M/S SAMRAT ROLLER FLOUR MILLS LTD., ALWAR V. PRINICIPAL COMMISSIONER OF INCOME TAX, ALWAR

ITA 698/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0114 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Audit objection; Principle of natural justice; Fair market value; Reason to believe; Reassessment proceedings
• Section: 143(3); 133(6); 147; 68; 148; 263

Judgement Text

S VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 698/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S SAMRAT ROLLER FLOUR MILLS LTD., (PRESENTLY NAMED AS DEROAH DEVELOPERS & ASSOCIATES LTD.) 39-E, MIA, ALWAR. CUKE VS. THE PR.CIT, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFCS 2220 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 29/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 10/12/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. PR. CIT, ALWAR DATED 28.03.2018 FOR ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY LD. CIT U/S 263, AT THE INSTANCE OF AUDIT OBJECT ION, WITHOUT FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE AND IGNO RING THAT ON THE ISSUE RAISED BY HIM, THE AO HAS ALREADY MADE DETAIL ED ENQUIRY, IS ILLEGAL & BAD IN LAW. ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 2 2. THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HOL DING THE ORDER PASSED BY AO AS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE ONLY FOR THE REASONS THAT OUT OF 18 INVESTO RS, ASSESSEE HAS NOT FILED THE BANK STATEMENT OF 15 INVESTORS IG NORING THE VARIOUS OTHER EVIDENCES FILED BEFORE THE AO TO PROV E THE CREDITWORTHINESS OF INVESTORS AND GENUINENESS OF TH E TRANSACTION. 2. THE LD. AR SUBMITTED THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.11.2008 DECLARING TOTAL INCOME OF RS. 4,40,81 0/-. A NOTICE U/S 148 OF IT ACT WAS ISSUED ON 05.01.2015. THE REASON RECORDED FOR ISSUANCE OF NOTICE STATES THAT DURING THE COURSE OF PROCEEDINGS U/S 147 OF IT ACT, 1961 FOR THE AY 2009-10, INFORMATION WAS RECEIVED FROM THE DIRECTOR OF INCOME TAX (I&CI), JAIPUR THAT ASSESSEE HAS ISSUED 47,500 EQUITY SHARES OF RS.10/- EACH AT PREMIUM OF RS.170/ - PER SHARE, TOTALING TO RS.85,50,000/- WHICH WAS FOUND UNREASONABLE BY T HE DIRECTORATE. AS PER FORM NO.2 SUBMITTED BY ASSESSEE COMPANY TO ROC, THE DATE OF ALLOTMENT OF SHARE IS 01.10.2007, HENCE THE MATTER RELATES TO AY 2008- 09 AND NOT AY 2009-10. THEREFORE, SHARE PREMIUM OF RS.80,75,000/- AND SHARE CAPITAL OF RS.4,75,000/- HAS ESCAPED ASSE SSMENT WITHIN THE MEANING OF SECTION 147 OF IT ACT, 1961. THEREAFTER , VARIOUS NOTICES WERE ISSUED TO ASSESSEE TO VERIFY THE GENUINENESS O F SHARE CAPITAL IN RESPONSE TO WHICH ASSESSEE FURNISHED VARIOUS DOCUME NTS. NOTICE U/S 133(6) WAS ALSO SENT TO 18 COMPANIES FROM WHOM SHAR E CAPITAL MONEY HAS BEEN RECEIVED. THE AO AFTER CONSIDERING THE SAM E AND MAKING NECESSARY ENQUIRIES FRAMED THE ASSESSMENT U/S 147/ 143(3) ON 30.03.2016 ACCEPTING THE GENUINENESS OF SHARE CAPIT AL RAISED BY THE ASSESSEE. ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 3 3. THE LD. AR FURTHER SUBMITTED THAT AFTER COMPLET ION OF ASSESSMENT, AN AUDIT OBJECTION WAS RAISED ON 30.12. 2016 BY ITO (AUDIT) WHICH WAS SERVED ON THE ASSESSEE ON 20.07.2 017. IN RESPONSE TO SAME, THE ASSESSEE FURNISHED ITS REPLY VIDE LETT ER DT. 28.07.2017. BASED ON THIS REPORT, PCIT INITIATED PROCEEDINGS U/ S 263 VIDE SHOW CAUSE NOTICE DT.27.03.2018 WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DT. 28.03.2018. 4. THE LD. AR FURTHER SUBMITTED THAT IN THE ORDER P ASSED BY LD. CIT U/S 263, IT IS STATED THAT OUT OF 18 COMPANIES, ONL Y 3 INVESTING COMPANIES HAVE PROVIDED THE COPIES OF BANK STATEMEN T NARRATING THE SOURCES OF FUNDS OUT OF WHICH THE INVESTMENT WAS MA DE IN THE ASSESSEE COMPANY. THUS, THE GENUINENESS OF TRANSACTIONS AS W ELL AS THE CREDITWORTHINESS OF THE REMAINING 15 COMPANIES ARE STILL PENDING FOR MAKING NECESSARY VERIFICATION. ACCORDINGLY, AFTER R ELYING ON THE AMENDMENT MADE BY THE FINANCE ACT, 2015 W.E.F. 01.0 6.2015 U/S 263, IT WAS HELD THAT THE ASSESSMENT ORDER PASSED U/S 14 8/ 143(3) IS BASED ON NON-MAKING OF PROPER VERIFICATION/ EXAMINATION O F THE GENUINENESS OF TRANSACTIONS AS WELL AS CREDITWORTHINESS OF THE INVESTING COMPANIES ON THE BASIS OF ANY SUBSTANTIVE EVIDENCES OF THE SO URCE OF THE FUNDS AVAILABLE WITH THEM PROVIDED EITHER BY THE ASSESSEE COMPANY OR BY SUCH COMPANIES. THUS, THE ORDER WAS TREATED TO BE E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND SET ASIDE TO THE AO FOR FRESH ASSESSMENT AFTER PROPER ENQUIRY. 5. THE LD. AR FURTHER SUBMITTED THAT FROM THE FACTS STATED ABOVE, IT CAN BE NOTED THAT AO HAS MADE DETAILED ENQUIRY TO V ERIFY THE ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 4 GENUINENESS OF SHARE CAPITAL MONEY OF RS. 85,50,000 /- RECEIVED BY THE ASSESSEE. IN THE NOTICE DT. 01.03.2016 ISSUED BY AO , IT WAS STATED THAT IN ORDER TO VERIFY THE GENUINENESS OF TRANSACTION, NOTICE U/S 133(6) WAS SENT TO 18 COMPANIES OUT OF WHICH NOTICE TO 8 COMPA NIES REMAINED UNSERVED. OUT OF REMAINING 10 COMPANIES TO WHOM NOT ICE WAS SERVED, ONLY 4 COMPANIES HAVE REPLIED. THEREAFTER, ASSESSEE WAS REQUIRED TO FURNISH NECESSARY DOCUMENT EVIDENCE TO ESTABLISH TH E IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTING PARTIES WHO HAVE CONTRIBUTED TO SHARE CAPITAL/ SHARE PREMIUM DURING THE YEAR UNDER CONSIDERATION AND TO FURNISH THE BASIS OF VALUATION / WORKING OF THE SHARE PRICE AND SHARE PREMIUM RATES AT WHICH SUCH SUBSCRI PTION WERE RECEIVED BY THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSES SEE VIDE LETTER DT. 09.03.2016 SUBMITTED THAT IT HAS PROVIDED ALL THE D OCUMENTS LIKE SHARE APPLICATION FORM, COMPANY MASTER DATA AS PER OFFICI AL WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, ITR/ COPY OF PAN CAR D/BANK STATEMENTS ON 07.01.2016. ALL THE COMPANIES ARE HAVING PAN AND RE GISTERED UNDER THE COMPANIES ACT HAVING CIN. PERUSAL OF COMPANY MASTER DATA DOWNLOADED FROM OFFICIAL WEBSITE OF MCA SHOWS THAT STATUS OF COMPANY IS ACTIVE OR IN ONE OR TWO CASES THE COMPANY IS AMA LGAMATED IN ANOTHER COMPANY. WITH REGARD TO GENUINENESS OF TRANSACTION, IT WAS SUBMITTED THAT ALL THE TRANSACTIONS ARE ROUTED THROUGH BANKIN G CHANNELS AND DETAILS OF CHEQUE NO., CHEQUE DATE, NAME OF BANK IS MENTIONED ON THE SHARE APPLICATION FORM. ALL THE CHEQUES ARE CLEARED IN THE BANK ACCOUNT OF THE COMPANY AND SAME ARE REFLECTED IN THE BANK S TATEMENT. CREDITWORTHINESS OF THE COMPANY IS PROVED FROM THE BALANCE SHEET DOWNLOADED FROM MCA WEBSITE WHICH SHOWS THAT THESE COMPANIES ARE HAVING HUGE AMOUNT OF SHARE CAPITAL AND RESERVE & S URPLUS AND HUGE ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 5 AMOUNT OF INVESTMENT IN SHARES. THE AO AFTER CONSID ERING THE SAME AND MAKING NECESSARY ENQUIRIES AFTER RECEIPT OF REPLY B Y THESE COMPANIES IN RESPONSE TO NOTICE U/S 133(6), FRAMED THE ASSESSMEN T U/S 147/ 143(3) ON 30.03.2016 ACCEPTING THE GENUINENESS OF SHARE CA PITAL RAISED BY THE ASSESSEE. THEREFORE, THE ORDER PASSED BY AO BY NO S TRETCH OF IMAGINATION CAN BE CONSIDERED AS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF REVENUE. IN SUPPORT, RELIANCE WAS PLACE D ON THE DECISION IN CASE OF HONDA MOTORCYCLE & SCOOTERS INDIA PVT. LTD. VS. PCIT (2018) 53 CCH 0241 (TRIB) (DEL) AND GE CAPITAL SERVICES INDIA VS. ACIT (2018) 52 CCH 0372 (TRIB) (DEL). 6. THE LD. AR FURTHER SUBMITTED THAT AFTER COMPLETI ON OF ASSESSMENT, AN AUDIT OBJECTION WAS RAISED ON 30.12.2016 AND AS SESSEE WAS ASKED BY THE AO TO MEET WITH THE AUDIT OBJECTION. IN THE AUDIT OBJECTION IT IS STATED THAT ASSESSEE HAS THWARTED THE AOS QUERY BY SAYING THAT CONCEPT OF FMV OF THE SHARES DOES NOT APPLY TO AY 2 008-09 AND THOUGH EACH OF THE 18 INVESTING COMPANIES HAVE RESPONDED T O NOTICE U/S 133(6) BUT THEY HAVE NOT PROVIDED THE BANK STATEMEN T OR OTHER RECORDS STATING THAT THE SAME IS TIME BARRED AND THEY HAVE DESTROYED THE RECORD AND THEREFORE, ASSESSMENT WAS COMPLETED WITHOUT VER IFICATION. AGAINST THIS OBJECTION, THE ASSESSEE HAS FILED THE REPLY DT . 28.07.2017 IN WHICH ALL THE OBJECTION OF THE AUDIT HAS BEEN EXPLAINED. ALL THESE FACTS SHOWS THAT DETAILED ENQUIRIES WERE MADE BY THE AO AS HAS BEEN STATED IN THE AUDIT OBJECTION ITSELF AND THEREFORE, IT CANNOT BE SAID THAT ASSESSMENT ORDER IS PASSED BY THE AO WITHOUT MAKING PROPER ENQ UIRY. THUS, ONLY ON THE BASIS OF AUDIT OBJECTION, SECTION 263 CANNOT BE INVOKED AS HELD IN THE CASES OF CIT VS. SOHANA WOOLLEN MILLS (2007) 29 6 ITR 238 (P&H) ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 6 (HC), SARLABENBHANSALI CHARITIES TRUST VS. CIT(E) ( 2017) 51 CCH 464 (KOL.) (TRIB.), SURINDER KUMAR JAIN VS. ITO (2016) 48 CCH 158 (DEL.) (TRIB.), DASHMESH MOTORS MUKTSARVS. PCIT (2016) 47 CCH 506 (ASR.) (TRIB.) AND JASWINDER SINGH VS. CIT (2012) 150 TTJ 33 (CHD.) (TRIB.) 7. THE LD. AR FURTHER SUBMITTED THAT IT MAY BE NOTE D THAT THE LD. CIT AFTER CONSIDERING THE FACT ON RECORD HAS ACCEPT ED THE INVESTMENT MADE BY THE THREE COMPANIES WHO HAVE PROVIDED THE B ANK STATEMENT BUT DOUBTED THE INVESTMENT MADE BY THE REMAINING 15 COMPANIES WHERE BANK STATEMENT IS NOT AVAILABLE AND THESE COM PANIES IN RESPONSE TO NOTICE U/S 133(6) HAS SHOWN THEIR INABILITY TO F URNISH THE SAME AS THE SAME IS NOT AVAILABLE WITH THEM THOUGH ALL OTHER EV IDENCES IN SUPPORT OF INVESTMENT HAS BEEN FILED. THUS, ONLY BECAUSE THE B ANK STATEMENT OF THESE 15 COMPANIES IS NOT FURNISHED CANNOT LEAD TO A CONCLUSION THAT AO HAS NOT MADE PROPER ENQUIRY WHEN ALL OTHER EVIDE NCES IN SUPPORT OF THE INVESTMENT MADE BY THESE COMPANIES ARE CALLED F OR AND EXAMINED BY THE AO BEFORE ACCEPTING THE GENUINENESS OF THE T RANSACTION. EVEN AFTER INSERTION OF EXPLANATION 2 TO SECTION 263 W.E .F 01.06.2015, THE REVISIONARY POWERS U/S 263 CANNOT BE EXERCISED ONLY TO FIND FAULT IN THE ASSESSMENT ORDER OR TO MAKE MORE ENQUIRY AS PERCEIV ED BY HIM. IN THIS CONNECTION RELIANCE IS PLACED ON THE DECISION IN CA SE OF TORRENT PHARMACEUTICALS LTD. VS. DCIT ITA NO.164/AHD/2018 O RDER DT.08.08.2018 (AHD.)(TRIB.) AND AMIRA PURE FOODS PV T. LTD. VS. PCIT (2017) 51 CCH 473 (DEL.) (TRIB.). ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 7 8. PER CONTRA, THE LD. DR VEHEMENTLY ARGUED THE MAT TER AND RELIED ON THE ORDER OF THE LD. CIT. OUR ATTENTION WAS DRA WN TO THE FOLLOWING FINDINGS OF THE LD. CIT WHICH ARE REPRODUCED AS UND ER:- ON CONSIDERING THE REPLY FILED BY THE AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE COMPANY AND THE INFORMATION/PAPERS/DOC UMENTS AVAILABLE ON THE RECORD, REVEAL THAT THE MAIN ISSUE INVOLVED IN THE CASE IS THAT DURING THE YEAR, 47500 EQUITY SHARES O F RS.10/- EACH WERE ISSUED BY THE ASSESSEE COMPANY AT A PREMIUM OF RS.170/- PER SHARE, TOTAL AMOUNTING TO RS.85,50,000/- (47500 X 1 80/-). THEREFORE, UNDER SECTION 68 OF THE INCOME TAX ACT, THE ASSESSEE COMPANY REQUIRES TO EXPLAIN THE NATURE AND SOURCE O F CREDIT ENTRIES. IN THIS CONNECTION, A CHART PROVIDED BY THE AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE COMPANY HAS BEEN PLA CED ON THE RECORD CONTAINING THE LIST OF THE 18 COMPANIES TO W HOM THE EQUITY SHARES WERE ALLOTTED DURING THE YEAR. THE LIST CONT AINS THE DETAILS OF THE NUMBERS OF THE EQUITY SHARES ALLOTTED TO EACH, THEIR PANS OR THE COPIES OF THEIR EARLIER YEAR ITRS FILED AND THE AVA ILABILITY OF SUCH COMPANY'S MASTER DATA, SHARE APPLICATION FORM & BAL ANCE SHEET. FURTHER, THE CONFIRMATION OF HAVING BEEN INVESTED I N THE EQUITY SHARES OF THE ASSESSEE COMPANY BY THOSE COMPANIES D ETAILS OF SUCH COMPANIES HAVING BEEN PROVIDED THEIR CONFIRMATIONS WITH COPIES OF THEIR ACCOUNTS, COPIES OR THEIR ITRS FILED & THEIR BANK STATEMENTS. IN THE CONFIRMATION GIVEN BY ALL THESE COMPANIES, T HE INVESTMENT MADE BY SUCH COMPANIES IN THE EQUITY SHARES OF THE ASSESSEE COMPANY ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 8 HAVE BEEN DULY ACCEPTED AND PAYMENTS MADE IN THIS R EGARD HAVE BEEN MENTIONED THROUGH CHEQUES WITH DATES. THE CONFIRMAT IONS RECEIVED FROM SUCH COMPANIES HAVE ALSO BEEN ATTACHED WITH TH E COPIES OF BALANCE SHEETS AS DOWNLOADED FROM THE OFFICIAL WEBS ITE OF MINISTRY OF CORPORATE AFFAIRS (MCA) AND MADE A SUBMISSION THAT THE INVESTMENT IN SHARE REFLECTED IN THE BALANCE SHEET UNDER THE 'INV ESTMENT' WHICH INCLUDES INVESTMENT IN THIS COMPANY ALSO. HOWEVER, AS REGARD TO THE REQUIREMENTS FROM SUCH COMPANIES IN RESPECT OF PROV IDING THE BANK STATEMENTS WITH SOURCE OF THIS INVESTMENT MADE, ONL Y 3 COMPANIES HAVE PROVIDED THE SAME. THE REMAINING 15 COMPANIES IN IT S CONFIRMATION FURNISHED HAVE INFORMED THAT THEY ARE NOT HAVING AN Y RECORD LIKE BANK STATEMENT ETC. AS THE SAME IS TIME BARRED AS PER TH E INCOME TAX ACT AND THEY HAVE DISPOSED OFF THE RECORDS RELATING TO FY 2007-08. THUS, FROM THE ABOVE DISCUSSION MADE ON THE ISSUE , IT CLEARS THAT FROM PROVIDING OF THE PANS OR COPIES OF EARLIER YEA RS ITR FILED AND THE DETAILS OF PAYMENT MADE THROUGH CHEQUES, ONLY PROVE S THE IDENTITIES OF SUCH COMPANIES. HOWEVER, THE GENUINEN ESS OF THE TRANSACTIONS AS WELL AS CREDITWORTHINESS OF THE COM PANIES HAVING BEEN INVESTED IN THE EQUITY SHARES OF THE ASSESSEE COMPA NY VERIFY ONLY IN THE CASES OF 3 INVESTING COMPANIES WHICH HAVE ALSO PROV IDED COPIES OF ITS BANK STATEMENTS NARRATING THE SOURCES OF FUNDS OUT OF WHICH THE INVESTMENT MADE IN THE ASSESSEE COMPANY. THUS, THE GENUINENESS OF TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE REMAINING 15 COMPANIES WHICH HAVE ALSO BEEN CLAIMED TO BE INVEST ED IN THE EQUITY SHARES OF THE ASSESSEE COMPANY ARE STILL PENDING FO R MAKING NECESSARY VERIFICATION IN THIS CASE. ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 9 THUS, FROM THE ABOVE DISCUSSION MADE, I HOLD THAT THE ASSESSMENT ORDER U/S 148/143(3) PASSED BY THE ASSES SING OFFICER ON 30.03.2016 IS BASED ON NON MAKING PROPER VERIFICATI ON/EXAMINATION OF THE GENUINENESS OF TRANSACTIONS AS WELL AS CREDITWO RTHINESS OF THE INVESTING COMPANIES ON THE BASIS OF ANY SUBSTANTIVE EVIDENCES OF THE SOURCE OF THE FUNDS AVAILABLE WITH THEM PROVIDED EI THER BY THE ASSESSEE COMPANY OR BY SUCH COMPANIES, ACCORDINGLY, THE ASSE SSMENT MADE BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS IS PR EJUDICIAL TO INTERESTS OF THE REVENUE. 6. IN VIEW OF THE DISCUSSION MADE ABOVE AND AFTER CONSIDERING THE REPLY OF THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE COMPANY, I AM OF THE OPINION THAT THE ASSESSMENT ORDER U/S 148/14 3(3) PASSED BY THE ASSESSING OFFICER ON 30.03.2016 IS BASED ON NON MAKING PROPER VERIFICATION/EXAMINATION OF THE GENUINENESS OF TRAN SACTIONS AS WELL AS CREDITWORTHINESS OF THE INVESTING COMPANIES ON THE BASIS OF ANY SUBSTANTIVE EVIDENCES OF THE SOURCE OF THE FUNDS AV AILABLE WITH THEM PROVIDED EITHER BY THE ASSESSEE COMPANY OR BY SUCH COMPANIES. THUS, THE ORDER IS TREATED TO BE ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. I, THEREFORE, CANCE L THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 148/143(3 ) ON 30.03.2016 WITH THE DIRECTION TO THE ASSESSING OFFICER TO PASS THE ASSESSMENT ORDER AFRESH AFTER CONSIDERING THE ABOVE MENTIONED ISSUE(S), APART FROM OTHER ISSUE(S) DISCUSSED IN THE ASSESSMENT ORD ER U/S 148/143(3) DATED 30.03.2016 AND ALSO THE ISSUE(S) WHICH MAY SU BSEQUENTLY COME INTO THE NOTICE OF ASSESSING OFFICER, DURING T HE ASSESSMENT PROCEEDINGS U/S 148/143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961. ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 10 CONSEQUENTLY, THE ORDER PASSED U/S 148/143(3) OF TH E INCOME TAX ACT DATED 30.03.2016 IS SET-ASIDE UNDER SECTION 263 OF THE INCOME TAX ACT WITH THE DIRECTION THAT THE ASSESSING OFFIC ER SHOULD PROPERLY EXAMINE THE ISSUE(S) RAISED IN THE FOREGOING PARAS AND PASS THE ASSESSMENT ORDER AFRESH AFTER MAKING PROPER ENQUIRI ES AND AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE COMP ANY. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A CASE WHERE THE ASSESSM ENT PROCEEDINGS WERE REOPENED BY ISSUANCE OF NOTICE U/S 148 AS THE AO HAD A REASON TO BELIEVE THAT SHARE PREMIUM OF RS 80,75,000 AND SHAR E CAPITAL OF RS 4,75,000 HAS ESCAPED ASSESSMENT WITHIN THE MEANI NG OF SECTION 147 OF THE ACT. IN OTHER WORDS, THE ISSUANCE OF SHARE C APITAL AND THAT TOO, AT A PREMIUM WAS THE PRECISE REASON FOR REOPENING THE ASSESSMENT PROCEEDINGS. IN THAT FACTUAL AND LEGAL BACKGROUND, IT WAS INCUMBENT ON THE AO TO VERIFY THE IDENTITY AND CREDITWORTHINESS OF THE SHARE HOLDERS WHO HAVE INVESTED IN THE SHARE CAPITAL OF THE ASSES SEE COMPANY AND THE GENUINENESS OF THE SHARE TRANSACTION IN TERMS O F FAIR MARKET VALUE AND ISSUANCE OF SHARES AT A PREMIUM. 10. NOW, LETS EXAMINE WHAT THE AO HAS DONE TO VERI FY THESE TRANSACTIONS. HE HAS ISSUED NOTICES U/S 133(6) TO THESE 18 COMPANIES AND THEREAFTER, ASKED THE ASSESSEE VIDE LETTER DATE D 1.3.2016 TO FURNISH NECESSARY DOCUMENTS TO ESTABLISH THE IDENTITY, GENU INENESS AND CREDITWORTHINESS OF THE TRANSACTING PARTIES WHO HAV E CONTRIBUTED TO SHARE CAPITAL/ SHARE PREMIUM DURING THE YEAR UNDER CONSIDERATION AND TO FURNISH THE BASIS OF VALUATION/ WORKING OF THE S HARE PRICE AND SHARE ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 11 PREMIUM RATES AT WHICH SUCH SUBSCRIPTION WERE RECEI VED BY THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE VID E LETTER DT. 09.03.2016 SUBMITTED THAT IT HAS PROVIDED ALL THE D OCUMENTS LIKE SHARE APPLICATION FORM, COMPANY MASTER DATA AS PER OFFICI AL WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, ITR/ COPY OF PAN CAR D/BANK STATEMENTS ON 07.01.2016. IT WAS FURTHER SUBMITTED THAT ALL THE COMPANIES ARE HAVING PAN AND REGISTERED UNDER THE COMPANIES ACT HAVING C IN, ALL THE TRANSACTIONS ARE ROUTED THROUGH BANKING CHANNELS AN D CREDITWORTHINESS OF THE COMPANIES ARE PROVED FROM THE BALANCE SHEET DOWNLOADED FROM MCA WEBSITE WHICH SHOWS THAT THESE COMPANIES ARE HA VING HUGE AMOUNT OF SHARE CAPITAL AND RESERVE & SURPLUS AND H UGE AMOUNT OF INVESTMENT IN SHARES. 11. THE AO THEREAFTER PASSED THE ASSESSMENT ORDER O N 30.03.2016 U/S 147 R/W 143(3) ON 30.03.2016 STATING THAT IN T HE ASSESSMENT PROCEEDINGS, THE REASONS RECORDED HAVE BEEN DISCUSS ED IN DETAIL, THE LD AR ATTENDED THE PROCEEDINGS AND SUBMITTED THE DETAI LS WHICH HAVE BEEN EXAMINED AND PLACED ON FILE. 12. IT IS THEREFORE NOT A CASE WHERE THE ENQUIRIES /VERIFICATION HAVE NOT BEEN CARRIED OUT BY THE AO. AT THE SAME TIME, WE FIND THAT THE AO HAS TAKEN THE SUBMISSIONS AND DOCUMENTATION IN SUPP ORT THEREOF ON FACE VALUE AND HAS NOT CARRIED OUT ADEQUATE ENQUIRY AND HAS COMPLETED THE REASSESSMENT PROCEEDINGS IN A SUMMARILY MANNER AND IN THAT SENSE, ERRONEOUS. IT IS A CASE WHERE THE ISSUANCE OF SHARE CAPITAL AT A PREMIUM WAS THE PRECISE REASON FOR REOPENING THE AS SESSMENT PROCEEDINGS. IN OTHER WORDS, WHERE THE AO HAS THE R EASONS TO BELIEVE ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 12 THAT INCOME HAS ESCAPED ASSESSMENT AT THE START OF THE REASSESSMENT PROCEEDINGS, IN ORDER TO DISLODGE HIS OWN SELF- BEL IEF, TO OUR MIND, THE AO SHOULD HAVE CARRIED OUT REQUISITE ENQUIRY AND VE RIFICATION AS WARRANTED IN SUCH CIRCUMSTANCES AND THEREAFTER, HE SHOULD HAVE REACHED THE NECESSARY CONCLUSION. IT IS NOT A QUEST ION OF DETERMINING THE NATURE AND EXTENT OF INVESTIGATION THAT THE AO SHOULD CARRY OUT IN THE PRESENT CIRCUMSTANCES, RATHER IT IS A CASE WHER E A PERSON OF REASONABLE INTELLECT AND UNDERSTANDING OF TAX LAWS AND PROCEDURES WILL CARRY OUT THE REQUISITE ENQUIRY AS WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 13. AS WE HAVE NOTED ABOVE, THE AO BESIDES ISSUING NOTICES U/S 133(6) HAS TAKEN THE ASSESSEES SUBMISSIONS ON FACE VALUE WITHOUT CARRYING OUT FURTHER EXAMINATION AND VERIFICATION. THERE IS NO FINDING REGARDING DETERMINATION OF FAIR MARKET VALUE OF SHA RES AND CONSEQUENT DETERMINATION OF SHARE PREMIUM AND THUS THE GENUINE NESS OF THE TRANSACTION WHERE THE SHARES HAVE BEEN ISSUED AT A PREMIUM. THE LD CIT HAS IN FACT EXAMINED THESE DOCUMENTS SO SUBMITT ED BY THE ASSESSEE AND HAS GIVEN A FINDING THAT GENUINENESS O F TRANSACTIONS AND CREDITWORTHINESS OF 15 COMPANIES OUT OF TOTAL 18 CO MPANIES HAVE NOT BEEN EXAMINED AND VERIFIED BY THE AO. IN PARTICULA R, SHE HAS STATED IN HER ORDER THAT WHERE THE BANK STATEMENTS OF THESE 1 5 COMPANIES ARE NOT SUBMITTED DURING THE REASSESSMENT PROCEEDINGS, HOW THE AO HAS ARRIVED AT A CONCLUSION THAT THESE INVESTEE COMPANI ES HAVE THE REQUISITE CREDITWORTHINESS TO SUBSCRIBE TO SHARES AT A PREMIU M AT THE RELEVANT POINT IN TIME WHEN THE INVESTMENT WERE MADE IS NOT EMANATING FROM THE RECORDS. FURTHER, IT IS NOT A CASE WHERE THERE WAS AN AUDIT OBJECTION ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 13 AND A DIFFERENT VIEW SO SUGGESTED BY THE AUDITOR HA S BEEN BLINDLY APPLIED BY THE LD CIT. NO DOUBT, THERE WAS AN AUDI T OBJECTION IN THE PRESENT CASE BUT AT THE SAME TIME, THERE WAS LACK O F ADEQUATE ENQUIRY ON PART OF THE AO AND THE LD CIT HAS GIVEN A SPECIF IC FINDING IN THIS REGARD ON EXAMINATION OF DOCUMENTS SO SUBMITTED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. 14. IN LIGHT OF ABOVE AND IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DONOT SEE ANY INFIRMITY IN THE ORDER O F THE LD CIT EXERCISING HER JURISDICTION UNDER SECTION 263 OF TH E ACT IN HOLDING THE ORDER PASSED UNDER SECTION 147 R/W 143(3) AS ERRONE OUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 15. BEFORE PARTING, WE MAY ADD THAT WE HAVE GONE T HROUGH THE VARIOUS DECISIONS SO RELIED UPON BY THE LD AR IN SU PPORT OF HIS CONTENTIONS. WE HOWEVER FIND THAT THESE DECISIONS HAVE BEEN RENDERED IN THEIR PECULIAR FACTS AND CIRCUMSTANCES OF THE CA SE AND DOESNT SUPPORT THE CASE OF THE ASSESSEE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/12/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 698 /JP/2018 M/S SAMRAT ROLLER FLOUR MILLS LT. VS. PR.CIT 14 FNUKAD@ DATED:- 10/12/2018. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SAMRAT ROLLER FLOUR MILLS LTD., ALWAR. 2. IZR;FKHZ@ THE RESPONDENT- PR.CIT, ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 698/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR