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TMI Blog2023 (7) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds of appeal before us: "1. In the facts and circumstances of the case, ld. Pr. CIT (Central) erred in holding that the assessment order passed by the AO is erroneous and prejudicial to the interest of Revenue. He erred in setting aside the assessment order. The twin conditions of sec. 263 are not satisfied. 2. In the facts and circumstances of the case, ld. Pr. CIT (Central) erred in passing the revisional order u/s. 263 in violation to principles of natural justice. The revisional order passed without following principles of natural justice is illegal and liable to be quashed. 3. The appellant reserves the right to amend, modify or add any of the grounds of appeal." 3. Although the registry has pointed out a delay of 314 days but as stated by the Ld. AR and, rightly so, the aforesaid period is covered by the order of the Hon'ble Supreme Court of India in Suo Moto Writ Petition (Civil) No.3 of 2020 dated 23.03.2020, which was thereafter modified vide further order(s) dated 08.03.2021, 27.04.2021, 23.09.2021 and 10.01.2022, wherein as per Para 5 (iii) the present appeal could have been filed well within the extended period upto 30th May, 2022. 3.1 Controversy involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and had no logic. It is clear that it shall be used for layering purpose. During the financial year 2009-10, Rs. 51 lakh has been credited in the bank account (account No.518011045909) of M/s Cherry Vintrade Pvt. Ltd. Out of which Rs. 21,20,000/- was transferred to M/s Spectrum Infonet Pvt. Ltd. on 27-09-2009 which is to be treated as beneficiary. Considering the above facts I am believed & satisfy that there was an escapement of income of Rs. 21,20,000/-. Proceedings u/s 147 of the I. T. Act, 1961 should be initiated. SD/- (SAGAR KANTI SARKAR) ITO, Ward-15(2), Kolkata The AO framed assessment vide his order passed u/s. 143(3)/147 of the Act dated 29.12.2017, wherein no adverse inferences as regards share capital of Rs. 21.20 lac received by the assessee company from M/s Cherry Vintrade Pvt. Ltd. was drawn by him. The Pr. CIT observed that the A.O while framing the assessment had failed to make enquiries and verifications which he should have made to ascertain the identity, creditworthiness and genuineness of the transaction of receipt of share capital of Rs. 21.20 lac by the assessee company from M/s. Cherry Vintrade Pvt. Ltd. Accordingly, the Pr. CIT vide his order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opened by the AO u/s 147 of the Act on the basis of specific details/information that were shared with him by the Dy. DIT (Inv.), Kolkata, but he had neither carried out any verification nor made any effort to enquire about the existence of the aforesaid investor company and its creditworthiness, as well as had failed to verify the genuineness of the transaction under consideration. The Pr. CIT further observed that no details of investment sold; the number of shares sold; the date of purchase of the investment which was sold; copy of contract note and bills raised etc. were filed by the assessee company during the course of scrutiny proceeding though the same were specifically asked for by the A.O vide his notice(s) u/s. 142(1) of the Act dated 15.06.2017, 07.09.2017 and 03.10.2017. Also, it was observed by the Pr. CIT that though as per information shared by the Dy. DIT, (Inv.), Kolkata the aforesaid investor company, viz. M/s. Cherry Vintrade Pvt. Ltd. was not into any genuine business activities, but no effort was made by the A.O to carry out necessary verifications either from the said authority or from the assessee or from the said investor company. To sum up, it was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; From the plain reading of the aforesaid section, it is abundantly clear that the jurisdiction u/s 263 of the Income Tax Act, 1961 gets invoked if the enquiries made by the Assessing Officer are not adequate and comprehensive enough vis-a-vis the impugned issue leading to framing of erroneous order in so far as it is prejudicial to the interests of revenue. Further with respect to the submissions of the assessee, it is observed as under - 1. The mere fact that the company is active as per the records of ROC does not substantiate its creditworthiness. 2. The assessee did not furnish copy of confirmation, genuineness and creditworthiness of the impugned transaction amounting to Rs. 21.20 lakhs from Cherry-Vintrade Pvt. Ltd. The assessee has also not furnished any documents in support of its contention that the impugned amount w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bills raised etc. were filed by the assessee during the period of scrutiny though the same were specifically asked by the AO vide Notices u/s 142(1) dated. 15/06/2017, 07/09/2017 & 03/10/2017. Further, the DDIT (Inv.) had given information that M/s Cherry Vintrade Pvt. Ltd did not have any genuine business activity even then no effort was made by the AO to find out the truth from DDIT (Inv.), Kolkata who had passed such important information to the AO or from the Assessee or from M/s Cherry Vintrade Pvt. Ltd. The Balance-sheet of the assessee company as on 31/03/2010 shows that investment of the Assesses company was Rs. 2,44,72,500/- in comparison to preceding year's figure of Rs. 2,44,50,000/- i.e. its investment had increased from last year by Rs. 22,500/-. Further, neither the Balance-sheet contained any schedule of investment nor the assessee had submitted details of investment though the same was asked for by the AO vide Notices u/s 142(1) Dated 15/06/2017, 07/09/2017 & 03/10/2017. In short, the submission of the assessee regarding sale of investment was not proved from the documents available on record. Further, the Profit & Loss A/c shows 'Zero' receipt from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 for A.Y. 2010-11 on 29.12.2017 is erroneous and prejudicial to the interest of the revenue. Therefore, the assessment order passed by the Assessing Officer u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 for A.Y. 2010-11 on 29.12.2017 is set aside. The Assessing Officer is directed to reframe the assessment after examining the above said issue and after affording sufficient opportunity of being heard to the assessee." 10. We have deliberated at length on the issue in hand in the backdrop of the observations of the lower authorities. As observed by the Pr. CIT and, rightly so, though the case of the assessee company was reopened on the basis of specific information that M/s. Cherry Vintrade Pvt. Ltd., i.e. a company which was stated to have made an investment of Rs. 21.20 lac with the assessee company was identified as a paper/bogus/shell company with dummy directors under the control and management of an infamous entry operator Shri Dinesh Dhandhania, but the A.O while framing the assessment had failed to carry out the basic enquiries and verifications as regards the authenticity of the aforesaid claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act; as well as the consequential assessment order so passed could not be sustained and was liable to be vitiated. Carrying his contention further, it was the claim of the Ld. AR that now when the case of the assessee had been reopened in absence of valid assumption of jurisdiction, therefore, the reassessment order passed by the AO being non-est in the eyes of law could not have been subjected to proceedings u/s. 263 of the Act. 12. We have given a thoughtful consideration to the aforesaid contentions of the Ld. AR and are unable to persuade ourselves to subscribe to the same. On a perusal of the "reasons to believe" which had formed the very basis for reopening of the assessee's case u/s. 147 of the Act, it transpires that the A.O was in receipt of information from the Dy. DIT, Investigation Wing, Unit- II, Kolkata, which revealed that M/s. Cherry Vintrade Pvt. Ltd., as per the information gathered by the Investigation Wing, Kolkata was identified as a paper/bogus/shell company with bogus directors who were being managed by an infamous entry operator, i.e Shri Dinesh Dhandhania. Also, as per the information, the investment made with the assessee company of Rs. 21.20 lac (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received from the Dy. DIT (Inv.), Kolkata. After perusing the order of the Pr. CIT, we find that the fact situation involved in the present case remains the same, i.e. non-application of mind by the A.O while framing assessment on issues which had formed the very basis for reopening of the assessee's case u/s 147 of the Act, i.e verification of the assessee's claim of having received a genuine investment of Rs. 25 lac from M/s Limelight Dealmark Pvt. Ltd (supra). As the fact situation involved in the present case remains the same as was there before us in the assessee's case for the immediately preceding year i.e. A.Y.2010-11, therefore, the order therein passed shall mutatis-mutandis apply for disposing off the present appeal. We, thus, in terms of our aforesaid observations recorded while disposing off the appeal in ITA No. 33/RPR/2022 uphold the order passed by the Pr. CIT u/s. 263 of the Act. 16. In the result, appeal filed by the assessee in ITA No. 34/RPR/2022 for A.Y. 2011-12 is dismissed in terms of our aforesaid observations. 17. In the combined result, both the appeals of the assessee company are dismissed in terms of our aforesaid observations. Order pronounced in o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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