TMI Blog2023 (1) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... t. We note that company has adopted fair market value/book value of shares and premium on the basis the certificate issued under Rule 11UA of the I.T. Rule dated 01.03.2016 by the Chartered Accountant Shri Chetan Joshi (M. No. 132207). It was further noticed that Shri Chetan Joshi is the same CA who was appointed by the company as an auditor under section 44AB of the Act, which is a violation of the sub-Rule (a)(i) of the Rule 11UA of the I.T. Rules. Thus, in absence of valid certificate under Rule 11U of the I.T. Rules for the share premium of Rs.1,49,60,000/- received during the year should be liable to be treated as income from the other sources under the provisions of section 56(2)(viib) - Assessing Officer has not examined this issue. The expression prejudicial to the interest of the revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. Therefore, we hold that order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue, hence we confirm the findings of ld PCIT. Appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n auditor under section 44AB of the Act, which is a violation of the sub-Rule (a)(i) of the Rule 11UA of the I.T. Rule. Thus, in absence of valid certificate under Rule 11U of the IT. Rule for the share premium of Rs.1,49,60,000/- received during the year was liable to be treated as income from the other sources under the provisions of section 56(2)(viib) of the Income Tax Act and tax was required to be levied accordingly. The Assessing Officer [herein after referred to 'the AO'] has passed the order u/s 143(3) of the Act dated 13.11.2019 without making inquiries which should have been made and without application of mind. This makes the order erroneous in so far as it is prejudicial to the interest of the Revenue and requiring revision of the order u/s. 263 of the IT. Act, 1961 for A.Y. 2017-18. Accordingly, proceedings for revision of order u/s 263 of the Act were initiated by issuing show cause notice bearing DIN ITBA/REV/F/REV1/2020-21/1039321500(1) dated 02.02.2022. A complete detail of the facts on account of which the remedial action u/s. 263 of the Act proposed was discussed in the show-cause letter. The assessee was required to furnish the reply through the e-filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1 of 1956); and (ii) in any ether case, shall have the same meaning as assigned to it in the Explanation below sub-section (2) of section 288 of the Act, The assessee further stated that it had obtain valuation certificate from statutory auditor also for its internal purpose. If the assessee company had adopted FMV of the share premium on the basis of Certificate dated 09.06.2016 issued by Accountant other than its statutory auditor, then there was no need to obtain another valuation certificate on the same day for same valuation. Moreover, the assessee had not submitted the copy of the Valuation Certificate (furnished during the revision proceeding) issued by Shri Dali j. Shah, CA before the Assessing Officer, during the course of assessment proceedings. Therefore, genuineness of the Certificate issued by other CA was left to be verified by the AO. Therefore, contentions of the assessee company is not correct, hence rejected. The valuation of shares, as submitted by the assessee during the assessment proceedings is not valid as per the definition of Accountant provided in Income Tax Rules for the purpose of section 56(2)(viib) of the I.T. Act. The AO has accepted the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Devi Sarogiv. CIT (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal v. CIT (1973) 88 ITR 323 (SC), wherein it was held that where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interest of the Revenue. The Hon'ble Delhi High Court in case of Gee Vee Enterprises Vs. Additional Commission of Income-Tax, Delhi-l, (1975) 99 ITR 375, held that the position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word erroneous inaction 263 emer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue discussed herein above also. Needless to mention that while passing the fresh assessment order, consequent to this order under section 263 of the IT. Act, the Assessing Officer shall grant reasonable and sufficient opportunity of being heard to the assessee. 8. Aggrieved by the order of Ld. PCIT, the assessee is in appeal before us. 9. The written submission is submitted by assessee before the Bench, which is reproduced below: The appellant is a private limited Company and is carrying on textile business since long. For Asstt. Year 2017-18, the case was selected for Limited Scrutiny (Computer Aided Scrutiny Selection), and issue identified for examination was Share Premium only [ Notice issued u/s. 143(2) of the Income tax Act, 1961 Dated 20/09/2018 - Page No. 08 to 11 ]. In response to the said notice issued from time to time, the appellant Company had furnished all relevant details of share issued and premium collected. - submission dated 21/05/2019 Page No. 19 to 22). The assessment was finalized u/s. 143(3) of the Income tax Act, 1961 on 13/11/2019 accepting returned income as assessed income. (Page No. 12and 13). In the month of February 2022, proceedings u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtered Accountant Shri Chetan Joshi (M. No. 132207). It was further noticed that Shri Chetan Joshi is the same CA who was appointed by the company as an auditor under section 44AB of the Act, which is a violation of the sub-Rule (a)(i) of the Rule 11UA of the I.T. Rules. Thus, in absence of valid certificate under Rule 11U of the I.T. Rules for the share premium of Rs.1,49,60,000/- received during the year should be liable to be treated as income from the other sources under the provisions of section 56(2)(viib) of the Income Tax Act. The Assessing Officer has not examined this issue. The expression prejudicial to the interest of the revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. Therefore, we hold that order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue, hence we confirm the findings of ld PCIT. 12. In the result, appeal filed by the assessee is dismissed. Order is pronounced on 23/01/2023 by placing the result on the Notice Board. - - TaxTMI - TMITax - Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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