INCOME TAX ACT, 1961

Section 263 Section 14A Section 68

Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry/plausible view -

The issue under consideration was two-fold. Firstly, whether the second Pr. CIT satisfied the statutory conditions-precedent as prescribed in section 263 before invoking the Revisionary Jurisdiction. Secondly, whether the Second Pr. CIT can again interfere in the re-assessment order framed by AO which was pursuant to the first revisional order passed by the First Pr. CIT under section 263, when the subject-matter was the same and the re-assessment order of the second AO had merged with the First Revisional Order of First Pr. CIT. Held: During the second round, the AO issued notices to shareholders under section 133(6) and after perusing their replies and supporting documents and thereafter having verified their veracity, the second AO was satisfied with the explanation of assessee in respect to the nature and source of share capital which view of second AO cannot be faulted. And all the shareholders were regular income-tax assessees. Therefore in the light of the documents discussed by second AO, their identity cannot be disbelieved and the AO's satisfaction in respect of identity of the shareholders was a possible view and cannot be termed as unsustainable. The satisfaction of assessing officer as envisaged in section 68 was a plausible view and the fact that the share subscribers responded to section 133(6) notice and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. The second Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. There was no merit in the vague allegation of second Pr. CIT that the second AO had not collected the full facts necessary to decide the issue of share capital and premium. So, the second AO, is a quasi-judicial authority. Second Pr.CIT, again cannot rake-up the same subject matter without the second Pr. CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the second Pr.CIT has not done. So the second Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Pr.CIT. And if this practice is allowed, then there will be no end to the assessment proceedings, meaning thereby, no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safeguards, restrictions and conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, the Second Pr. CIT without satisfying the condition precedent under section 263 had invoked the revisional jurisdiction (second time), so all his actions were ab initio void.

Malabar Industries Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Kanchan Plywood Products (P) Ltd. v. ITO vide Order, dated 1-5-2019 : 2019 TaxPub(DT) 3200 (Kol-Trib), Dy. CIT v. Alcon Biosciences (P) Ltd., ITA No. 1946/M/2016, Order, dated 28-2-2018 : 2018 TaxPub(DT) 2037 (Mum-Trib), Asstt. CIT-1(1) v. Gagandeep Infrastructure (P) Ltd. Green Infra Limited (2013) 38 Taxmann.com 253 (Mum-Trib) : 2014 TaxPub(DT) 0101 (Mum-Trib), ITA-2270/KOL/2016-Trend Infra Developers (P) Ltd., CIT v. Smt. P. K. Noorjahan (1999) 237 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj-HC) : 2002 TaxPub(DT) 0305 (Guj-HC), Nemi Chand Kothari (2004) 136 Taxman 213 (Gau-HC) : 2003 TaxPub(DT) 1401 (Gau-HC), CIT v. S. Kamaljeet Singh (2005) 147 Taxman 18 (All.) : 2005 TaxPub(DT) 1275 (All-HC), S.K. Bothra & Sons, HUF v. ITO (2012) 347 ITR 347 (Cal-HC) : 2012 TaxPub(DT) 815 (Cal-HC), Crystal Networks (P) Ltd. v. CIT (2013) 353 ITR 171 (Cal) : 2013 TaxPub(DT) 1470 (Cal-HC), CIT v. Dataware Private Ltd. ITAT No. 263 of 2011, dated 21-9-2011 : 2013 TaxPub(DT) 1384 (Cal-HC), Lovely Exports as has been reported as judgment delivered by the (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC), CIT v. Roseberry Mercantile (P) Ltd. ITAT No. 241 of 2010, dated 10-1-2011, CIT v. Nishan Indo Commerce Ltd. dated 2-12-2013 in ITA No. 52 of 2001 : 2014 TaxPub(DT) 1934 (Cal-HC) and CIT v. Leonard Commercial (P) Ltd. on 13-6-2011 ITAT No. 114 of 2011.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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