Arihant Technology Pvt Ltd, New Delhi V. Pr. CIT, New Delhi

ITA 5473/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3552 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Reopening of assessment; Document seized; Capital receipt; Documents seized; Reassessment proceedings; Set aside
• Section: 13; 147; 131; 148; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SH. K. N. CHARY, JUDICIAL MEMBER ITA NO.5473/DEL/2019 ASSESSMENT YEAR: 2009-10 ARIHANT TECHNOLOGY PVT. LTD. WZ-284B, LANE-11, LAJWANTI GARDEN, NEW DELHI PAN NO. AADCA6471D VS. PR. CIT NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. RANJAN CHOPRA, ADVOCATE RESPONDENT BY SH. S. S. RANA, CIT DR DATE OF HEARING: 17/12/2019 DATE OF PRONOUNCEMENT: 03/03/2020 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 22.03.2019 PASSED U/S.263 OF THE IT ACT FOR THE A.Y.2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 29.09.200 9 DECLARING TOTAL LOSS OF RS.1,12,18,000/-. SUBSEQUENTLY, ON TH E BASIS OF INFORMATION PROVIDED BY THE INVESTIGATION WING THAT THE ASSESSEE PAGE | 2 HAS RECEIVED ACCOMMODATION ENTRY FROM COMPANIES FLO ATED BY SH. SURINDER KUMAR JAIN AND SH. V. K. JAIN, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE U/S. 148 AFTER RECO RDING THE REASONS. THE AO COMPLETED HE ASSESSMENT U/S. 148/14 3 (3) ACCEPTING THE RETURNED LOSS. 3. SUBSEQUENTLY, THE LD. PR.CIT EXAMINED THE ASSES SMENT RECORD AND NOTED THAT THE AO HAS NOT VERIFIED THE I NFORMATION RECEIVED FROM THE DIT (INV.)-II, NEW DELHI VIDE L ETTER DATED 12.03.2013 INTIMATING THAT THE SEARCH CONDUCTED ON SH. SURINEDER KUMAR JAIN AND SH. VIRENDER JAIN HAD SHOW N THAT THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIE S IN LIEU OF CASH THROUGH PAPER/ DUMMY COMPANIES FLOATED BY THEM . THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRY OF RS.40 LAC S FROM M/S. SRI AMARNATH FINANCE PVT. LTD. IN A.Y.2009-10. HE FURTHER NOTED THAT THE AO AT THE TIME OF DISPOSING OFF THE OBJECT ION RAISED BY THE ASSESSEE IN PARA-2 OF HIS ORDER HAS OBSERVED THAT T HE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRY FROM COMPA NIES FLOATED BY THE JAIN BROTHERS BUT DID NOT SUMMON THE DIRECTORS OF M/S. SRI AMARNATH FINANCE PVT. LTD. U/S. 131 OF THE IT ACT IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS AND THEIR CREDITWORTHINESS. HE, THEREFORE, ISSUED NOTICE U/S .263 ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSMENT ORDER DATED 29.09.2016 SHOULD NOT BE REVISED U/S. 263 OF THE IT ACT SINCE THE ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTEREST OF THE REVENUE. PAGE | 3 4. THE ASSESSEE EXPLAINED THAT THE AO HAD ISSUED NO TICE U/S. 142 (1)/143 (2) CALLING FOR DETAILS NECESSARY FOR F INALIZATION OF THE ASSESSMENT AND THE ASSESSEE HAD PROVIDED ALL THE RE QUISITE DETAILS. THE AO AFTER CONSIDERING THE COPY OF INCO ME TAX RETURN, CONFIRMATION, BALANCE SHEET AND BANK STATEMENT OF M /S. SRI AMARNATH FINANCE PVT. LTD. AND AFTER CONSIDERING TH E REPLY BY THE SAID COMPANY IN RESPONSE TO NOTICE U/S. 133 (6) COM PLETED THE ASSESSMENT U/S. 148 / 143 (3) BY ACCEPTING THE RETU RNED LOSS. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE POSSIBL E VIEW, THE ORDER CANNOT BE HELD TO BE ERRONEOUS. RELYING ON V ARIOUS OTHER DECISIONS IT WAS SUBMITTED THAT ACTION U/S. 263 CAN BE TAKEN ONLY WHEN THERE IS NO ENQUIRY. IT WAS SUBMITTED THAT IF THE EVIDENCES ARE EXAMINED AND APPRECIATED BY THE AO, NO PROCEEDI NG U/S. 263 IS POSSIBLE. 5. HOWEVER, THE LD. PR.CIT WAS NOT SATISFIED WITH T HE ARGUMENTS ADVANCED BY THE ASSESSEE. HE NOTED THAT AS PER THE SEIZED DOCUMENTS FOUND FROM THE PREMISES OF SH. SUR INDER KUMAR JAIN AND SH. V. K. JAIN, THE ASSESSEE COMPANY HAS ACCEPTED ACCOMMODATION ENTRY OF RS.40 LACS FROM M/S . SRI AMARNATH FINANCE PVT. LTD. AND THE AO HAS NOT PROPE RLY VERIFIED THE IDENTITY OF THE PARTY AND ITS CREDIT WORTHINESS AND GENUINENESS OF THE SO CALLED LOAN OF RS.40 LACS TO THE ASSESSEE COMPANY. THE AO WITHOUT TAKING PROPER CARE OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING HAS SIMPLY ISS UED NOTICE U/S. 133 (6) TO THE SAID COMPANY AND PLACED ITS REPLY ON RECORD. NO PAGE | 4 FURTHER ENQUIRY / INVESTIGATION WAS CONDUCTED BY TH E AO IN THIS REGARD THOUGH IT IS APPARENT FROM THE AUDIT REPORT THAT THIS COMPANY IS MANAGED BY SH. SURINDER KUMAR JAIN, WHO IS ONE OF THE DIRECTORS OF THIS COMPANY. SINCE THE AO COMPLET ED THE ASSESSMENT WITHOUT CONDUCTING PROPER ENQUIRIES / VE RIFICATION FOR DETERMINING THE CORRECT TOTAL INCOME OF THE ASSESSE E, HE HELD THAT THE ORDER PASSED BY THE AO IS NOT ONLY ERRONEOUS BU T ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE, TH EREFORE, SET ASIDE THE ORDER OF THE AO AND RESTORED THE SAME TO HIS FI LE FOR NECESSARY VERIFICATION AND ENQUIRY AND COMPLETE THE ASSESSMEN T DENOVO. 6. AGGRIEVED WITH SUCH ORDER OF THE PR. CIT, THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LEARNED PR. CIT WAS UNJUSTIFIED IN PASSING AN ORDER OF REVISION U/S. 263 OF THE ACT FOR THE AY 2009-10 AND HOLDING THAT THE APPELLANT HAD TAKEN ACCOMMODATION ENTRY OF RS.40,00,000/- FROM S. K. JAINS DUMMY/ PAPER COMPAN Y. 2. WITHOUT PREJUDICE TO THE ABOVE, WITH RESPECT TO THE ISSUE RAISED BY THE CIT IN THE IMPUGNED ORDER, THE AO EXAMIN ED THE SAID ISSUE OF ACCOMMODATION ENTRY BY RAISING SPECIFI C QUESTIONS AT ASSESSMENT STAGE AND THE SAME HAD BEEN DULY REPLIE D BY THE APPELLANT. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. PR. CIT WAS UNJUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER PASSED U/S. 148 / 143 (3) TO BE ERRO NEOUS PAGE | 5 AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND TH EREFORE, THE ORDER OF THE PR. CIT PASSED U/S. 263 BE CANCELLED. 4. THAT THE JURISDICTION UNDER SECTION 263 CANNOT B E ASSUMED BY PR. CIT FOR MAKING ROVING ENQUIRIES ON TH E ISSUE THAT WAS ALREADY ENQUIRED BY THE AO, HOWEVER, NOT EX PRESSLY DISCUSSED IN THE ASSESSMENT ORDER PASSED BY THE AO WI THOUT PREJUDICED TO EACH OTHER. 5. THAT THE LEARNED PR. CIT HAS ERRED IN CONCLUDING THAT THE APPELLANT HAD TAKEN ACCOMMODATION ENTRY TO THE EXTE NT OF RS.40,00,000/- ON THE GROUND THAT AO WITHOUT MAKING PROPER INQUIRY/ INVESTIGATION HAD PASSED THE ORDER U/S. 148 / 143 (3) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE I NFORMATION / DOCUMENTS CALLED FOR THE AO W.R.T AMOUNT OF RS.40,00, 000/- WERE DULY FURNISHED WITH HIM AND ONLY AFTER HAVING CON VINCED WITH THE DOCUMENTS/ DETAILS, AO HAD PASSED THE ORDER. 6. THAT THE ORDER OF LEARNED PR. CIT IS BAD IN LAW A ND ON FACTS AND IS LIABLE TO BE SET-ASIDE. 7. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEN D, MODIFY, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE O R AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOU T PREJUDICE TO EACH OTHER. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PA GE-1 TO PAGE-5 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE COPY OF THE REASONS RECORDED FOR REOPENING OF THE C ASE OF THE ASSESSEE. REFERRING TO PAGE-6 TO 9 OF THE PAPER BO OK HE DREW THE ATTENTION OF THE BENCH TO THE REPLY GIVEN BY THE AS SESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. REFERRING TO PAGE 10 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO TH E LETTER ISSUED U/S. 133 (6) TO M/S. SRI AMARNATH FINANCE PVT. LTD. WHEREIN THE PAGE | 6 AO HAS CALLED FOR VARIOUS DETAILS FROM THE SAID PAR TY. REFERRING TO PAGE NO.11 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE REPLY GIVEN BY THE SAID PARTY IN RESPONSE TO NOTICE U/S. 133 (6). HE SUBMITTED THAT THE SAID PARTY HAD FILED TH E COPY OF THE BANK STATEMENT FOR LOAN GIVEN, COPY OF INCOME TAX R ETURN, COPY OF BALANCE SHEET AND P & L ACCOUNT, COPY OF LEDGER ACC OUNT ETC. HE SUBMITTED THAT THE AO AFTER CONDUCTING NECESSARY EN QUIRIES TO HIS SATISFACTION HAS ACCEPTED THE RETURNED LOSS FILED B Y THE ASSESSEE. THEREFORE, MERELY BECAUSE THE LD. PR. CIT DOES NOT AGREE WITH THE FINDINGS OF THE AO, HE CANNOT HOLD THAT THE ORDER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. REFERR ING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. SOFTWARE CONSULTANTS REPORTED IN 341 ITR 240 HE SUB MITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HEL D WHERE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ISSU E IN RESPECT OF WHICH REASONS WERE RECORDED AT THE TIME OF ISSUING NOTICE UNDER SECTION 148, SEQUITUR IS THAT ASSESSING OFFICER COU LD NOT HAVE MADE AN ADDITION ON ACCOUNT OF SAID ISSUE AND, THUS , COMMISSIONER COULD NOT HAVE EXERCISED REVISIONAL JU RISDICTION. 8. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MONARCH EDUCATIONAL SOCIETY REPORTE D IN 387 ITR 416, HE SUBMITTED THAT THE HONBLE HIGH COURT IN TH E SAID DECISION HAS HELD THAT IF NO ADDITION IS MADE IN RE SPECT OF ISSUES RECORDED BY THE AO FOR REOPENING ASSESSMENT, AO CAN NOT MAKE ADDITION ON ANY OTHER ISSUE IN REASSESSMENT PROCEED INGS. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE PAGE | 7 OF ORIENTAL BANK OF COMMERCE VS. ADDL. CIT REPORTED IN 272 CTR 56 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE NO ADDITIONS WERE MADE IN RESPE CT OF REASONS GIVEN FOR REOPENING OF ASSESSMENT, IT WAS NOT OPEN TO THE AO TO INDEPENDENTLY ASSESSEE SOME OTHER INCOME. RELYING ON VARIOUS OTHER DECISIONS HE SUBMITTED THAT IF THE EVIDENCE A RE EXAMINED AND APPRECIATED BY THE AO NO REVISION IS POSSIBLE. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS. DLF LIMITED REPORTED I N 350 ITR 555. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF SUNBEAM AUTO LIMITED HE SUBMITTED THAT PROVISION S OF SECTION 263 CANNOT BE INVOKED FOR INADEQUATE ENQUIRY. IT CA N BE UNDERTAKEN ONLY IF THERE IS A COMPLETE LACK OF ENQU IRY. HE SUBMITTED THAT THE ASSESSMENT IN THE INSTANT CASE W AS REOPENED ON THE GROUND THAT ASSESSEE IS A BENEFICIARY OF SHA RE CAPITAL AS WELL AS SHARE PREMIUM FROM THE ENTRY PROVIDING COMP ANIES BEING CONTROLLED BY SH. SURINEDER KUMAR JAIN AND SH. VIRE NDER KUMAR JAIN. HOWEVER, SINCE ASSESSEE HAS NOT TAKEN ANY SH ARE CAPITAL AND HAS TAKEN LOAN OF RS. 40 LACS AND THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT DETAILS REQUIRED FOR COMPLETION OF THE ASSESSMENT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ACCEPTED THE SAME AND COMPLETED THE ASSESSMENT U/S. 148/143 (3). THEREFORE, THE PR. CIT IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE IT ACT. HE SUBMITTED THAT FOR I NVOKING OF PROVISIONS U/S. 263, THE TWIN CONDITIONS NAMELY THE ORDER IS ERRONEOUS AND THE ORDER IS PREJUDICIAL TO THE INTER EST OF THE REVENUE MUST BE SATISFIED. IN THE INSTANT CASE THE ORDER CANNOT PAGE | 8 BE TREATED AS ERRONEOUS SINCE THE AO HAS TAKEN A PO SSIBLE VIEW. THEREFORE, MERELY BECAUSE THE ORDER MAY BE PREJUDIC IAL TO THE INTEREST OF THE REVENUE OR THAT THE PR. CIT DOES NO T AGREE WITH THE CONCLUSION REACHED BY THE AO, THE PR.CIT COULD NOT HAVE ASSUMED JURISDICTION U/S. 263 OF THE IT ACT. 9. THE LD. DR ON THE OTHER HAND REFERRED TO THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF DANIEL MERCHAN TS P. LTD. AND ANOTHER VS. ITO AND SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAID DECISION HAS DISMISSED THE SLP FI LED BY THE ASSESSEE WHEREIN THE CIT HAD PASSED ORDER U/S. 263 WITH OBSERVATION THAT THE AO DID NOT MAKE ANY PROPER ENQ UIRY WHILE MAKING THE ASSESSMENT AND ACCEPTED THE EXPLANATION OF THE ASSESSEE IN SO FAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. HE ALSO RELIED ON VARIOUS OTHER DECISIO NS AND SUBMITTED THAT THE ORDER PASSED U/S. 263 IN THE INS TANT CASE IS IN ACCORDANCE WITH LAW AND, THEREFORE, THE SAME SHOULD BE UPHELD. HE ALSO RELIED ON THE FOLLOWING DECISIONS :- 1. SURYA JYOTI SOFTWARE P. LTD. 2. SURYA FINANCIAL SERVICES LTD. VS. PCIT 3. SHANKAR TRADEX PRIVATE LIMITED VS. PR. CIT 4. SHREE SAI CITY PROMOTERS AND DEVELOPERS PVT. LTD. V S. PCIT 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE PCIT AN D THE PAPER PAGE | 9 BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE HAD COMPLETED THE ASSESSMENT U/S. 143 (3)/148 ACCEPTING THE RETURNED LOSS. WHILE COMPLETING THE ASSESSMENT THE AO HAD CONSIDERED THE INFORMATION RECEIVED FROM THE INVEST IGATION WING REGARDING THE AMOUNT OF RS.40 LACS TAKEN BY THE ASS ESSEE AS ACCOMMODATION ENTRY. WE FIND THE LD. PR. CIT INVOK ED JURISDICTION U/S. 263 OF THE IT ACT ON THE GROUND T HAT THE AO WHILE COMPLETING THE ASSESSMENT HAS NOT APPLIED HIS MIND AND PASSED THE ORDER WITHOUT MAKING REQUIRED ENQUIRIES / INVESTIGATION AND NECESSARY VERIFICATION FOR WHICH THE ORDER HAS BECOME ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 11. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO WHILE COMPLETING THE ASSESSMENT HAD CON DUCTED NECESSARY ENQUIRIES BY CALLING FOR INFORMATION FROM THE ASSESSEE AS WELL AS FROM THE LENDER COMPANY BY ISSUING NOTIC E U/S. 133 (6). AFTER BEING SATISFIED WITH SUCH INFORMATION THE AO COMPLETED THE ASSESSMENT ACCEPTING THE RETURNED LOSS. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE IT IS NOT A CASE OF NO ENQ UIRY AND, THEREFORE, THE PROCEEDINGS AND ORDER PASSED U/S. 26 3 OF THE ACT ARE INVALID. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT MERELY BECAUSE THE LD. PR. CIT DOES N OT AGREE WITH THE CONCLUSION ARRIVED AT BY THE AO, HE CANNOT SUBS TITUTE HIS OWN REASONS BY INVOKING THE POWER U/S. 263 OF THE IT AC T. PAGE | 10 12. WE FIND SOME FORCE IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE AO IN THE INSTANT CASE H AS REOPENED THE ASSESSMENT ON THE BASIS OF THE INFORMATION RECE IVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS RECEIVED ACCOM MODATION ENTRY OF RS. 40 LACS FROM M/S. SRI AMARNATH FINANCE PVT. LTD., A COMPANY CONTROLLED BY SH. SURINDER KUMAR JAIN AND S H. VIRENDER KUMAR JAIN WHO ARE KNOWN ENTRY OPERATORS. WE FIND THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS CALLED FOR INFORMATION FROM THE ASSESSEE WHO FILED THE REQ UISITE DOCUMENTS SUCH AS THE ITR, BANK STATEMENT, PAN NUMB ER, CONFIRMATION ETC. OF THE LENDER COMPANY. WE FIND T HE AO HAD ISSUED NOTICE U/S. 133 (6) TO M/S. SRI AMARNATH FIN ANCE PVT. LTD. WHO RESPONDED TO SUCH NOTICE AND FILED THE REQUISIT E DOCUMENTS AS CALLED FOR BY THE AO. WE, THEREFORE, FIND FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE THAT T HE AO HAS EXAMINED THE DOCUMENTS / CONFIRMATION IN DETAIL AND ADOPTED A POSSIBLE VIEW THAT THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE LENDER AND THE GENUINENESS OF THE TRANSACTION. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT ACTION U/S. 263 CAN BE TAKEN ONLY WHEN THERE IS LACK OF EN QUIRY OR NO ENQUIRY. HOWEVER, IN THE INSTANT CASE NECESSARY ENQ UIRY WAS CONDUCTED. THEREFORE, MERELY BECAUSE THE LD. PR. CI T DOES NOT AGREE WITH THE MANNER OF ENQUIRY CONDUCTED BY THE A O HE CANNOT SUBSTITUTE HIS OWN REASONS AND HELD THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. PAGE | 11 13. WE FIND UNDER SOMEWHAT IDENTICAL CIRCUMSTANCES THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DWA RKADHISH BUILDWELL PRIVATE LIMITED VS. CIT REPORTED IN 109 T AXMAN.COM 5 ( TO WHICH ONE OF US IS A PARTY) HAS QUASHED THE 263 PROCEEDINGS BY OBSERVING AS UNDER :- 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE U BY BOT H THE SIDES. WE FIND THE ORIGINAL ASSESSMENT IN THE INSTAN T CASE WAS COMPLETED BY THE ASSESSING OFFICE U/S. 143 (3) ON 3 1.12.2008 ACCEPTING THE RETURNED INCOME AT NIL. WE FIND THE C ASE OF THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE U/S. 148 AF TER RECORDING REASONS AND SUBSEQUENTLY THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT U/S. 143 (3)/147 ON 13/12/2 011 ACCEPTING THE RETURNED INCOME AND THEREBY DROPPING THE PROCEEDING INITIATED U/S. 147 OF THE IT ACT. WE FIND THE LD. CIT HELD THE ORDER PASSED BY ASSESSING OFFICER U/S 143 (3 )/147 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REV ENUE ON THE GROUND THAT THE ASSESSING OFFICER SIMPLY ACCEPTED THE CASE DECISION RELIED ON BY THE ASSESSEE IN THE CASE OF LOV ELY EXPORTS (P) LTD. (SUPRA) AND THE AC DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS FINLEASE (P) LTD. {SUP RA). HE WAS ALSO OF THE OPINION THAT THE AO SHOULD HAVE APPRECI ATED THE EVIDENCE GATHERED BY THE INVESTIGATION WING WHERE IN CERTAIN INCRIMINATING MATERIAL WERE GATHERED AND THE ASSESSIN G OFFICER SHOULD HAVE CONDUCTED FURTHER ENQUIRY WHICH WERE NECE SSARY TO GATHER RELEVANT MATERIAL WHICH THE AO FAILED TO DO . ACCORDING TO THE LD. CIT THERE WAS COMPLETE NON APPLICATION OF MIND ON THE PART OF THE AO IN NOT APPRECIATING THE MATERIAL AVAILABLE ON RECORD AS WELL AS IN NOT FOLLOWING COURSE OF FURTHER ENQUIRY TO GATHER RELEVANT MATERIAL. SINCE THERE WAS FAILURE O N THE PART OF THE AO TO APPLY THE PROVISION OF LAW CORRECTLY, THE REFORE, HE HELD THAT THE ORDER PASSED BY THE AO IS BOTH ERRONEOU S AS WELL AS PRE-JUDICIAL TO THE INTEREST OF THE REVENUE. 20.1 IT IS THE SUBMISSION OF THE ID. COUNSEL FOR TH E ASSESSEE THAT THE AO HAD FOLLOWED THE CORRECT PROPOSITION OF LAW AVAILABLE AT THE TIME OF PASSING OF THE ORDER. AS P ER DECISION OF PAGE | 12 HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD. {SUPRA) EVEN IF THE SHARE HOLDERS ARE BOGUS, ADDITI ON CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AND ADDITION CAN B E MADE ONLY IN THE HANDS OF SUCH BOGUS SHARE HOLDERS IF THEI R IDENTITY IS KNOWN TO THE DEPARTMENT. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FOR INVOKING JURISDIC TION U/S. 263 THE ORDER MUST BE BOTH ERRONEOUS AS WELL AS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. THE TWIN CONDITIONS MUST B E SATISFIED AND ABSENCE OF ANY ONE CANNOT EMPOWER THE CIT TO IN VOKE JURISDICTION U/S. 263. IT IS ALSO HIS SUBMISSION TH AT THE ASSESSING OFFICER IN THE INSTANT CASE HAD CONDUCTED T HOROUGH ENQUIRY TWICE AND IT IS NOT THE CASE OF NO ENQUIRY OR LACK OF ENQUIRY. 21. WE FIND SOME FORCE IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE AO IN THE ORDE R PASSED U/S. 143(3)/147 HAS FOLLOWED THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD (SUPRA) IN LETTER AND SPIRIT. IN THE OFFICE NOTE, COPY OF WHICH IS AVAILA BLE IN THE PAPER BOOK, IT IS SEEN THAT THE ASSESSING OFFICER HAD FORW ARDED INFORMATION TO THE CONCERNED AO OF THE INVESTOR COMP ANIES FOR TAKING FURTHER NECESSARY ACTION AGAINST THEM. THE R ELEVANT PORTION OF THE OFFICE NOTE READS AS UNDER : 'OFFICE NOTE' FROM THE RECORD, IT IS SEEN THAT THE FOLLOWING COMPA NY AHS DEPOSITED BELOW MENTIONED AMOUNT OF SHARE APPLICATION MONEY WITH THE ASSESSEE M/S. DWARKADISH BUILD WELL PVT. L TD. C/O N.K. JAIN, ADVOCATE, NAYA BAZAR, BHIWANI. THE ASSESS EE HAS FURNISHED INFORMATION ALONGWITH SUPPORTING DOCUMENTA RY EVIDENCE WITH REGARD TO AMOUNT OF SHARE APPLICATION M ONEY PAGE | 13 AND AFTER VERIFICATION OF THESE AMOUNTS FROM THE RE LEVANT BOOKS OF A/C AS WELL AS FROM THE BANK STATEMENTS, NO ADDI TION IS REQUIRED TO BE CONSIDERED IN THE SAID ASSESSEE COMPANY CASE. THE INFORMATION OF THE FOLLOWING COMPANY ARE BEING REFERRED/SENT TO THE CONCERNED ASSESSING OFFICER FOR TAKING FURTHER NECESSARY ACTION AGAINST THE BELOW COMPANIE S. SI. NO. NAME OF THE ENTRY PROVIDER ENTRY AMOUNT OF SHARE APPLICATION MONEY (IN RS.) 1 ADONIS FINANCIAL SERVICES PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH, 2500000 2 ARIES CRAFTS PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5000000 3 BHAWANI PORTFOLIO PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 3000000 4 CAMPARI FISCAL SERVICES PVT. LTD. 13/34, WEA, 4TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH 6000000 5 CORPORATE FINLEASE PVT LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5500000 6 DEEP SEA DRILING PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5500000 7 DU SECURITIES PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 3000000 8 EBONY INVESTMENT PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 2500000 9 KAROL BAGH, TRADING LTD. 203 DHAKA CHAMBERS 2069/39, NAIWALA, KAROL BAGH, NEW DELHI 5000000 10 MERTA FINANCE LTD. 13/34, WEA, ARYA SAMAJ ROAD, 5000000 PAGE | 14 KAROL BAGH 11 SADGURU FINMIN PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5000000 12 SAI DWARKA FINMAN PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5000000 13 TAURUS IRON & STEEL CO. PVT. LTD. GOHANA DISTT. SONEPAT 3000000 14 TEJASVI INVESTMENT PVT. LTD. GOHANA DISTT. SONEPAT 5000000 15 THAR STEEL PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 4500000 16 VOLGA CRESEC PVT. LTD. 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH 5500000 TOTAL 71000000 22. THUS WHEN THE AO PASSED THE ORDER U/S. 147/143 (3 ), WE FIND HE HAS FOLLOWED THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF LOVELY EXPORTS (P) LTD. {SUPRA) IN LETT ER AND SPIRIT. SO FAR AS THE ALLEGATIONS OF THE LD. CIT THAT SUBSEQUE NT DECISION HAD COME FOR WHICH HE REFERRED TO THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS FINLEASE { SUPRA) IS CONCERNED WE FIND THE HON'BLE DELHI HIGH COURT PRONO UNCED THE SAID DECISION ON 15.02.2012 WHEREAS THE AO IN THE IN STANT CASE HAS PASSED THE ORDER U/S. 143(3)/147 ON 13.12.20 11. THEREFORE, WE DO NOT FIND ANY MERIT IN THE ALLEGATION OF THE LD. CIT OF NON CONSIDERATION OF THE ABOVE DECISION SINCE THE SAME WAS NOT AVAILABLE AT THE TIME OF PASSING OF THE ASS ESSMENT ORDER. 23. THE HON'BLE SUPREME COURT IN THE CASE OF G. M. M ITTAL STAINLESS STEEL (P.) LTD {SUPRA) AT PARA 5 OF THE ORDER HAS OB SERVED AS UNDER : PAGE | 15 1. 'IN THIS PARTICULAR CASE, THE CIT HAS NOT RECORD ED ANY REASON WHATSOEVER FOR COMING TO THE CONCLUSION THAT THE AS SESSING OFFICER WAS ERRONEOUS IN DECIDING THAT THE POWER SU BSIDY WAS CAPITAL RECEIPT. GIVEN THE FACT THAT THE DECISION O F THE JURISDICTIONAL HIGH COURT WAS OPERATIVE AT THE MATE RIAL TIME, THE ASSESSING OFFICER COULD NOT BE SAID TO HAVE ERRE D IN LAW. THE FACT THAT THIS COURT HAD SUBSEQUENTLY REVERSED T HE DECISION OF THE HIGH COURT WOULD NOT JUSTIFY THE CIT IN TREAT ING THE ASSESSING OFFICER'S DECISION AS ERRONEOUS. THE POWER OF THE CIT UNDER SECTION 263 OF THE ACT MUST BE EXERCISED ON THE BASIS OF THE MATERIAL THAT WAS AVAILABLE TO HIM WHEN HE EXER CISED THE POWER. AT THAT TIME, THERE WAS NO DISPUTE THAT THE ISSUE WHETHER THE POWER SUBSIDY SHOULD BE TREATED AS CAPITAL RECEIPT HAD BEEN CONCLUDED AS AGAINST THE REVENUE. THE SATISF ACTION OF THE CIT, THEREFORE, WAS BASED ON NO MATERIAL EITHER LEGAL OR FACTUAL WHICH WOULD HAVE GIVEN HIM THE JURISDICTION TO TAKE ACTION UNDER SECTION 263 OF THE ACT.' 24. SO FAR AS THE ALLEGATION OF THE LD. CIT THAT TH E AO SHOULD HAVE CONDUCTED FURTHER ENQUIRY WHICH WERE NECESSARY TO GATHER RELEVANT MATERIAL WHICH THE AO FAILED TO DO AN D THERE WAS NON APPLICATION OF MIND ON THE PART OF THE AO IS CONCERNED, WE FIND IN THE INSTANT CASE THOROUGH ENQUIRIES WERE CONDUCTED BY THE AO BOTH AT THE TIME OF ORIGINAL ASSESSMENT A ND AT THE TIME OF REASSESSMENT PROCEEDINGS. FULL DETAILS GIVI NG THE NAMES, ADDRESSES, NUMBER OF SHARES OF NOMINAL VALUE AND SHARE PREMIUM AMOUNT OF ALL THE SHARE HOLDERS ALONG WITH THEIR BANK STATEMENTS, COPY OF IT RETURNS, PAN ETC. WERE FILED BEFORE THE AO. EVEN IF THE SHARE HOLDERS WERE BOGUS AS PER ALLEGATION OF THE REVENUE IN VIEW OF THE REASONS RECORDED FOR RE OPENING, PAGE | 16 HOWEVER, AS PER PREVAILING LAW AT THAT TIME IN VIEW OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPOR TS (P) LTD. {SURPA) ADDITION COULD NOT HAVE BEEN MADE IN THE HAN DS OF THE ASSESSEE AND ADDITION, IF ANY, COULD HAVE BEEN MADE ONLY IN THE HANDS OF SUCH BOGUS SHARE HOLDERS. SINCE AO HAS T AKEN A PLAUSIBLE VIEW, THEREFORE, IT CANNOT BE SAID THAT TH E ORDER OF THE AO IS ERRONEOUS. 25. WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. DELHI AIRPORT METRO EXPRESS (P.) LTD. [2018] 99 T AXMANN.COM 382/[2017] 398 ITR 8 HAS HELD THAT FOR THE PURPOSE OF EXERCISING JURISDICTION U./S 263 OF THE ACT, THE CO NCLUSION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE HAS TO BE PRECEDED BY SOME MINIMAL EN QUIRY. IF THE PCIT IS OF THE VIEW THAT THE AO DID NOT UNDERTA KE ANY ENQUIRY, IT BECOMES INCUMBENT INCUMBENT ON THE PCIT TO CONDUCT SUCH ENQUIRY. IF THE PCIT DOES NOT CONDUCT SUC H BASIC EXERCISE THEN THE CIT IS NOT JUSTIFIED IN SETTING A SIDE THE ORDER U/S. 263 OF THE IT ACT. 26. WE FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF JYOTI FOUNDATION (SUPRA) HAS HELD THAT WHERE REVISIONARY A UTHORITY OPINED THAT FURTHER ENQUIRY WAS REQUIRED, SUCH ENQUI RY SHOULD HAVE BEEN CONDUCTED BY REVISIONARY AUTHORITY HIMSELF TO RECORD FINDING THAT ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE RE VENUE. WE FIND HON'BLE DELHI HIGH COURT IN THE CASE OF SUNBEAM AUTO LIMITED (SUPRA) HAS HELD THAT IF THE AO, WHILE MAKING AN ASSESSMENT, HAS MADE INADEQUATE ENQUIRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER U/S.2 63 MERELY BECAUSE HE HAS DIFFERENT OPINION OF THE MATTER. ONL Y IN THE CASE PAGE | 17 OF 'LACK OF ENQUIRY' THAT SUCH A COURSE OF ACTION W OULD BE OPEN. IT HAS FURTHER BEEN HELD IN THE SAID DECISION THAT WH ERE THE VIEW TAKEN BY AO WAS ONE OF THE POSSIBLE VIEWS, THE REFORE, THE ASSESSMENT ORDER PASSED BY THE AO CANNOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HON 'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR SHARMA (SUPRA) HAS HELD THAT WHERE IT WAS DISCERNIBLE FROM RECORD THAT THE AO HAD APPLIED HIS MIND TO AN ISSUE IN QUESTION, COMMISSION ER COULD NOT INVOKE SECTION 263 MERELY BECAUSE HE HAS DIFFER ENT OPINION. 27. SO FAR AS THE DECISION RELIED ON BY LD. DR IN THE CASE OF DENIEL MERCHANTS (P) LTD, (SUPRA) IS CONCERNED, THE LD. DR COULD NOT CONTROVERT THE SUBMISSION OF THE LD. COUNSEL FO R THE ASSESSEE THAT NO ENQUIRY WAS CONDUCTED IN THE SAID C ASE WHEREAS IN THE CASE OF THE ASSESSEE ENQUIRIES WERE CONDUCTED TWICE I.E. DURING THE ORIGINAL ASSESSMENT PROCEEDING S AND SECONDLY DURING THE REASSESSMENT PROCEEDINGS. THEREFO RE, THE DECISION RELIED ON BY LD. DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE FIND FROM A PERUSAL OF THE PAPER BO OK THAT THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT PR OCEEDINGS AS WELL AS DURING REASSESSMENT PROCEEDINGS HAD FILED THE REQUISITE DETAILS AS CALLED FOR BY THE AO AND THE ASS ESSING OFFICER AFTER CONSIDERING THE SAME AND FOLLOWING TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORT ( P.) LTD. (SUPRA) WHICH WAS PREVAILING AT THE TIME OF PASSING OF THE ORDER COMPLETED THE ASSESSMENT AND HE HAS INFORMED THE AO OF THE INVESTOR COMPANIES TO PASS APPROPRIATE ORDER. THEREF ORE, IN VIEW OF OUR DISCUSSION IN THE PRECEDING PARAGRAPHS THE ORDER OF THE AO IN THE INSTANT CASE CANNOT BE HELD AS ERRONEO US. SINCE FOR INVOKING JURISDICTION U/S. 263 THE TWIN CONDITI ONS I.E. ORDER PAGE | 18 MUST BE ERRONEOUS AND THE ORDER MUST BE PREJUDICIAL TO THE INTEREST OF REVENUE MUST BE FULFILLED AND SINCE, WE HAVE HELD THAT THE ORDER IS NOT ERRONEOUS, THEREFORE, THE TWI N CONDITIONS ARE NOT SATISFIED. THEREFORE, THE LD. CIT IN OUR OPIN ION COULD NOT HAVE INVOKED JURISDICTION U/S. 263 OF THE IT ACT. WE , THEREFORE, SET ASIDE THE ORDER OF THE CIT PASSED U/S. 263 OF THE IT ACT AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 28. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 14. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTIC AL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE CASE OF DWARKADHISH BUILDWELL PRIVATE LIMITED (SUPRA), THEREFORE, FOLLO WING THE AFOREMENTIONED DECISION WE QUASH THE PROCEEDINGS IN ITIATED BY THE LD. PR. CIT U/S. 263 OF THE IT ACT, 1961. THE V ARIOUS DECISIONS RELIED ON BY THE LD. DR ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER THE PROCEEDINGS U/S. 263 ARE QUASHED AND THE GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.2020. SD/- SD/- (K. NARSIMHA CHARY) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:-03.03.2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 19 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 03.03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 05.03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05.03.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER