudicial to the interest of revenue. 3. For that the Ld. PCIT erred in invoking the provision of Sec. 263 by citing various case laws on Section 68 of the Income Tax Act, 1961 whereas section 68 does not apply in this case as there is no cash credit so as to invoke section 68 of the I T Act, 1961. 4. For that the Ld. Pr. CIT erred in invoking the provisions of Sec. 263 when all the enquiries as directed in the order u/s 263 were made by the AO and the Ld. PCIT has not pointed out any error of not following the directions in the said order. 5. For that the Ld. Pr. CIT erred in invoking the provisions of Sec. 263 of the I T Act, 1961 where as LD. AO himself mentioned in assessment order that "The identity, Source of Fund, genuineness and creditworthiness of the investors were verified and the source of source i.e. the second layer of source of fund were verified" and the Ld. PCIT has not pointed out any error for not following the directions in the said order. 6. For that the Ld. PCIT should not have invoked the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the following grounds which have been mentioned in the show cause notice issued u/s 263 of the Act: "2. Subsequently, the assessment records of the assessee were called for & on the basis of the verification of the material available on records, it was found that the order of assessment was erroneous so far as it is prejudicial to the interest of revenue on the following grounds:- (i) The A.O passed the order without carrying out detailed investigation/ verification/ independent enquiry regarding identity, creditworthiness of the shareholders & also the genuineness of transactions relating to share capital that was intended to be carried out and merely accepted the submission of the assessee in this regard. (ii) That A.O has also failed to carryout detailed investigation of the shareholders on the very issue that how they decided to invest in such a company which was never known for its line of business and also they invested at huge premium without verifying the financial position. (iii) The A.O further failed to examine the rationale behind raising the said share premium and also did not verily the method adopted by assessee for determining such abnormally huge p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order. The A.Q. also failed to examine the veracity of the reason that weighted with the Investors in absence of any history of the concern to generate substantial return on capital to prompt them to pay usually high share premium. How the share premium has been fixed at high value is not forthcoming. By not conducting any enquiry to ascertain and examine' the crucial facts as above, severe prejudice to revenue has been caused and also the assessment order suffers from infirmity due to lack of proper and adequate enquiry. Further, the A.O. failed to make enquiry to ascertain authenticity of the said transactions. While the A.O. made certain enquiries, it was restricted to ascertaining the claim of transaction; no enquiry was made to ascertain whether the investors had the capacity to make impugned investments and whether the transactions were genuine. No enquiry was made to rule out the possibility of the transaction being illusive and sham and the activity being an attempt to launder black unaccounted income. No enquiry had been made to ascertain whether the investors had sufficient income of their own to enable them to have the capacity to make impugned investment. The A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may choose to rely upon for substantiating its own claim. Thereafter a fresh assessment order may be passed in accordance with the relevant provisions of law." 6.1. Further, finding of the ld. Pr. CIT in para 4.4 of the impugned order is also worth observing: "4.4 1st Assessment Order in this case was found erroneous and prejudicial to interest of revenue by PCIT-4, Kolkata. Hence PCIT-4 vide his order u/s 263 directed AO to conduct sufficient amount of enquiries and finalize the order accordingly. Intention of said order u/s. 263 of the Act was to strengthen the assessment order passed dtd. 29.3.2016, as possibly because of possible paucity of time, AO could not conduct all the required enquiries. But subsequent order passed by AO u/s 143(3) was made without conducting proper enquiries of transactions and creditworthiness of investors that the A.O ought to have. Any order passed subsequent to order u/s 263 must be in favor of revenue. Either earlier assessed income should be enhanced or could be same as earlier order, but with enhanced enquiries so that addition should be strengthened to pass the test of appellate proceedings. But here the assessment order passed u/s 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of assessment proceedings carried out in direction to the order u/s 263 of the Act dated 26.09.2016, ld. AO has stated to have examined the financial statements of the assessee and other documents relating the investments made in the company. However, no such details are placed on record. There is no information before us as to what was the amount of share application money, credit entries, details of identity of the share applicants, documents supporting the genuineness and creditworthiness of such transactions. The finding of ld. AO in the assessment order dated 17.10.2016 is in a summary manner which is not indicating the details in a correct manner. Also, the order u/s 263 of the Act dated 26.09.2016 is not placed before us which would have helped us to know about the directions given by ld. Pr. CIT and whether such directions have been complied by the ld. AO. 11. Under these given facts and circumstances, where the assessee has opted not to appear before the ld. Pr. CIT nor before this Tribunal and has merely filed the appeal but has not pursued the appeal so filed by it and in the given situation where we are unable to lay our hands on any of the details of the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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