M/S B.K. ROLLING MILLS PRIVATE LIMITED, RAIPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX -1, RAIPUR

ITA 40/RPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5453 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 06-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Keywords: Corroborative evidences
• Section: 133(6); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO.40/RPR/2018 ASSESSMENT YEAR : 2013-14 M/S. B.K. ROLLING MILLS PRIVATE LIMITED, 5, SAHAKARI MARG, STREET NO.3, CHOUBEY COLONY, RAIPUR (CG). VS. PR. CIT-1, RAIPUR (CG). PAN : AACCB5689H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VEEKAAS S. SHARMA, ADV. DEPARTMENT BY : SHRI P. K. MISHRA, CIT-DR DATE OF HEARING : 14-05-2019 DATE OF PRONOUNCEMENT : 16-05-2019 O R D E R PER DR. MITHA LAL MEENA, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR. CIT-I, RAIPUR (CG) DATED 26.03.2018 PASSED U/S 263 OF THE ACT FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. PR. CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION U/S 263 AND FURTHER ERRED IN HOLDING THE ASSESSMENT ORDER DATED 21/03/2016 ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 2 ITA NO.40/RPR/2018 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, THE ACTION OF LD. PR. CIT IN ASSUMING JURISDICTION U/S 263 AND PASSING THE IMPUGNED ORDER UNDER THIS SECTION IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD. PR. CIT HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ASSESSMENT ORDER IS ERRONEOUS DUE TO ALLEGED LACK OF ENQUIRY ON THE PART OF THE AO IN EXAMINING THE CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF TRANSACTION I.E. INVESTMENT IN SHARE CAPITAL / PREMIUM OF THE ASSESSEE COMPANY, PARTICULARLY, WHEN THE AO HAS ACCEPTED THE TRANSACTION AFTER CONDUCTING COMPLETE AND PROPER ENQUIRY. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER VARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE REVISIONARY ORDER PASSED U/S 263 OF THE ACT, ALLEGING THAT THE PR. CIT HAS ERRED IN LAW AS MUCH AS ASSUMING JURISDICTION U/S 263 OF THE ACT AND HOLDING THAT THE ASSESSMENT ORDER DATED 21.03.2016 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSING OFFICER WAS FULLY SATISFIED WITH THE SOURCES OF SOURCE WHILE EXAMINING THE DISPUTED CREDITWORTHINESS OF THE SHAREHOLDER OF THE COMPANIES WHERE THE PR. CIT HAS HELD THAT THE ASSESSING OFFICER SHOULD HAVE ENLARGED THE ENQUIRY AND DUE TO LACK OF ENQUIRY AND INSUFFICIENT ENQUIRY ON THE PART OF THE ASSESSING OFFICER, THE ASSESSMENT ORDER WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. THE LD. COUNSEL CONTENDED THAT THE ASSESSING OFFICER HAS RAISED SPECIFIC QUERY WITH REGARDS TO RECEIPT OF SHARE APPLICATION MONEY/SHARE CAPITAL OF RS.50 LAKHS VIDE POINT NO.1 OF QUERY LETTER DATED 08.09.2015 (APB, PG. NO.17 TO 20); THAT THE SAID QUERY WAS REPLIED BY THE ASSESSEE VIDE POINT NO.1 VIDE ITS LETTER 3 ITA NO.40/RPR/2018 DATED 01.12.2015 (APB, PG. NO.21 TO 26); THAT