TMI Blog2022 (5) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... o 3rd parties or issue of summon u/s 131 of the Act for attendance of the witnesses etc. But no such inquiries were carried out by the assessee on the pile of information filed by the assessee. We are of the opinion that no enquiry has been carried out by the Assessing Officer on the two issues of i.e. applicability of section 56 (2)(viib) and depreciation on deposit of ₹25 crore. Assessing Officer has not analyzed the information supplied by the assessee and he simply accepted whatever filed by the assessee. In such circumstances, we can t say that he has made any opinion or taken a particular view. Thus, no issue of change of opinion is involved in the case before us. We are of the opinion that there is no error in the order of the Ld. PCIT and accordingly we uphold the same. The grounds raised by the assessee are accordingly dismissed. - ITA No. 895/MUM/2021; ITA No. 896/MUM/2021 - - - Dated:- 31-5-2022 - SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) For the Assessee : Dr. K. Shivaram, Sr. Advocate Mr. Rahul Hakani, Advocate For the Revenue : Mr. Prabhat Kumar Gupta, CIT-DR ORDER PER OM PRAKASH KAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and after making due investigation / enquiries, which fact is clearly borne from the assessment records and hence was not a case of lack of enquiry as envisaged in Explanation 2 to section 263 and hence the assessment order was neither erroneous nor prejudicial to the interest of the revenue and hence the order of revision is bad in law. 3. The Learned PCIT failed to appreciate that Section 56(2) (viib) is not attracted in the facts of the present case as Appellant has issued shares on premium on the basis of valuation report obtained from category-1 Merchant Banker and addition in subsequent assessment Year cannot have any impact in the current year as shares in both years are issued at premium on the basis of different valuation report and hence the order of revision is bad in law. 4. The learned PCIT erred in revising the order with respect to the issue of valuation of shares/charging of premium on wrong assumption of facts that the Valuation report showed profits whereas they actually showed losses and hence the order of revision is bad in law. 5. The Learned PCIT failed to appreciate that depreciation on Rs 25 crores paid to acquire operation and managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued to the promoters on the basis of the valuation done by category (I) Merchant Banker Spa Capital Advisors Limited vide its report dated 26.05.2014. 3.3 The assessee-company further allotted equity shares to M/s Shrem Construction Private Limited during the period from 18.07.2014 to 13.02.2015 at fair market value of Rs.20/- (Rs.10/- against face value and Rs.10/- as share premium). It is the claim of the assessee that value of the shares of the company was enhanced due to an agreement entered into by the assessee-company on 16.07.2014 with Dr. Balabhai Nanavati for acquiring the Operation and Management Rights of M/s Nanavati Hospital for a period of 29 years. The assessee claimed that fair market value of Rs.20/- per equity share was arrived at on the basis of valuation report dated 17.07.2014 on category-I Merchant Banker Spa Capital Advisors Limited. 3.4 The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act was issued and complied with. The Assessing Officer accepted the returned income vide assessment u/s 143(3) of the Act dated 29/12/2017, with following finding: 5. After verification of the details filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved is whether there was any lack of inquiry on the part of the Assessing Officer on two issues, on which order u/s 263 has been passed. It is also contested that the Assessing Officer has taken one of the possible view, which is not unsustainable in law. Therefore, all the grounds are taken together for adjudication. 7.1 Before us, the Ld. counsel of the assessee contended that during the course of assessment proceedings u/s 143(3), the Assessing Officer had issued notice u/s 142(1) of the Act dated 04.09.2017 and raised specific queries on the issue of details of large share premium received by the assessee and introduction addition on intangible assets during the year. The Ld. counsel referred to page 72 of the Paper Book in this regard. He further submitted that vide letter dated 12.10.2017 (APB 131) the assessee submitted details of the shares allotted during the year under consideration along with valuation report. He further submitted that assesseecompany also submitted balance sheet and Income-Tax Return of the share applicants vide its letter dated 06.11.2017, which is placed at page 73-81 of the Paper Book. The Ld. counsel further submitted that Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied simultaneously. The Hon ble Delhi High Court in the case of GEE VEE Enterprises Private Limited versus CIT [1975] 99 ITR 375 (Delhi) held that the CIT may consider the order of the Income Tax Officer as erroneous not only because it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo-typed order which simply accepts what the assessed has stated in his return and fails to make inquiries which are called for in the circumstances of the case. The Hon ble Delhi High Court referred to the two decision of the Hon ble Supreme Court in the case of Rampyari Devi Saraogi v. Commissioner of Income Tax, (1968)67 I.T.R. 84 (12), and Tara Devi Aggarwai v. Commissioner of Income Tax, (1973) 88 ITR 323 (13) and observed that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income Tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income Tax Officer should have made further inquiries before accepting the statements made by the assessed in his return. 7.4 The Hon ble Delhi High Court (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous the relevant observation of the Hon ble High Court are as under : A distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order erroneous and prejudicial to the interests of the Revenue and cases where the Assessing Officer conducts an enquiry but the finding recorded is erroneous and which is also prejudicial to the interests of the Revenue. In the latter cases, the Commissioner has to examine the order or the decision taken by the Assessing Officer on the merits and then form an opinion on the merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. In the second set of cases, the Commissioner cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not. 7.7 Further, we also find that in terms of Explanation-2 below section 263 of the Act, which has been made effective from assessment year 2015-16 w.e.f. 01.06.2015, an assessment order is deemed to be erroneous insofar as prejudicial to the interest of the Revenue, if the Assessing Officer fails to carry ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the e-Filing website (www.incometaxindiafiling.gov.in). Assessee would retain complete information of all e-submissions made during the course of assessment proceedings through E-Proceeding facility for reference record purpose in his e-Filing portal account. Hearing/submission of the document(s) may be conducted manually, if required, in following situation(s): i. where manual books of accounts or original documents have to be examined; ii. where Assessing Officer invokes provisions of section 131 of the Income-tax Act, 1961; iii. where examination of witness is required to be made by the concerned assessee or the Department. iv. where a show-cause notice contemplating any adverse view is issued and assessee requests for personal hearing to explain the matter. 7.11 In view of facility of e-assessment proceeding extended to the assessee, notice, questionnaire etc were available to the assessee in his account on e-filing website and the assessee was required to respond those notices by way of uploading reply along with enclosures on the e- portal of the Income-tax Department. 7.12 Before us, for AY 2015-16, in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issues (i) including large share premium received during the year and applicability of section 56(2)(viib) of the Act (ii) addition of intangible asset during the year. Contents of said letter are reproduced as under : 7.15 We find that the Assessing Officer has simply asked the submission of the assessee on the reasons for which the case was selected for scrutiny. In this letter , no where it as asked as on which shares issued, either to the promoters or other persons , share premium has been charged. Actually, all these facts that during the year assessee has issued equity share at par as well as with premium of Rs. 10 per share, came on record only after filing the information by the assessee in response to notice u/s 142(1) of the Act dated 04.09.2017. 7.16 Thereafter, the assessee in letter dated 12/10/2017 has filed the factual copy of the valuation reports of merchant banker justifying the share premium of ₹ 10 per share. The Ld. PCIT in the impugned order has pointed out that between the period from 21/05/2014 to 15/07/2014 shares have been issued to the promoters without charging share premium that too on the basis of valuation report dated 26/05/2014. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as why (i) the provision of section 56 (2)(viib) should not be applied on the shares allotted during the year (ii) depreciation of intangible asset should not be disallowed (sic), but no such copy of the show cause letter issued by the Assessing Officer has been produced before us. In absence of any such document, it cannot be presumed existence of such show cause. It has been claimed by the assessee of filing reply on 01/12/2017 in response to alleged show cause notice, but filing of said reply before the AO is also not proved in absence of any stamp of the receiving authority on said letter. Thus, there is no evidence on record, which could show that the Assessing Officer has made enquiry on the issue of applicability of section 56(2)(viib) of the Act and eligibility of depreciation on deposit made the person running the Nanawati Hospital as how the same was an intangible asset in the hands of the assessee. Merely placing of certain information by the assessee on the issue in dispute cannot be termed as conducting of enquiry by the Assessing Officer. The Assessing Officer is not only adjudicator, but he is the investigator also as prior to adjudication of the issue, he is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us in view of complete lack of inquiries by the Assessing Officer on the two issues of applicability of section 56(2)(viib) and depreciation on deposits in para 4.1 of the impugned order and held the order erroneous on the issue of no inquiry in respect of applicability of section 56(2)(viib) of the Act. In para 4.2 of the impugned order, the Ld. PCIT has held the order as erroneous in so far as prejudicial to the interest of the Revenue in view of no inquiry carried out by the Assessing Officer on depreciation on deposit of Rs.25 crores. In addition to the para 4.1 and 4.2 of the impugned order, in para 5 the Ld. PCIT has referred to Explanation 2 to section 263 and therefore, in our opinion it cannot be said that Ld. PCIT has the order erroneous only on the basis of the Explanation-2 to section 263 of the Act. In view of the above, reliance placed by the Ld. counsel of the assessee on the said decision is not relevant to the facts of the case. 7.23 Further, the Ld. counsel of the assessee submitted that Assessing Officer has already made view on the issue of applicability of section 56(2)(viib) and depreciation on deposits and therefore Ld. PCIT was not justified in taking dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 142(1) dated 04/09/2017 for assessment year 2015-16, which has been held by us as no enquiry conducted. The Ld. counsel of the assessee referred to page 86 to 89 of the paperbook and submitted that assessee filed response of the notice dated 8/8/2018 by way of letter dated 08/11/ 2018 and provided details of share allotted along with valuation report. According to the Ld. counsel, as far as issue of the depreciation is concerned, it was allowed by the Assessing Officer in the earlier assessment year i.e. 2015-16 and Assessing Officers being same, in his opinion, the assessing officer had thoroughly verified the issue of taxability of share premium and the depreciation on operation and management rights. 9. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that in the year under consideration also the Assessing Officer has merely asked the assessee for filing information in respect of the grounds on which the case was selected and no meaningful enquiry has been carried out by the Assessing Officer on the information filed by the assessee. Facts and circumstances of the year under consideration being ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
