TMI Blog2023 (12) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of D G Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] Twin conditions have to be satisfied as envisaged in section 263 of the Act in absence of which the revisionary jurisdiction is not available to the Pr. CIT . Even if one of the two condition is satisfied the jurisdiction is not available. However in the present case the twin conditions were not satisfied as the order is neither erroneous nor prejudicial to the interest of the revenue as all the facts were examined by the AO on the basis of details and explanation of the assessee before the AO and he has taken a correct view based on his examination of records furnished by the assessee as well as by the subscribers. The case of the assessee squarely covered by the decision of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that the jurisdiction is not available to the Pr. CIT where the twin conditions as envisaged by section 263 of the Act were not satisfied. The Hon ble Court has even held that where one of the two conditions are satisfied, the provisions of section 263 of the Act cannot be invoked. We also find merit in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dt. 16/03/2015 directing the Assessing Officer to frame the assessment de novo. The Assessing Officer in the set aside proceedings accordingly gave effect to the order passed u/s 263 vide order dt. 04/10/2016 passed u/s 143(3) r.w.s. 263 of the Act determining the total income at Rs. 1,240/-. The ld. Pr. CIT, after calling for the assessment records and perusing the same, came to a conclusion that the order passed by the Assessing Officer is erroneous so far as it is prejudicial to the interest of the revenue, for the following reasons:- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to the facts on record as the Assessing Officer in the first set aside proceedings has conducted a detailed enquiry into the issue of share capital and share premium and thus the issue of share capital/share premium was thoroughly examined and discussed in the assessment order with reasons and justifications as to why the amount of share capital/share premium received to the tune of Rs. 6,21,00,000/- was not required to be added to the income of the assessee as was done in the first round of assessment. The ld. Assessing Officer vehemently argued that the second round of 263 on the same issue which stands adjudicated by the Assessing Officer in the first round of set aside proceedings u/s 263 of the Act is wrong as the same runs contrary to the ratio laid down by the Hon ble Jurisdictional High Court in the case of PCIT Vs Bhagwati Vintrade Pvt Ltd. ITAT/ 184/2022 IA No. GA/2/2022 and PCIT Vs M/S Intent Dealers Pvt Ltd. ITAT/92/2022 IA No. GA/2/2022 and by the decisions of the Coordinate Benches in Goodpoint Stockist Pvt Ltd Vs PCIT ITA No. 263/Kol/2021 dated 11.03.2011, Bhupati Dealmark Pvt Ltd VS PCIT ITA No. 2405/Kol/2019 dated 22.12.2021 and Starpoint Constructions (P) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the set aside proceedings pursuant to first revisionary order dated 09/09/2016. The ld. D/R submitted that the purpose enshrined in the provisions of sub-section 2(c) of Section 263 of the Act is to correct the erroneous order which is prejudicial to the interest of the revenue as the Department/revenue has no right to appeal against the said order of the Assessing Officer. However, in the present case, in the first round of 263, the jurisdiction was invalidly exercised as the predecessor ld. Pr. CIT in the order passed u/s 263 of the Act, though pointed out the error in the order of the Assessing Officer, did not highlight any instance of prejudice caused to the revenue simply because of issue of equity shares and premium. The ld. D/R submitted that though the predecessor ld. Pr. CIT wanted an enquiry on the issues but the same effectively ended up in deleting the addition which is against the provisions of the Act and was in fact illegal. 6.1. The ld. D/R submitted that the predecessor ld. Pr. CIT should have exercised the powers as contained in Section 264 of the Act. Therefore, the order passed u/s 263 of the Act was a wrong order and any assessment pursuant to the said or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. Undisputedly the facts are that in the first round of proceedings u/s 263 of the Act the, ld. Pr. CIT vide order dated 09.09.2016 set aside the assessment framed u/s 143(3) of the Act vide order dated 16.03.2015 wherein the AO had assessed the income at Rs. 6,21,01,240/-. The assessee had filed the return of income on 24.09.2012 declaring income at Rs. 1,240/-. In the said assessment the AO had made the addition of Rs. 6,20,00,000/- as unexplained cash credit u/s 68 of the Act in respect of share capital/share premium by holding that these transactions were sham and bogus. 10. The Assessing Officer in the set aside assessment proceedings completed the assessment vide order dated 21.10.2016 passed u/s 143(3)/263 of the Act wherein the addition already made u/s 68 of the Act in respect of share capital/share premium was deleted and income was assessed at Rs. 1,240/-. Before deleting the addition, the AO called for the necessary details from the assessee and also from the shareholders u/s 133(6) of the Act which were fully replied by filing the details as requisitioned. The ld AO gave a detailed finding in the assessment order dated 21.10.2016 for deleting the addition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In our opinion where the PCIT was of the view that AO has not conducted enquiry to come to the conclusion on the issue, then the ld. PCIT is duty bound to make an enquiry and reach a conclusion that order is erroneous and prejudicial to the interest of the revenue. The case of the assessee is squarely covered by the decision of Hon ble Delhi High Court in the case of D G Housing Projects Ltd. (Supra). Besides, the twin conditions have to be satisfied as emvisaged in section 263 of the Act in absence of which the revisionary jurisdiction is not available to the Pr. CIT . Even if one of the two condition is satisfied the jurisdiction is not available. However in the present case the twin conditions were not satisfied as the order is neither erroneous nor prejudicial to the interest of the revenue as all the facts were examined by the AO on the basis of details and explanation of the assessee before the AO and he has taken a correct view based on his examination of records furnished by the assessee as well as by the subscribers. The case of the assessee squarely covered by the decision of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. (supra), wherein it h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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