INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO took a plausible view after due enquiry as regards genuineness of transactions of receipt of share capital -

PCIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground of AO not having made enquiry as regards transactions of receipt of share capital from alleged entry operators. Held: Assessee for proving identity of share applicants, furnished name, address, ROC details, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. With regard to creditworthiness of share applicants, those Companies were having capital in several crores of rupees and had the capacity to make the investment in assessee company. These transactions were also duly reflected in balance sheets of the share applicants, so creditworthiness was proved. Third ingredient was genuineness of the transactions, for which it was apparent that monies had been directly paid to assessee company by account payee cheques out of sufficient bank balances available in their bank accounts on behalf of share applicants. Even source of the source had been brought to the notice of AO. Also, share applicants had furnished confirmation in response to notice under section 133(6). Thus, AO's action in accepting share capital and premium was a plausible view and no addition under section 68 was called for and ,therefore, assessment order could not be held as erroneous and prejudicial.

Supported by: Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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