Sunray Cotspin (P) Ltd, Gurgaon V. Pr. CIT, Gurgaon

ITA 5239/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4575 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K CHAUDHARY
• Keywords: Fair market value; Assessment record; Set aside
• Section: 56(2)(vii)(b); 143(3); 142(1); 133(6); 13; 68; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI G BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 5239/DEL/2019 (A.Y. 2014-15) M/S. SUNRAY COTSPIN (P) LTD. VS. PR. CI T PLOT NO.660, UDYOG VIHAR, GURGAON. PHASE-V, GURGAON, HARYANA-122 002 PAN NO: AAPCS 2728 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 20.02.2020 DATE OF PRONOUNCEMENT : 21.02.2020 ASSESSEE BY : SHRI GAUTAM JAIN, C.A REVENUE BY : SHRI H. K. CHAUDHARY, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE AS SUMPTION OF JURISDICTION U/S 263 OF THE INCOME-TAX ACT, 1961 [H EREINAFTER REFERRED TO AS 'THE ACT'] BY THE PCIT, GURGAON FOR A.Y. 2014 -15. 2. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUS ED. 3. FACTS ON RECORD SHOW THAT THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 18.08.2016. ASSUMING P OWERS CONFERRED UPON HIM BY PROVISIONS OF SECTION 263 OF THE ACT, T HE PCIT SERVED A NOTICE WHICH READS AS UNDER: MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, OFFICE OF THE PR. COMMISSIONER OF INCOME TAX, HSIIDC BUILDING, VANIJYA NIKUNJ, UDYOG VIHAR, PHASE F NO. PCIT/GGN/TECH/263/78/2018 TO, THE PRINCIPAL OFFICER, M/S. SUNRAY COTSPIN PVT. LTD., PLOT NO.116, UDYOG VIHAR, PHASE SIR/ MADAM SUBJECT: NOTICE U/S 263 IN CASE OF M/S. SUNRAY COTS PIN PVT. LTD. (PAN 2728 D) FOR A.Y. 2014 2 THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. THE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUS ED. FACTS ON RECORD SHOW THAT THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 18.08.2016. ASSUMING P OWERS CONFERRED UPON HIM BY PROVISIONS OF SECTION 263 OF THE ACT, T HE PCIT SERVED A NOTICE WHICH READS AS UNDER: GOVERNMENT OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, OFFICE OF THE PR. COMMISSIONER OF INCOME TAX, HSIIDC BUILDING, VANIJYA NIKUNJ, UDYOG VIHAR, PHASE - V, GURGAON F NO. PCIT/GGN/TECH/263/78/2018 -19/5391 DATED 29.11.2018 M/S. SUNRAY COTSPIN PVT. LTD., PLOT NO.116, UDYOG VIHAR, PHASE -IV, SUBJECT: NOTICE U/S 263 IN CASE OF M/S. SUNRAY COTS PIN PVT. LTD. (PAN 2728 D) FOR A.Y. 2014 -15 REG - THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. THE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES. FACTS ON RECORD SHOW THAT THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 18.08.2016. ASSUMING P OWERS CONFERRED UPON HIM BY PROVISIONS OF SECTION 263 OF THE ACT, T HE PCIT SERVED A V, GURGAON SUBJECT: NOTICE U/S 263 IN CASE OF M/S. SUNRAY COTSP IN PVT. LTD. (PAN -AAPCS 3 THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 147/143(3) OF THE I.T. ACT VIDE ORDER DATED 18.08.2 016 BY THE THEN ASSESSING OFFICER DECLARING A RETURNED INCOME OF RS.12,350/- 2. THE ASSESSMENT RECORDS OF THE ABOVE NOTED AS SESSE FOR THE A.Y. 2014-15 WERE EXAMINED. ON EXAMINATION OF T HE ASSESSMENT RECORDS, FOLLOWING DISCREPANCIES ARE NOT ICED. ON THE BASIS OF DISCREPANCIES, IT IS OBSERVED THAT THE ASS ESSMENT FRAMED BY THE AO U/S 143(3) IS ERRONEOUS AND PRE-JU DICIAL TO THE INTEREST OF REVENUE DUE TO FOLLOWING REASONS: 3. DURING THE YEAR UNDER CONSIDERATION, COMPANY HAD IS SUED 1833300/- SHARES @ RS.30/- TO VARIOUS INDIVIDUAL AG AINST THE FACE VALUE OF RS.10/- AND HAS RECEIVED SHARE PREMIU M OF RS.3,66,66,000/-. ON PERUSAL OF ASSESSMENT RECORD IT IS NOTICED THAT NO DETAILS W.R.T. THE CALUCATION OF FMV AS DETERMINED IN ACCORDANCE WITH THE RULE 11U AND 11UA OF THE I.T. ACT 1961 OR OTHERWISE, HAVE BEEN VERIFIED BY THE AO AND THE ABOVE MENTIONE D ENTITIES/PERSONS HAVE PAID HUGE SHARE PREMIUM OF RS.3,66,66,000/- WHICH IS NOT DULY SUBSTANTIATED BY THEIR RETURN OF INCOME FOR THE PERIOD UNDER CONSIDERATION. THE A O HAS FAILED TO EXAMINE/ VERIFY WITH DOCUMENTS, THE CREDITWORTHI NESS OF M/S. SUNRAY COTSPIN PVT. LTD. AND NO DESIRED EXPLAN ATION ABOUT THE NATURE AND SOURCE OF THIS SHARE APPLICATION MON EY & SHARE PREMIUM HAS BEEN EXAMINED WHICH IS NECESSARY FOR MA KING ASSESSMENT. 4 4. HENCE, ON PERUSAL OF ASSESSMENT RECORD, IT WA S FOUND THAT REQUISITE INQUIRIES WERE NOT CONDUCTED REGARDING TH E ISSUE AS TO WHAT PROMPTED THE SUBSCRIBERS TO THE SHARES TO PAY SUCH SUBSTANTIAL PREMIUM ON SHARES OF A LITTLE KNOWN COM PANY HAVING NO SIGNIFICANT BUSINESS ACTIVITIES. IT IS ALSO OBSE RVED THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT APPLICATIO N OF MIND. A PROPER INQUIRY HAS ALSO NOT BEEN CONDUCTED REGARDIN G THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS. IT IS OBSERVED THAT THE ORDER HAS BEEN PASSED MECHANICALL Y WHICH TURNS THE ASSESSMENT ERRONEOUS AND CAUSE PREJUDICE TO THE INTEREST OF SERVICE. 5. YOU ARE, THEREFORE, PROVIDED AN OPPORTUNITY TO SHOW CAUSE AS TO WHY ASSESSMENT ORDER PASSED BY INCOME TAX OFF ICER, WARD-4(3), DATED 18.08.2016 FOR THE A.Y. 2014-15 IN YOUR CASE, SHOULD NOT BE REVISED U/S 263 OF THE IT ACT. YOU AR E THEREFORE REQUESTED TO ATTEND MY OFFICE ON 10.12.2018 AT 10.3 0 AM EITHER IN PERSON OR THROUGH REPRESENTATIVE DULY AUTHORIZED IN WRITING ON YOUR BEHALF OR PRODUCE OR CAUSE TO BE PRODUCED AT T HE SAID TIME, ANY DOCUMENTS OR ANY OTHER EVIDENCE ON WHICH YOU RE LY IN YOUR SUPPORT. IN CASE OF NO REPLY NO ATTENDANCE AS PER AB OVE, IT SHALL BE ASSUMED THAT YOU DO NOT WISH TO SAY ANYTHING IN THE MATTER AND MATTER WOULD BE DECIDED ON MERIT, AS PER MATERIAL A VAILABLE ON RECORD WITHOUT ANY FURTHER NOTICE INTIMATION TO YOU . (KRINWANT SAHAY) PR. COMMISSIONER OF INCOME TAX GURUGRAM 5 4. SECOND NOTICE WAS AGAIN SERVED VIDE NOTICE DATED 17.01.2019. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A D ETAILED REPLY, WHICH IS PLACED AT PAGES 182 TO 233 OF THE PAPER BOOK. 5. THE LD. PCIT WAS NOT CONVINCED WITH THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE AND SET ASIDE THE ASSESSMENT O RDER BY OBSERVING AS UNDER: IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE, I AM OF THE CONFIRMED VIEW THAT THE A C), BY NOT PURSUED THE INQUIRIES TO THEIR LOGICAL END HAS MADE THE ORDER E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE THE S AME DESERVES TO BE REVISED U/S 263 OF I.T. ACT, 1961. THEREFORE, THE SAID ORDER PASSED BY THE ASSESSING OFFICER IS SET ASIDE ON THIS PARTICULAR ISSUE ONLY. THE ASSESSING OFFICER IS DIR ECTED TO PASS FRESH ASSESSMENT ORDER AFTER MAKING THOROUGH AND DE TAILED INQUIRIES-ON THIS PARTICULAR ISSUE ONLY. THE ASSESS ING OFFICER SHOULD PASS A SPEAKING ORDER AFTER PROVIDING ADEQUA TE OPPORTUNITY TO THE ASSESSEE. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE POIN TED OUT THAT THE PCIT HAS GROSSLY ERRED IN NOT UNDERSTANDING THE FAC TS IN ITS TRUE PERSPECTIVE. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT DURING THE F.Y. 2012-13, RELEVANT TO ASSESSMENT YEA R 2013-14, SHARE 6 APPLICATION MONEY WAS RS. 5,46,80,000/- AND SHARE C APITAL WAS RS. 1 LAKH AND THERE WAS NEGATIVE RESERVE AND SURPLUS OF RS. 1,06,177/- AND EFFECTIVE INCREASE IN THE SHARE CAPITAL OF RS. 3,19 ,000/- AND NOT THE AMOUNT TAKEN BY THE LD. PCIT. 7. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE ASSESSEE HAS FULLY DISCHARGED THE INITIAL ONUS CAST UPON IT BY FILING DOCUMENTARY EVIDENCES, WHICH HAVE BEEN CONSIDERED BY THE ASSESS ING OFFICER BEFORE FRAMING ASSESSMENT ORDER U/S 143(3) OF THE ACT. 8. THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF TH E PCIT. IT IS THE SAY OF THE LD. DR THAT THE ASSESSING OFFICER HAS NO T MADE ANY ENQUIRY AND HAS ACCEPTED THE DOCUMENTS/SUBMISSIONS FURNISHE D BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AT FACE VALUE. THE LD. DR STATED THAT BECAUSE OF INADEQUATE ENQUIRY, THE O RDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF T HE REVENUE. 9. TO UNDERSTAND THE FACTS, LET US CONSIDER THE BAL ANCE SHEET, WHICH IS AS UNDER: 7 BALANCE SHEET AS AT 31 ST MARCH, 2014 (ALL AMOUNTS IN RS., UNLESS OTHERWISE SATATED) NOTE AS AT 31 ST MARCH, 2014 AS AT 31 ST MARCH, 2013 EQUITY & LIABILITIES SHAREHOLDERS FUNDS SHARE CAPITAL 3 1,84,33,000 100000 RESERVE & SURPLUS 4 3,66,50,408 - 106177 SHARE APPLICATION MONEY 0 54680000 NON CURRENT LIABILITIES LONG TERM BORROWINGS 5 14900000 0 CURRENT LIABILITIES SHORT TERM BORROWINGS 6 49574006 100000 TRADE PAYABLES 7 7892019 8682 SHORT TERM PROVISIONS 8 21600 0 TOTAL 127471033 54782505 ASSETS NON - CURRENT ASSETS FIXED ASSETS CAPITAL WORK - IN - PROGRESS 54258043 54060040 DEFFERED TAX ASSETS 9 1160 2318 NON CURRENT ASSETS 10 161600 0 CURRENT ASSETS INVENTORIES 11 1691395 0 TRADE RECEIVABLE 12 71006423 0 CASH & BANK BALANCES 13 288845 720147 SHORT TERM LOANS & ADVANCES 14 53770 0 OTHER CURRENT ASSETS 15 9797 0 TOTAL 127471033 54782505 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2 THE ACCOMPANYING NOTES ARE AN INTEGRAL PARTS OF THE SE FINANCIAL STATEMENTS AS PER OUR REPORT OF EVEN DATE FOR AND ON BEHALF OF BOARD OF DIRECTOS FOR BHUDLADIA & COMPANY CHARTERED ACCOUNTANTS FIRM REGN. NO. 002511N PANKAJ SHARDA MAHESH SHA RDA DIRECTOR DIRECTOR CA RAMESH KUMAR PARTNER MEMBERSHIP NO.503354 PLACE : SIRSA DATE: 3 RD SEPTEMBER 2014 8 10. IT CAN BE SEEN FROM THE ABOVE THAT THE SHARE AP PLICATION MONEY OF RS. 5,46,80,000/- WAS TAKEN IN ASSESSMENT YEAR 2 013-14 AND NOT IN THE YEAR UNDER CONSIDERATION. RESERVE AND SURPLUS ACCOUNT IS AS UNDER: NOTE TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ST MARCH, 2014 (CONTD.) 4) RESERVES AND SURPLUS (ALL AMOUNTS IN RS., UNLESS OTHERWISE STATED) AS AT 31 ST MARCH, 2012 ADDITIONS DEDUCTIONS AS AT 31 ST MARCH, 2013 ADDITIONS DEDUCTIONS AS AT 31 ST MARCH, 2014 CAPITAL RESERVE 0 0 0 0 0 0 0 CAPITAL REDEMPTION RESERVE 0 0 0 0 0 0 0 SECURITIES PREMIUM ACCOUNT 0 0 0 0 36666000 0 36666000 OTHER RESERVE CAPITAL SUBSIDY 0 0 0 0 0 0 0 INVESTMENT ALLOWANCE RESERVE 0 0 0 0 0 0 0 GENERAL RESERVE 0 0 0 0 0 0 0 SURPLUS IN STMNT OF PROFIT & LOSS - 78734 - 27443 0 - 106177 90585 0 - 15592 TOTAL - 78734 - 27443 0 - 106177 36756585 0 36650408 11. IT IS PERTINENT TO SEE THE NOTICE U/S 142(1) OF THE ACT ISSUED BY THE ASSESSING OFFICER WHICH IS AS UNDER: NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961 M/S SUNDRY COTSPIN PRIVATE LIMITED - PAN: AAPCS2728D 2014 - 15 INCOME TAX OFFICER, WARD-4(3), GURGAON THU, JUN 2, 2016 AT 11:56 AM TO: [e-mail] 9 NOTICE UNDER SECTION 142(1) OF TH E INCOME TAX ACT, 1961 PAN : AAPCS 2728 D OFFICE OF THE INCOME TAX OFFICER, WARD-4(3), 6 TH FLOOR, HSIDC BUILDING VINIJYA NIKUNJ, UDYOG VIHAR-V, GURGAON. DATED: 01/06/2016 TO, M/S SUNRAY COTSPIN PRIVATE LIMITED, POLT NO 116, UDYOG VIHAR, PHASE IV, GURGAON - 122002 SIR, IN CONNECTION WITH THE ASSESSMENT FOR THE ASSESSMEN T YEAR 2014-15 YOU ARE HEREBY REQUIRED TO: (A)* PREPARE A TRUE AND CORRECT RETURN OF YOUR INCO ME IN RESPECT OF WHICH YOU ARE ASSESSABLE UNDER THE INCOME TAX ACT, 1961 THE RETURN SHOULD BE IN THE APPROPRIATE FORM AS PRESCRIBED IN RULE 12 OF THE INCOME TAX RULES, 1962. IT SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF TH E SAID ACT AND DELIVERED AT MY OFFICE ON OR BEFORE AT ___ (B) **PRODUCE OR CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE AT GURGAON ON 08-06-2016 AT 11.00 AM , THE ACCOUNTS AND/OR DOCUMENTS SPECIFIED BELOW. (C)***FURNISH IN WRITING AND VERIFIED IN THE PRESCR IBED MANNER, THE INFORMATION CALLED FOR ON THE POINTS AND/OR MATTERS SPECIFIED THEREIN BEFORE ME AT MY OFFICE AT GURGAON ON 08-06-2016 AT 11.00AM, SPECIFIED OVERLEAF OR BELOW*. 10 YOURS FAITHFULLY, (P. B. VERMA) INCOME TAX OFFICER, WARD-4(3), GURGAON (ASSESSING OFFICER) 4. COPY OF AUDIT REPORT WITH ANNEXURE. 5. DETAILS OF SHARE PREMIUM 6. GIVE THE DETAILS OF BANK A/C MAINTAINED BY YOU & Y OUR FAMILY MEMBERS WITH ALL BANK STATEMENTS. 7. COMPUTATION OF INCOME. 12. IT WOULD NOT BE OUT OF PLACE TO MAKE IT CLEAR T HAT THE RETURN WAS SELECTED UNDER SCRUTINY THROUGH CASS AND THE MAIN R EASON WAS TO EXAMINE THE SHARE PREMIUM. BEING A LIMITED SCRUTIN Y CASE, WE FAIL TO PERSUADE OURSELVES TO BELIEVE THAT THE ASSESSING OF FICER DID NOT MAKE ANY ENQUIRY ON THE ISSUE ON THE BASIS OF WHICH RETU RN WAS SELECTED FOR SCRUTINY ASSESSMENT. IT IS A SETTLED PROPOSITION O F LAW THAT IN A RETURN SELECTED FOR LIMITED SCRUTINY, THE ASSESSING OFFICE R CANNOT GO BEYOND THE ISSUE AND FROM THE NOTICE U/S 142(1) OF THE ACT EXHIBITED ELSEWHERE, IT CAN BE SEEN THAT THE ASSESSING OFFICE R MADE SPECIFIC QUERY IN RELATION TO DETAILS OF SHARE PREMIUM. 13. THE ASSESSEE HAD FURNISHED COMPLETE DETAILS IN RESPECT OF SHARE APPLICATION MONEY RECEIVED AND THE SAME IS PLACED A T PAGES 34 TO 36 OF THE PAPER BOOK WHICH READ AS UNDER: 11 SUNRAY COTSPIN PRIVATE LIMITED DETAIL OF SHARE APPLICATION MONEY RECEIVED AJAY GOYAL DATE AMOUNT 06.08.2011 1200000 10.08.2011 700000 14.11.2011 640000 16.11.2011 5000 08.12.2011 65000 2610000 GIRDHARI LAL MODI DATE AMOUNT 25.08.2011 700000 LESS: REFUND 06.01.20 14 - 1000 699000 NARAYANI DEVI GOYAL DATE AMOUNT 04.08.2011 1300000 10.08.2011 700000 23.08.2011 800000 24 . 09.2011 1000000 27.12.2013 1000 3801000 PHULA DEVI MODI DATE AMOUNT 24.09.2011 1000000 10.12.2011 500000 1500000 RAMESH MODI DATE AMOUNT .08.2011 3200000 2 4.09.2011 600000 10.12.2011 204000 27.12.2013 46000 4050000 SANJAY GOYAL DATE AMOUNT 04.08.2011 1455000 10.08.2011 700000 23.08.2011 175000 16.09.2011 250000 08.12.2011 793000 3373000 12 LESS : REFUND ON 01.12.2012 - 3373000 01.10.2013 874000 27.12.2013 104000 978000 SAT NARAIN GOYAL DATE AMOUNT 04.08.2011 2500000 06.08.2011 1270000 10.08.2011 700000 23.08.2011 800 0 00 24.09.2011 1000000 01.10.2013 1616000 27.12.2013 1000 7887000 SEEMA GOYAL DATE AMOUNT 06.08.2011 755000 10.08.2011 700000 2 3.08.2011 175000 1 6.09.2011 250000 08.12.2011 793000 01.12.2012 3373000 6046000 LESS : REFUND 06.01.204 1000 6045000 VIKAS MODI DATE AMOUNT 10.08.2011 2500000 LESS: REFUND 06.01.2014 1000 2499000 LALIT MOHAN SHARDA DATE AMOUNT 08 .08.2011 2780000 10 .08.2011 220000 26 .08.2011 348000 09.12.2011 327000 30.12.2013 480000 4155000 13 KRISHNA DEVI SHARDA DATE AMOUNT 08.08.2011 2780000 10.08.2011 220000 26.08.2011 348000 09.12.2011 327000 30.12.2013 480000 4155000 MAHESH SHARDA DATE AMOUNT OPENING BALANCE 110000 09.08.2011 2780000 11. 08.2011 220000 27.08.2011 348000 10.12.2011 327000 19.07.2012 100000 30.12.2013 270000 4155000 PRIYANKA SHARDA DATE AMOUNT 09.08.2011 2780000 10.08.2011 220000 27 .08.2011 348000 09. 12.2011 327000 30.12.2013 480000 4155000 ANUJ SHARDA DATE AMOUNT 0 8.08.2011 2780000 10.08.2011 220000 26.08.2011 348000 09.12.2011 327000 30.12.2013 480000 4155000 PANKAJ KUMAR SHARDA DAT E AMOUNT 08.08.2011 2780000 11.08.2011 220000 .08.2011 348000 09.12.2011 327000 16.12.2013 320000 0.12.2013 160000 4155000 SHWETA GOYAL 14 DATE AMOUNT 06.08.2011 1085000 10.08.2011 700000 14.11.2011 640000 08.12.2011 65000 2490000 LESS: REFUND ON 01.10.2013 2490000 0 54999000 14. A BARE PERUSAL OF THE AFOREMENTIONED DETAIL SH OWS THAT OUT OF TOTAL SUM OF RS. 5,49,99,000/-, ONLY RS. 53 LAKHS H AS BEEN ACCOUNTED FOR DURING THE YEAR UNDER CONSIDERATION. THE SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM VERY SAME PERSONS FROM WHOM SHARE APPLICATION AND SHARE PREMIUM AMOUNT HAS BEEN RECEI VED IN EARLIER YEARS. NO ADVERSE INFERENCE HAS BEEN DRAWN IN EARL IER YEARS IN RESPECT OF MONEY RECEIVED FROM THE VERY SAME PERSONS. DURI NG THE YEAR ALSO, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS EE HAS FURNISHED COPY OF BANK STATEMENTS IN RESPECT OF ALL ALLOTTEES ALONGWITH THEIR TAX RETURNS DETAILS. 15. WE ALSO FIND THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FURNISHED A CERTIFICA TE FROM THE CA JUSTIFYING THE VALUATION OF SHARES AND THE CERTIFIC ATE IS PLACED AT PAGES 168 TO 170 OF THE PAPER BOOK. THIS CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS EXAMINED THE SHARE PREMIUM RECEIVED DUR ING THE YEAR 15 WHICH IS SUPPORTED BY THE FACT THAT THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT ONLY FOR THIS LIMITED PURPOSE. 16. THE FOLLOWING OBSERVATIONS OF THE PCIT APPEAR T O BE MISPLACED: I HAVE CONSIDERED THE VARIOUS CASE LAWS QUOTED BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS FOUND THAT THE CON TENTS/FACTS OF THE CASE LAWS ARE NOT EXACTLY RELATED TO THE INSTAN T CASE. PERUSAL OF THE ASSESSMENT RECORDS MOWS THAT THE A.O HAS NOT MADE ANY INDEPENDENT INQUIRIES REGARDING THE CONFIRMATIONS. NO NOTICES U/S 133(6) WERE SENT TO THE SHAREHOLDERS. ON PERUSA L OF RECORDS, IT IS FOUND THAT THE AO HAS NOT VERIFIED A NY OF THE RETURNS OF THE SUBSCRIBERS FROM THE CONCERNED ASSES SING OFFICER OF THE PERSON TO WHOM SHARES HAVE BEEN ASSE SSED. ANALYSIS OF THIS STATEMENT DOES NOT THROW ANY LIGHT WHATSOEVER ON THE SOURCE OF THE FUNDS OF THE SUBSCRIBER COMPAN IES. THE A.O. SHOULD HAVE CALLED FOR THE BANK STATEMENT DULY SIGNED BY CONCERNED AUTHORITY FOR PROPER ANALYSIS & VERIFICAT ION. FURTHER, THE REPLIES WERE JUST PLACED ON RECORD AND NO INDEP ENDENT INQUIRIES WERE CARRIED OUT REGARDING THE FACT WHETH ER THE SUBSCRIBING COMPANIES/INDIVIDUALS WERE AVAILABLE AT THE GIVEN ADDRESS, WHETHER THEY HAD THE FINANCIAL CAPABILITY TO INVEST SUCH SUBSTANTIAL AMOUNTS AND WHETHER THEY WERE GENUINE C ORPORATE ENTITIES. 16 17. AS MENTIONED ELSEWHERE, SINCE THE CASE WAS FOR A LIMITED SCRUTINY IN RESPECT OF SHARE PREMIUM RECEIVED DURIN G THE YEAR, IT CANNOT BE EXAMINED IN PIECEMEAL MANNER BUT HAS TO B E EXAMINED IN RESPECT OF SHARE CAPITAL AS A WHOLE AND SINCE REASO N FOR SELECTION FOR SCRUTINY CONFINED TO SHARE PREMIUM RECEIVED DURING THE YEAR AND DID NOT EXTEND TO THE SHARE CAPITAL, THEREFORE, THE ASS UMPTION THAT CREDITWORTHINESS OF SUBSCRIBERS HAS TO BE EXAMINED VIS A VIS SHARE PREMIUM RECEIVED IS MISCONCEIVED/MISPLACED. IN OUR UNDERSTANDING OF THE LAW, SHARE PREMIUM DURING THE YEAR OUGHT TO BE CONFINED TO EXAMINATION OF APPLICATION OF SECTION 56(2)(VII)(B) OF THE ACT AND HAVE NOTHING TO DO WITH THE APPLICATION OF SECTION 68 OF THE ACT. MOREOVER, U/S 68 OF THE ACT, THE OPENING BALANCES CANNOT BE A DDED. 18. IN OUR UNDERSTANDING OF THE FACTS, THERE WAS A SPECIFIC QUERY FROM THE ASSESSING OFFICER TO WHICH A SPECIFIC REPLY ALO NGWITH SUPPORTING DOCUMENTS WERE SUBMITTED BY THE ASSESSEE DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS ITSELF. 19. CONSIDERING THESE FACTS IN TOTALITY, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSING OFFICER DID RAISE QUERIES WHICH WERE COMPLIED BY THE ASSESSEE. IT IS A SETTLED POSITION OF LAW THAT PO WERS U/S 263 OF THE ACT 17 CAN BE EXERCISED BY THE COMMISSIONER ON SATISFACTIO N OF TWIN CONDITIONS, I.E., THE ASSESSMENT ORDER SHOULD BE ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BY 'ERR ONEOUS' IS MEANT CONTRARY TO LAW. THUS, THIS POWER CANNOT BE EXERCIS ED UNLESS THE COMMISSIONER IS ABLE TO ESTABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS AND THE AS SESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, NO ACTION TO EXERC ISE POWERS OF REVISION CAN ARISE, NOR CAN REVISIONAL POWER BE EXE RCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERR ONEOUS. THIS POWER OF REVISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HON'BLE HI GH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 TAXMANN.C OM 272 (BOMBAY)'. 20. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. GABRIEL INDIA LTD. 203 ITR 108 HAS HELD THAT: THE DECISION OF THE ITO CANNOT BE HELD TO BE ERRO NEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MADE AN ELABORATE D ISCUSSION IN THIS REGARD.. 18 21. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF M ICRO INKS LTD. 85 TAXMANN.COM 310 HAS HELD THAT: IF THE ASSESSING OFFICER HAS ADOPTED A VIEW WHICH I S A PLAUSIBLE ONE, THE VIEW WOULD NOT BE OPEN TO REVISION BY THE COMMISSIONER. 22. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF JUDICIAL DECISIONS DISCUSSED HEREINABOVE AND ON PERUSAL OF THE FACTS, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSMENT FRAMED U/ S 143(3) OF THE ACT WAS AFTER DETAILED ENQUIRIES AND VERIFICATION AND M ERELY BECAUSE THE ASSESSMENT ORDER IS SILENT, THE SAME CANNOT BE CONS IDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS HELD BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF GABRIEL INDIA L TD [SUPRA]. 23. IN THE INSTANT CASE, THE ASSESSING OFFICER, AFT ER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE, HAS TAKEN A POSSIBLE VIEW. THEREFORE, MERELY BECAUSE THE PCIT DOES NOT AGREE W ITH THE OPINION OF THE ASSESSING OFFICER, HE CANNOT INVOKE THE PROVISI ONS OF SECTION 263 OF THE ACT TO SUBSTITUTE HIS OWN OPINION. IT HAS BEEN FURTHER HELD IN SEVERAL DECISIONS THAT WHEN THE ASSESSING OFFICER H AS MADE ENQUIRY TO HIS SATISFACTION AND IT IS NOT A CASE OF NO ENQUIRY AND THE PCIT WANTS 19 THAT THE CASE SHOULD HAVE BEEN INVESTIGATED/PROBED IN A PARTICULAR MANNER, HE CANNOT ASSUME JURISDICTION U/S 263 OF TH E ACT. 24. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE ORDER OF THE PCIT AND RESTORE THAT OF THE ASSESSING OFFICER DATE D 18.08.2016 FRAMED U/S 143(3) OF THE ACT. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.02. 2020. SD/- SD/- - [SUCHITRA KAMBLE] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 21 ST FEBRUARY, 2020 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 20 DATE OF DICTATION 20.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER