M/s Sapphire Vanijya Pvt. Ltd., Kolkata V. CIT, KOLKATA-1, Kolkata

ITA 855/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0796 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 142(1); 147; 68; 148; 263

Judgement Text

ITA NO.855/KOL/2015 M/S. SAPPHIRE VANIJYA PVT. LTD. A.Y.2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.855/KOL/2015 ASSESSMENT YEAR : 2008-09 M/S SAPPHIRE VANIJYA PVT.LTD. -VS.- C.I.T. - 1, KOLKATA KOLKATA. [PAN : AALCS 3321 E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : MD. USMAN, CIT(DR) DATE OF HEARING : 05.12.2017. DATE OF PRONOUNCEMENT : 08.12.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11.03.2013 OF CIT- KOL-1, KOLKATA PASSED U/S 263 OF THE INCOME TAX ACT , 1961 (ACT). 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. DURIN G THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09, THE ASSESSEE ISSUED 2,18,000 SHARES O F THE FACE VALUE OF RS.10/- EACH AT A PREMIUM OF RS.190/- PER SHARE. A SUM OF RS.4,36,0 0,000/- WAS RAISED TOWARDS SHARE CAPITAL AND SHARE PREMIUM. THE ASSESSEE FILED RETUR N OF INCOME DECLARING TOTAL INCOME OF RS.1,336/-. A NOTICE U/S 148 OF THE ACT WAS ISSU ED AND AN ORDER U/S 148 R.W.S. 143(3) OF THE ACT DATED 23.12.2010 WAS PASSED. 3. BY THE IMPUGNED ORDER THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT HELD THAT WHILE CONCLUDING THE ASSESSMENT U/S 148 O F THE ACT, THE AO FAILED TO MAKE PROPER ENQUIRIES WITH REGARD TO RECEIPT OF SHARE CA PITAL INCLUDING SHARE PREMIUM BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. BY THE IMPUGNED ORDER THE CIT SET ASIDE THE ORDER OF AO AND DIRECTED THE AO TO MAKE COMPREH ENSIVE AND DETAILED ENQUIRY INTO THE SOURCE OF SUBSCRIPTION OF THE SHARE CAPITAL. ITA NO.855/KOL/2015 M/S. SAPPHIRE VANIJYA PVT. LTD. A.Y.2008-09 2 4. AGGRIEVED BY THE ORDER OF CIT THE ASSESSEE HAS P REFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS RELEVANT TO MENTION THAT WE HAVE DISPOSED OF MORE THAN 500 CASES INVOLVING S AME ISSUE THROUGH CERTAIN ORDERS WITH THE MAIN ORDER HAVING BEEN PASSED IN A GROUP O F CASES LED BY SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (ITA NO.1104/KOL/2014) DATED 30.7.2015 FOR THE A.Y. 2009- 10. 6. WE FIND AS HAS ALSO BEEN ADMITTED BY THE LD. DR AND THE AR THAT FACTS AND CIRCUMSTANCES OF THE CASES UNDER CONSIDERATION ARE MUTATIS MUTANDIS SIMILAR TO THOSE DECIDED EARLIER. IN OUR AFORESAID ORDER IN SUBHLAKSHMI VANIJYA PVT. LTD., VS. CIT (ITA NO. 1104/KOL/2014 A.Y. 2009-10), WE HAVE DRAWN THE FOLLOWING CONCLUSIONS: - A. CONTENTION OF THE ASSESSEE THAT SINCE THE AO OF TH E ASSESSEE-COMPANY WAS NOT EMPOWERED TO EXAMINE OR MAKE ANY ADDITION ON AC COUNT 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 UNSUSTAINABLE. B. FAILURE OF THE AO TO GIVE A LOGICAL CONCLUSION TO THE ENQUIRY CONDUCTED BY HIM GIVES POWER TO THE CIT TO REVISE SUCH ASSESSMEN T ORDER, 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 CONSIDERS FIT IN TERMS OF SECTION 142(1) AND 143(2) OF THE ACT, WHICH IS R ELEVANT 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 EMPOWERED 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 PREMIU M ; AND ITA NO.855/KOL/2015 M/S. SAPPHIRE VANIJYA PVT. LTD. A.Y.2008-09 3 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 PREMISE THAT THE AO DID NOT MAKE ENQUIRY THEREBY RENDERING THE ASSES SMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE 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 OTHERWIS E. FURTHER THE LAW DOES NOT REQUIRE THE SERVICE OF NOTICE U/S 263 STRICTLY AS P ER THE TERMS OF SECTION 282 OF THE ACT. THE ONLY REQUIREMENT ENSHRINED IN THE PROV ISION IS TO GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE, WHICH HAS B EEN COMPLIED WITH IN ALL SUCH 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 DATE OF INTIMATION ISSUED U/S 143(1) OF THE ACT, WHICH IS NOT AN ORDER FOR THE PU RPOSES OF SECTION 263. IN ALL THE CASES, THE ORDERS HAVE BEEN PASSED WITHIN THE T IME LIMIT. E. THE CIT HAVING JURISDICTION OVER THE AO WHO PASSED ORDER U/S 147 READ WITH SECTION 143(3), HAS THE TERRITORIAL JURISDICTI ON TO PASS THE ORDER U/S 263 AND NOT 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 AMALGAM ATION, 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 ASSESSEE 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 ORDER 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. ITA NO.855/KOL/2015 M/S. SAPPHIRE VANIJYA PVT. LTD. A.Y.2008-09 4 7. SOME OR ALL OF THE AFORESAID CONCLUSIONS ARE AP PLICABLE TO THE CASE OF THE ASSESSEE IN THE PRESENT APPEAL ALSO. CONSEQUENTLY T HE GROUNDS OF APPEAL RAISED BY THE ASSESSEE WILL HAVE TO BE DISMISSED AS DEVOID OF MER IT. IT MAY ALSO BE RELEVANT TO POINT OUT THAT THE DECISION OF THE TRIBUNAL IN THE CASE O F SUBHLAKSHMI VANIJYA PVT. LTD VS CIT (SUPRA) WAS THE SUBJECT MATTER OF THE APPEAL BY THE ASSESSEE BEFORE THE HONBLE CALCUTTA HIGH COURT. THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF RAJ MANDIR ESTATES (P)LTD. VS PR.CIT 386 ITR 162 (CAL) WAS PLE ASED TO UPHOLD THE ORDER OF THE TRIBUNAL. AT THE TIME OF HEARING OF THE APPEAL IT W AS ALSO BROUGHT TO OUR NOTICE THAT AS AGAINST THE DECISION OF THE HONBLE CALCUTTA HIGH C OURT AFORESAID SOME OF THE ASSESSEES PREFERRED A PETITION FOR SPECIAL LEAVE TO APPEAL BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT BY ITS ORDER D ATED 29.11.2017 IN SLP(C) NO.27799/2017 AND OTHER CONNECTED SLPS DISMISSED AL L THE SLPS. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERITS IN THIS APPEAL BY T HE ASSESSEE AND ACCORDINGLY THE SAME IS DISMISSED. 8. IN THE RESULT THE APPEAL BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE COUR T ON 08.12.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.V ASUDEVAN ] ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED : 08.12.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. M/S SAPPHIRE VANIJYA PVT. LTD., 36, GANESH CHAND RA AVENUE, 4 TH FLOOR, ROOM NO.4L, KOLKATA-700013. 2. C.I.T.-KOL-1, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE / D.D.O., ITAT KOLKATA BENCHES ITA NO.855/KOL/2015 M/S. SAPPHIRE VANIJYA PVT. LTD. A.Y.2008-09 5