SECOND QUERY WAS RAISED BY THE ASSESSING OFFICER VIDE POINT NO.1 VIDE ITS LETTER DATED 21.12.2015 IN ORDER TO JUSTIFY THE SHARE PREMIUM RECEIVED BY THE ASSESSEE COMPANY ON ALLOTMENT OF SHARES (APB, PG. NO.27 TO 28); THAT IN COMPLIANCE TO THE SPECIFIC QUERY, THE ASSESSEE HAD DULY SUBMITTED A SPECIFIC REPLY VIDE LETTER DATED 04.01.2016 (APB, PG. NO.29 TO 31) AND THAT DETAILED ENQUIRY AS ENSHRINED UNDER THE ACT WAS CARRIED OUT AND INFORMATION U/S 133(6) OF THE ACT WERE CALLED FOR BY THE ASSESSING OFFICER (APB, PG. NO.32 TO 34) WHERE IN RESPONSE TO THE SAID NOTICE U/S 133(6), THE FOLLOWING DOCUMENTARY EVIDENCES WERE SUBMITTED BY THE RESPECTIVE SHARE SUBSCRIBERS BEFORE THE ASSESSING OFFICER (APB, PG. NO.35 TO 87) :- (A) ACKNOWLEDGEMENT FOR FILING OF INCOME TAX RETURN FOR A.Y. 2013-14. (B) COPY OF SHARE APPLICATION FORM ALONGWITH THE DECLARATION WHICH CONTAINS THE COMPLETE DETAILS OF THE SUBSCRIBERS, NUMBER OF SHARES APPLIED AND THE DETAILS OF BANK VIDE WHICH PAYMENT AGAINST SHARE APPLICATION WAS MADE TO THE ASSESSEE. (C) COPY OF BANK STATEMENT SHOWING THE RELEVANT ENTRY OF PAYMENT, I.E. THE PAYMENT OF SHARE APPLICATION MONEY WAS MADE BY THE COMPANIES THROUGH PROPER BANKING CHANNEL. (D) COPY OF AUDITED ACCOUNTS OF THE SUBSCRIBER COMPANIES CONTAINING BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE F.Y. 2012-13. 5. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS CONSCIOUSLY APPLIED HIS MIND ON THE ISSUE OF SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED. THE ASSESSING OFFICER COULD HAVE TAKEN ONE OUT OF THE TWO POSSIBLE VIEWS IN THE 4 ITA NO.40/RPR/2018 LIGHT OF DOCUMENTARY EVIDENCES, IN VIEW OF PROPER AND SUFFICIENT ENQUIRIES WERE BEING CONDUCTED BY HIM ON THE EARLIER OCCASIONS TOO AND INVOKING OF THE PROVISIONS OF SECTION 263 BY THE PR.CIT IS NOTHING BUT HIS OWN OPINION ON THE BASIS OF PRESUMPTIONS. IN THE GARB OF THE PROVISIONS OF SECTION 263 OF THE ACT, THE PR.CIT CANNOT SUBSTITUTE THE WAY OF INQUIRY DONE BY THE ASSESSING OFFICER BY HIS OWN INTERPRETATION OF STATUTE. THE PR.CIT IS AT LIBERTY TO INITIATE PROCEEDINGS U/S 263 OF THE ACT WHEN THERE IS ABSENCE OF ENQUIRY AT THE END OF THE ASSESSING OFFICER BUT HE CANNOT INVOKE PROVISIONS OF SECTION 263 OF THE ACT TO SUBSTITUTE THE ASSESSING OFFICERS ENQUIRIES ALREADY DONE BY THE ASSESSING OFFICER IN THE PRESENT CASE. 6. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT BEFORE HOLDING AN ORDER TO BE ERRONEOUS, THE LD. PR.CIT OUGHT TO HAVE VERIFIED FROM THE ASSESSMENT ORDER THAT THE FINDING GIVEN BY THE ASSESSING OFFICER ARE BASED ON DOCUMENTARY EVIDENCES WERE BEING FILED IN COMPLIANCE TO QUERIES RAISED IN THE SHOW CAUSE NOTICES ISSUED TO THE ASSESSEE ON THE ISSUE UNDER DISPUTE, BEFORE ARRIVING AT THE VIEW THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS BY ANY STRETCH OF IMAGINATION AND AS THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S 263 OF THE ACT, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS, 5 ITA NO.40/RPR/2018 THEREFORE, THE ASSUMPTION OF JURISDICTION BY THE PR.CIT U/S 263 IS NOT IN ACCORDANCE WITH THE LAW, IN THE PRESENT CASE. 7. HE STATED THAT THE ASSESSING OFFICER HAS MADE ELABORATE ENQUIRY DURING THE PROCEEDINGS AND THE PR.CIT HAS NOT CONDUCTED ANY ENQUIRY BEFORE HOLDING THE ASSESSMENT ORDER AS ERRONEOUS U/S 263 OF THE ACT; THAT SECTION 263 APPLIES ONLY TO THOSE ORDERS PASSED WITHOUT MAKING ENQUIRIES AND VERIFICATION WHICH A REASONABLE AND PRUDENT ASSESSING OFFICER WOULD HAVE CARRIED OUT, HOWEVER, IN THE INSTANT CASE, AN ELABORATE ENQUIRY WITH DUE APPLICATION OF MIND WAS CONDUCTED BY THE ASSESSING OFFICER; THAT SECTION 263 DOES NOT AUTHORIZE OR GIVE UNFETTERED POWERS TO THE PR. CIT TO REVISE EACH AND EVERY ORDER, THE PROCESS OF ENQUIRY WOULD BE UNENDING AND NO ASSESSMENT ORDER CAN BE SAID TO BE FINAL AS ALL THE ASSESSMENT ORDER CAN BE FOUND TO BE FAULT ON THE GROUND THAT ENQUIRIES SHOULD HAVE BEEN MADE MORE ELABORATELY, AND THEREFORE, THE EXPLANATION 2 OF SECTION 263 OF THE ACT WHICH HAS BEEN INSERTED WITH EFFECT FROM 01.06.2015 CANNOT BE SAID TO HAVE OVERRIDDEN THE LAW. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING JUDGEMENTS :- (I) NARAYAN TATU RANE VS. ITO, (2016) 47 CCH 0309 (MUM-TRIB) (II) AMIRA PURE FOODS PVT. LTD. VS. PCIT, (2017) 51 CCH 0473. (III) SANGEETA JAIN VS. PCIT, (2018) 52 CCH 0101. 6 ITA NO.40/RPR/2018 8. IT IS NOTED THAT THE IDENTITY OF THE SHARE SUBSCRIBERS WAS ESTABLISHED ON THE BASIS OF MATERIAL EVIDENCE FILED BEFORE THE ASSESSING OFFICER IN THE FORM OF PAN, ADDRESS, INCOME TAX RETURN, AUDITED REPORT, BANK STATEMENTS, MOA, AOA AND CERTIFICATE OF INCORPORATION. THE CREDITWORTHINESS OF THE INVESTOR COMPANIES COULD BE VERIFIED FROM THE TANGIBLE NET WORTH OF THE COMPANIES BEING MORE THAN SUFFICIENT OTHER THAN THE AMOUNT INVESTED IN THE SHARES OF THE ASSESSEE COMPANY AND THE SHARE APPLICATION HAS BEEN RECEIVED THROUGH PROPER BANKING CHANNEL DULY SUPPORTED BY THE SHARE APPLICATION FORMS. THEREFORE, THE GENUINENESS OF THE TRANSACTIONS IS PROVED BEYOND THE DOUBT. FOR THIS PURPOSE, THE ASSESSEE RELIED ON THE DECISION OF DELHI TRIBUNAL IN THE CASE OF ZION PROMOTERS & DEVELOPERS PVT. LTD. VS. ADLL.CIT, (2018) 52 CCH 0137. 9. PER CONTRA , THE LD. DR FOR THE REVENUE HEAVILY RELIED ON THE IMPUGNED ORDER. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE RELEVANT JUDICIAL PRONOUNCEMENTS. IT IS AN ADMITTED MATERIAL FACT ON RECORD THAT THE OBSERVATION OF THE LD. PR.CIT REGARDING THE ISSUE OF NOTICES U/S 133(6) OF THE ACT THAT THE ASSESSING OFFICER HAS ISSUED SAID NOTICES ON TEST CHECK BASIS IS FACTUALLY INCORRECT, AS THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM THE THREE SHARE SUBSCRIBERS DURING THE 7 ITA NO.40/RPR/2018 YEAR UNDER CONSIDERATION AND SO NOTICE U/S 133(6) WERE SENT TO ALL THE SUBSCRIBERS. FROM THE BANK STATEMENT OF THE SUBSCRIBERS COMPANIES, IT IS REVEALED THAT THERE WAS NO CASH DEPOSIT IN THIS ACCOUNTS AND THERE WAS SUFFICIENT BALANCE AVAILABLE TO MAKE INVESTMENT IN SHARE CAPITAL OF THE ASSESSEE COMPANY AND THAT THE BANK STATEMENT OF THE COMPANIES ITSELF CANNOT DETERMINE THE CREDITWORTHINESS OF THE COMPANY, IN-FACT, THE REFERENCE HAS TO BE MADE TO THE BALANCE SHEET WHEREAS THERE IS NO SATISFACTION OF THE LD. PR.CIT IN THIS REGARD. 11. ABOUT EXAMINATION OF THE DIRECTOR OF THE ABOVE INVESTOR COMPANIES BY THE ASSESSING OFFICER, THE LD. COUNSEL WHILE RELYING ON THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF ZION PROMOTERS & DEVELOPERS PVT. LTD. VS. ADLL.CIT, (2018) 52 CCH 0137, CONTENDED THAT THERE WAS NO ALLEGATION/ADVERSE MATERIAL BROUGHT ON RECORD CONTRARY TO EVIDENCES FILED. 12. SIMILARLY, ON THE OBSERVATION OF PR.CIT RELATING TO SOURCES OF SOURCE, IT IS SEEN THAT THE DOCUMENTARY EVIDENCES FURNISHED ALONG WITH SUPPORTING EVIDENCES SUCH AS BANK STATEMENT, AUDITED STATEMENT OF ACCOUNT, BALANCE SHEET, PROFIT AND LOSS ACCOUNT, CLEARLY ESTABLISHED THE FACT THAT THE TANGIBLE NET WORTH OF THE DISPUTED COMPANIES WAS MORE THAN SUFFICIENT AND WAS MUCH MORE THAN THE AMOUNT INVESTED IN THE SHARES OF THE ASSESSEE COMPANY. THEREFORE, THE SOURCE OF SOURCE OF INVESTMENT HAS BEEN ESTABLISHED BY THE ASSESSEE AND AFTER BEING 8 ITA NO.40/RPR/2018 SATISFIED WITH THE SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER DID NOT OPT TO MAKE ADDITION U/S 68 OF THE ACT. 13. FROM THE ABOVE, WE NOTE THAT THOUGH THE LD. PR.CIT HAS WIDE SUPERVISORY POWER U/S 263 OF THE ACT, HOWEVER, HE CANNOT INVOKE SUCH POWERS TO SUBSTITUTE THE VIEW TAKEN BY THE ASSESSING OFFICER MERELY ON THE BASIS OF THE PRESUMPTION. SUCH A VIEW IS APPROVED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DAWJEE DADABHOY AND CO. VS. S.P. JAIN, (1957) 311 ITR 872. 14. THE CASE LAWS RELIED ON BY THE PR.CIT ARE DISTINGUISHED IN PECULIAR FACTS OF THE CASE AS THE FACTS OF THOSE CASES WERE RELATED TO THE PAPER SHELL COMPANIES TO CONVERT IT UNACCOUNTED MONEY INTO ACCOUNTED FUNDS/INCOME AND NO ENQUIRY WAS INVOKED BY THE ASSESSING OFFICER BY WAY OF ISSUING NOTICES U/S 133(6) OF THE ACT, WHEREAS IN THE PRESENT CASE THE INVESTOR COMPANIES ARE NOT PAPER/SHELL COMPANIES AND ASSESSING OFFICER HAS INVOKED PROPER AND SUFFICIENT ENQUIRIES BY ISSUING NOTICES U/S 133(6) OF THE ACT WHICH ARE DULY COMPLIED WITH BY THE ASSESSEE. 15. CONSIDERING THE PECULIAR FACTS OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE, WE HOLD THAT THE LD. PR.CIT WAS FACTUALLY INCORRECT IN MAKING THE OBSERVATION MERELY ON THE BASIS OF PRESUMPTION, THAT THE ASSESSMENT ORDER WAS ERRONEOUS. 9 ITA NO.40/RPR/2018 16. IN THE ABOVE VIEW, WE ACCEPT THE GRIEVANCE OF THE ASSESSEE AS GENUINE. THEREFORE, THE ORDER OF THE PR.CIT IS REVERSED AND ASSESSMENT ORDER IS UPHELD. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH MAY, 2019. SD/- SD /- (PARTHA SARATHI CHAUDHURY) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16-05-2019. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR