M/s Neelakantha Commosales Pvt. Ltd., Kolkata V. CIT, KOLKATA-1, Kolkata

ITA 644/KOL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9324 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2015
• Court: TRIBUNAL
• Keywords: Transfer pricing; Period of limitation; Time period of passing order; Revenue expenditure
• Section: 143(3); 142(1); 133(6); 147; 131; 68; 263; 92

Judgement Text

ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHE S : D : KOLKATA BEFORE SHRI P.M.JAGTAP, AM & SHRI N.V. VASUDEVAN, J M ITA NO.644/KOL/2015 ASSESSMENT YEAR: 2009 - 10 M/S. NEELAKANTHA COMMOSALES PVT. LTD. 161, RABINDRA SARANI, 4 TH FLOOR, KOLKATA-700007. REP. BY SHRI S.M.SURANA, ADVOCATE PAN : AADCN 0281 E VS. COMMISSIONER OF INCOME TAX, KOLKATA-I, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. REP. BY SHRI NIRAJ KUMAR, CIT (APPELLANT) (RESPONDENT) DATE OF HEARING : 27.02 .2017. DATE OF PRONOUNCEMENT : 01.03.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.03.2015 OF CIT- KOLKATA-I, KOLKATA PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS A COMPANY. IT CARRIES ON BUSINES S OF TRADING IN SHARES AND DERIVING INCOME FROM RENDERING CONSULTANCY SERVICES. DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2009-10 THE ASSESSEE ISSUED SHARE CAPITAL IN TH E FORM OF 129000 EQUITY SHARES OF THE FACE VALUE OF RS.10/- AT A PREMIUM. THE ASSESSEE RE CEIVED A SUM OF RS.12,90,000/- TOWARDS SHARE CAPITAL AND A SUM OF RS.5,83,10,000/- ON ACCOUNT OF SHARE PREMIUM. 3. THE ASSESSEE FILED RETURN OF INCOME ON 07.09.200 9 DISCLOSING TOTAL INCOME OF RS.790/- FOR A.Y.2009-10. THEREAFTER THE ASSESSEE OFFERED VO LUNTARILY CERTAIN INCOME TO TAX AND BASED ON SUCH DISCLOSURE PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED. IN SUCH PROCEEDINGS THE AO BROUGHT TO TAX CONSULTANCY FEES NOT DISCLOSED OF RS.24,000/- AND ALSO DISALLOWED SHARE ISSUE EXPENSES OF RS.5,000/- WHICH ACCORDING TO THE AO WERE NOT IN ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 2 THE NATURE OF REVENUE EXPENDITURE. CONSEQUENTLY TH E AO PASSED AN ORDER U/S.147 OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT A SUM OF RS.29,790/-. WHILE COMPLETING THE ASSESSMENT THE AO ALSO MADE A PASSIN G REFERENCE TO THE FACT THAT THE ASSESSEE HAS RAISED SHARE CAPITAL DURING THE PREVIO US YEAR BY ISSUE OF SHARES AT A PREMIUM AND ALSO MADE A REFERENCE TO THE FACT THAT NOTICE U /S 133(6) OF THE ACT WERE ISSUED TO THE FRESH SHARE APPLICANTS AND REPLIES WERE VERIFIED. T HERE IS NO OTHER DISCUSSION IN THE ORDER OF ASSESSMENT ABOUT ANY OTHER ASPECT OF THE RECEIPT OF SHARE CAPITAL BY THE ASSESSED DURING THE PREVIOUS YEAR. THE AO PASSED AN ORDER U;/S 143( 3) R.W.S. 147 OF THE ACT ON 07.08.2012. 4. THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE IN AS MUCH AS THE AO DID NOT MAKE A THOROUGH AND PROPE R ENQUIRY WHICH WERE REQUIRED IN THE CASE TO CHECK THE GENUINENESS OF THE TRANSACTIO N OF THE RECEIPT OF SHARE CAPITAL, THE CAPACITY AND IDENTITY OF THE PERSONS WHO WERE INVES TORS IN THE SHARE CAPITAL OF THE ASSESSEE. THE CIT WAS ALSO OF THE VIEW THAT THE AO FAILED TO INFORM THE AO OF THE PERSONS WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE REGARDING THE AMOUNT PAID BY THEM AS CONTRIBUTION TO THE SHARE CAPITAL OF THE ASSESSEE. 5. THE CIT ALSO NOTICED FROM THE COPY OF THE BAN K STATEMENT OF THE ASSESSEE THAT THERE WERE SEVERAL DEBIT AND CREDIT ENTRIES OF SIMILAR FI GURES INVOLVING HUGE TRANSACTIONS DURING DIFFERENT PERIODS. THE ASSESSEE BEING A NEWL Y FORMED COMPANY SCRUTINY IN RESPECT OF THE PECULIAR NATURE OF SUCH BANK TRANSACTIONS WE RE REQUIRED TO BE MADE. HENCE THE CIT WAS OF THE VIEW THAT THOROUGH AND PROPER INQUIRY IN TO THE EXISTENCE, CREDIT-WORTHINESS AND GENUINENESS OF SUBSCRIBERS IN THE CASE AS CLAIMED B Y THE ASSESSEE COMPANY WAS NOT MADE BY THE A.O., NOR THE GENUINENESS OF THE COMPANY AND ITS DIRECTORS WERE EXAMINED. 6. THE CIT ISSUED SHOW CAUSE NOTICE U/S 263 OF T HE ACT. IN REPLY TO THE SHOW CAUSE NOTICE THE ASSESSEE FILED EXPLANATION FOR HUGE SHAR E PREMIUM, DETAILS OF PAYMENTS, SOURCE ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 3 OF FUNDS, COPY OF INCOME TAX RETURNS , BALANCE SHEE T AND BANK STATEMENTS OF THE SHARE HOLDERS ETC. 7. THE CIT AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE WAS OF THE VIEW THAT THE MODUS OPERANDI OF THE INTRODUCTION OF SUCH BOGUS SH ARE CAPITAL AND HUGE PREMIUM WAS SIMILAR AS WAS DONE IN A LARGE NUMBER OF CASES WHIC H WAS CONSIDERED AND DECIDED BY THE HONBLE ITAT KOLKATA BENCH IN THE CASE OF M/S. BIS AKHA SALES PVT. LTD AS BOGUS TRANSACTIONS. THE CIT ALSO CAME TO THE CONCLUSION T HAT THE AO FAILED TO CARRY OUT PROPER VERIFICATION OF THE TRANSACTIONS OF THE SHARE CAPIT AL BY THE ASSESSEE AND FINALLY PASSED AN ORDER DIRECTING THE AO TO MAKE PROPER INQUIRY WITH REGARD TO THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM BY THE ASSESSEE. THE FOLLOWING WE RE THE CONCLUSIONS OF THE CIT IN THIS REGARD :- 16. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE A,O, IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE, THE ORDER PAS SED BY THE A.O. IS SET-ASIDE WITH THE DIRECTION THAT HE/SHE SHOULD PASS THE ASSESSMEN T ORDER AFTER CONDUCTING INDEPENDENT DETAILED AND COMPLETE ENQUIRIES INTO TH E SUBSCRIPTION TO THE SHARE CAPITAL AND PREMIUM TO THE EXTENT OF RS. 5,96,00,000/-.INTR ODUCED IN THIS CASE. THE A.O. SHOULD EXAMINE THE SOURCE OF SHARE CAPITAL BY PROPE R ENQUIRY THROUGH WHICH THE MONEY HAS BEEN INTRODUCED IN THIS COMPANY AS SHARE CAPITAL AND ALSO EXAMINE THE DIRECTORS OF SUBSCRIBER COMPANIES BY ISSUING SUMMON S U/S 131 OF THE I.T. ACT. THE A.O. SHOULD CONDUCT THOROUGH INDEPENDENT ENQUIRIES TO VERIFY THE DOCUMENTS FILED BEFORE HIM IN RESPECT OR PROOF OF SUBSCRIPTION TO S HARE-CAPITAL/SHARE-PREMIUM. THE A.O. SHOULD PASS SPEAKING ORDER AFTER PROVIDING RE ASONABLE OPPORTUNITY TO THE ASSESSEE AND VERIFYING THE SOURCE OF SHARE CAPITAL INCLUDING THE SHARE PREMIUM OF ALL THE SUBSCRIBERS SO AS TO ASCERTAIN THE TRUE NATUR E OF TRANSACTIONS WHICH WILL BRING TO THE FORE THE REALITY OF TRANSACTIONS, AND TAX ACCOR DINGLY. 8. AGGRIEVED BY THE ORDER OF CIT THE ASSESSEE HA S PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING IT WAS SUBMITT ED BY THE LD. DR THAT THE CASE OF THE ASSESSEE IS SIMILAR TO THE CASE OF SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (ITA NO.1104/KOL/2014) DATED 30.7.2015 FOR THE A.Y. 2009-10 AND THE VARIOU S ASPECTS CONSIDERED AND DECIDED BY THE TRIBUNAL ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE FOLLOWING ARE THE FINDINGS OF THE HONBLE TRIBUNAL IN THE CASE OF SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (SUPRA) ON RECEIPT OF SHARE CAPITAL BY SEVERAL ASSE SSES WHOSE ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 4 MODUS OPERANDI AND THE FACTS AND CIRCUMSTANCES UNDE R WHICH ORDER U/S 147 WAS PASSED AND WAS REVISED BY ORDER U/S 263 OF THE ACT ARE IDE NTICAL: A. CONTENTION OF THE ASSESSEE THAT SINCE THE AO OF TH E ASSESSEE-COMPANY WAS NOT EMPOWERED TO EXAMINE OR MAKE ANY ADDITION ON ACCOUN T OF RECEIPT OF SHARE CAPITAL WITH OR WITHOUT PREMIUM BEFORE AMENDMENT TO SECTION 68 BY THE FINANCE ACT, 2012 W.E.F. A.Y. 2013-14 AND HENCE THE CIT BY MEANS OF IMPUGNED ORDER U/S 263 COULD NOT HAVE DIRECTED THE AO TO DO SO, IS UNSUSTA INABLE. B. FAILURE OF THE AO TO GIVE A LOGICAL CONCLUSION TO THE ENQUIRY CONDUCTED BY HIM GIVES POWER TO THE CIT TO REVISE SUCH ASSESSMENT OR DER, BY HOLDING THAT :- I) THE ENQUIRY CONDUCTED BY THE AO IN SUCH CASES CA NT BE CONSTRUED AS A PROPER ENQUIRY; II) CIT U/S 263 CAN SET ASIDE THE ASSESSMENT ORDER AND DIRECT THE AO TO CONDUCT A THOROUGH ENQUIRY, NOTWITHSTANDING THE JUR ISDICTION OF THE AO IN MAKING ENQUIRIES ON THE ISSUES OR MATTERS AS HE CON SIDERS FIT IN TERMS OF SECTION 142(1) AND 143(2) OF THE ACT, WHICH IS RELE VANT ONLY UP TO THE COMPLETION OF ASSESSMENT ; III) INADEQUATE INQUIRY CONDUCTED BY THE AO IN THE GIVEN CIRCUMSTANCES IS AS GOOD AS NO ENQUIRY AND AS SUCH, THE CIT WAS EMP OWERED TO REVISE THE ASSESSMENT ORDER ; IV) THE ORDER OF THE CIT IS NOT BASED ON IRRELEVANT CONSIDERATIONS AND FURTHER IN THE PRESENT CIRCUMSTANCES, HE WAS NOT OB LIGED TO POSITIVELY INDICATE THE DEFICIENCIES IN THE ASSESSMENT ORDER O N MERITS ON THE QUESTION OF ISSUE OF SHARE CAPITAL AT A HUGE PREMIUM ; AND V) THE AO IN THE GIVEN CIRCUMSTANCES CANT BE SAID TO HAVE TAKEN A POSSIBLE VIEW AS THE REVISION IS SOUGHT TO BE DONE ON THE PR EMISE THAT THE AO DID NOT MAKE ENQUIRY THEREBY RENDERING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THAT SCORE ITSELF. C. IN THE GIVEN FACTS AND CIRCUMSTANCES OF ALL SUCH CASES, THE NOTICES U/S 263 WERE PROPERLY SERVED THROUGH AFFIXTURE OR OTHERWISE. FUR THER THE LAW DOES NOT REQUIRE THE SERVICE OF NOTICE U/S 263 STRICTLY AS PER THE T ERMS OF SECTION 282 OF THE ACT. THE ONLY REQUIREMENT ENSHRINED IN THE PROVISION IS TO G IVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE, WHICH HAS BEEN COMPLIED WITH IN ALL S UCH CASES. D. LIMITATION PERIOD FOR PASSING ORDER IS TO BE COUNT ED FROM THE DATE OF PASSING THE ORDER U/S 147 READ WITH SEC. 143(3) AND NOT THE DAT E OF INTIMATION ISSUED U/S 143(1) OF THE ACT, WHICH IS NOT AN ORDER FOR THE PURPOSES OF SECTION 263. IN ALL THE CASES, THE ORDERS HAVE BEEN PASSED WITHIN THE TIME LIMIT. ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 5 E. THE CIT HAVING JURISDICTION OVER THE AO WHO PASSED ORDER U/S 147 READ WITH SECTION 143(3), HAS THE TERRITORIAL JURISDICTION TO PASS THE ORDER U/S 263 ANDNOT OTHER CIT. F. ADDITION IN THE HANDS OF A COMPANY CAN BE MADE U/S 68 IN ITS FIRST YEAR OF INCORPORATION. G. AFTER AMALGAMATION, NO ORDER CAN BE PASSED U/S 263 IN THE NAME OF THE AMALGAMATING COMPANY. BUT, WHERE THE INTENTION OF T HE ASSESSEE IS TO DEFRAUD THE REVENUE BY EITHER FILING RETURNS, AFTER AMALGAMATIO N, IN THE OLD NAME OR OTHERWISE, THEN THE ORDER PASSED IN THE OLD NAME IS VALID. H. ORDER PASSED U/S 263 ON A NON-WORKING DAY DOES NOT BECOME INVALID, WHEN THE PROCEEDINGS INVOLVING THE PARTICIPATION OF THE ASSE SSEE WERE COMPLETED ON AN EARLIER WORKING DAY. I. ORDER U/S 263 CANNOT BE DECLARED AS A NULLITY FOR THE NOTICE HAVING NOT BEEN SIGNED BY THE CIT, WHEN OPPORTUNITY OF HEARING WAS OTHERWISE GIVEN BY THE CIT. J. REFUSAL BY THE REVENUE TO ACCEPT THE WRITTEN SUBMIS SIONS OF THE ASSESSEE SENT AFTER THE CONCLUSION OF HEARING CANNOT RENDER THE O RDER VOID AB INITIO . AT ANY RATE, IT IS AN IRREGULARITY. K. SEARCH PROCEEDINGS DO NOT DEBAR THE CIT FROM REVI SING ORDER U/S PASSED U/S 147 OF THE ACT. 9. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER SUB MITTED THAT THE FACTS OF THE ASSESSEES CASE STOOD ON A DIFFERENT FOOTING FROM THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE CASE OF SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (SUPRA). IN THIS REGARD HE BROUGHT TO OUR NOTICE THAT SHARE CAPITAL AND SHARE PREMIUM WAS REC EIVED BY THE ASSESSEE WAS FROM SIX DIFFERENT PERSONS AS FOLLOWS :- NAME OF APPLICANT ADDRESS PAN NO.OF SHARES APPLIE D FOR NO.OF SHARES ALLOTTED TOTAL FACE VALUE TOTAL PREMIUM RECEIVED TOTAL AMOUNT RECEIVED GOODHOPE VANIJYA PVT., LTD. 16, MANGOE LANE, KOLKATA- 700001 AADCG3758 P 20000 20000 200,000.00 9800000 10,000,000.00 LIPI FINSTOCK LIMITED P-41, PRINCEP STREET, 6 TH FLOOR,KOLKATA -700072 AAACL2220 N 20000 20000 200,000.00 9800000 10,000,000.00 SHARMA GANDHI HIRE PURCHASE JALAN COMPLEX, GATE NO.3, AANCS9614 A 20000 20000 200,000.00 9800000 10,000,000.00 ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 6 LIMITED NEAR BHAGWATI KANTA, P.O.BEGRI, JANGALPUR, HOWRA- 711411 SHIVSHAKTI COMMUNICATIO N & INVESTMENT PVT.LTD. ROOM NO.602, 6 TH FLOOR, 4 FARILIE PLACE, KOLKATA- 700001 AAFCS0279P 12000 12000 120,000.00 5880000 6,000,000 .00 SHOBHA INVESTMENT PVT. LTD. MARTIN BURN HOUSE, 1, R.N.MUKHERJE E ROAD, 4 TH FLOOR, ROOM NO-43, KOLKATA- 700001. AANCS6578 F 20000 20000 200,000.00 9800000 10,000,000.00 SHREYANS FINLEASE PVT. LTD. HOUSE NO.220,STREEE T NO.9, CHANDAN VIHAR, WEST SANT NAGAR, BURARI DELHI NORTH DELHI 110084 AABCS3447 F 27000 27000 270,000.00 13230000 13,500,000.00 TOTAL 11900 0 119,00 0 1,190,000.0 0 58,310,00 0.00 59,500,000.00 10. HE DREW OUR ATTENTION TO THE ORDER OF CIT U/ S 263 OF THE ACT AND POINTED OUT THAT THE CIT HAS PRESUMED THAT THERE WERE NINE SHARE HOLDERS AND THE AO ISSUED NOTICES U/S 133(6) OF THE ACT ONLY TO SIX OUT OF THE NINE SHARE HOLDERS. HE POINTED OUT THAT THE AO HAD ISSUED NOTICES TO ALL THE SIX SHARE HOLDERS. TH ESE SHARE HOLDERS HAD FILED REPLY TO THE NOTICES ISSUED U/S 133(6) OF THE ACT ISSUED BY THE AO IN THE COURSE OF THE PROCEEDINGS U/S 147 OF THE ACT. THESE REPLIES ARE PLACED AT PAGES 2 9 TO 34 OF THE ASSESSEES PAPER BOOK. HE ALSO POINTED OUT THAT THE CIT IN THE IMPUGNED OR DER HAS ALSO OBSERVED THAT THE AO HAS FAILED TO SEND ANY INTIMATION TO THE PERSONS OF THE AO WHO HAS SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE. IN THIS REGARD HE POINTED OUT THAT IN THE CASE OF ALL THE SIX SHARE APPLICANTS WHO CONTRIBUTED TO THE CAPITAL OF THE AS SESSEE COMPANY, PROCEEDINGS U/S 263 OF THE ACT HAD BEEN INITIATED BY THE CIT ON THE GROUND THAT THE AO IN THEIR CASES HAD NOT ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 7 PROPERLY INVESTIGATED RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM BY THEM. HE ALSO BROUGHT TO OUR NOTICE THE FACT THAT THESE PROCEEDI NGS WERE DROPPED BY CIT. COPIES OF THE RELEVANT SHOW CAUSE NOTICE U/S 263 OF THE ACT AND T HE ORDER DROPPING THE PROCEEDINGS U/S 263 OF THE ACT IN THE CASE OF THE SIX SHARE APPLICA NTS ARE PLACED AT PAGES 186 TO 195 OF THE ASSESSEES PAPER BOOK. IT WAS SUBMITTED BY HIM THAT THE IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS STOOD ESTABLISHED BY REASON OF THE CIT DROPPING PROCEEDINGS U/S.263 OF THE ACT AGAINST THE SHARE APPLICANTS WHO SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY HIM THAT THE ALLEGATION TH AT THE DIRECTORS OF THE ASSESSEE SHOULD HAVE BEEN EXAMINED WAS NOT A REQUIREMENT CONTEMPLAT ED IN LAW AND SUCH OBSERVATIONS OF THE CIT IN THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT ARE UNSUSTAINABLE. IT WAS ALSO SUBMITTED BY HIM THAT THE RECEIPT OF SHARE PREMIUM IS A CAPITAL ITEM AND NOT IN THE NATURE OF INCOME AND IN THIS REGARD HE PLACED RELIANCE ON THE CBDT INSTRUCTION NO.2 OF 2015 DATED 29.01.2015. IT WAS ALSO SUBMITTED THAT THE IM PUGNED ORDER OF THE CIT MERELY STATES THAT ORDER OF THE AO IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND NOWHERE IT HAS BEEN MENTIONED THAT ORDER OF THE AO IS ERRONEOUS. ACCORD ING TO HIM THEREFORE THE CONDITION PRECEDENT FOR EXERCISING OF POWERS U/S 263 OF THE A CT DOES NOT EXIST. 11. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION T O THE RIVAL SUBMISSIONS. FROM A READING OF THE ENTIRE OF THE CIT IT IS CLEAR THAT THE MAIN PLANK OF THE CASE OF CIT IS THAT MERE SENDING NOTICES U/S 133(6) OF THE ACT TO THE VARIOU S SHARE APPLICANTS AND GETTING THEIR REPLIES WAS NOT SUFFICIENT, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, NAMELY THE RECEIPT OF HUGE PREMIUM BY A COMPANY WHICH WAS A NE WLY FORMED COMPANY. IT IS FOR THIS REASON OF LACK OF PROPER INQUIRY THAT PROCEEDINGS U /S 263 OF THE ACT HAD BEEN INVOKED BY THE CIT. THE ABSENCE OF THE WORD ERRONEOUS ORDER IS NOT VERY FATAL AS READING OF THE ENTIRE ORDER OF THE CIT WOULD GO TO SHOW THAT HE W AS OF THE VIEW THAT ORDER OF THE AO WAS ERRONEOUS BECAUSE THE AO FAILED TO MAKE PROPER ENQUIRIES WHICH WERE WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. APART FRO M THE ABOVE, WE ALSO FIND FROM PARA-16 OF THE IMPUGNED ORDER THAT THE CIT HAS CLEARLY OBSE RVED THAT ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 8 12. THE REFERENCE IN THE IMPUGNED ORDER REGARDING EXISTENCE OF NINE SHARE HOLDERS WHEN IN FACT THERE ARE ONLY SIX SHARE HOLDERS, IN OUR VI EW IS NOT VERY MATERIAL. WHAT IS MATERIAL IS THE QUALITY OF ENQUIRY THAT WAS MADE BY THE AO. THIS ENQUIRY WAS NOT PROPER AND HAD NOT BEEN CARRIED TO ITS LOGICAL CONCLUSION. THE FAC T THAT PROCEEDINGS INITIATED IN THE CASE OF THE SHARE APPLICANTS U/S 263 OF THE ACT WERE DROPPE D IS NOT VERY MATERIAL AND THAT FACT IPSO FACTO CANNOT BE THE BASIS TO CONCLUDE THAT PRO CEEDINGS U/S 263 OUGHT NOT TO HAVE BEEN INVOKED BY THE CIT IN THE CASE OF THE CASE OF THE A SSESSEE. REFERENCE MADE BY THE LD. COUNSEL FOR THE ASSESSEE TO INSTRUCTION NO.2 OF 201 5 OF CBDT DATED 29.01.2015 IS THOROUGHLY MISPLACED AS THOSE INSTRUCTIONS OF CBDT WAS GIVEN IN THE CONTEXT OF TRANSFER PRICING PROVISIONS U/S 92 OF THE ACT AND HAS NO REL EVANCE TO THE PRESENT CASE. WE ARE OF THE VIEW THAT CONCLUSIONS DRAWN BY ITAT, KOLKATA IN THE CASE OF SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT(SUPRA) WHICH HAVE BEEN REFERRED TO IN THE EARLIER PART OF THIS ORDER CLEARLY SUPPORTS CASE OF THE REVENUE. WE THEREFORE HOLD THAT JURISDICTION U/S 263 OF THE ACT WAS PROPERLY EXERCISED BY THE CIT AND HIS ACTIO N DOES NOT CALL FOR ANY INTERFERENCE. CONSEQUENTLY THIS APPEAL BY THE ASSESSEE IS DISMISS ED. 12. IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 01.03.20 17. S D / - S D / - [P.M.JAGTAP] ACCOUNTANT MEMBER [N.V.VASUDEVAN] JUDICIAL MEMBER DATED : 01.03.2017. RG.PS COPY FORWARDED TO: APPELLANT RESPONDENT CIT CIT (A) DR, ITAT AR, ITAT, KOLKATA ITA NO.644/KOL/2015-M/S. NEELAKANTHA COMMOSALES PVT. LTD. A.Y.2009-10 9 .