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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. N. K. ChoudhryDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. PCIT, Faridabad dated 23.03.2022.
2. Following grounds have been raised by the assessee:
“1. On the facts and circumstances of the case, the order passed by the learned Pr. Commissioner of Income Tax (CIT) under Section 263 of the Act is bad, both in the eye of law and on facts.
On the facts and circumstances of the case, the order passed by the learned Pr. CIT assuming jurisdiction under section 263 is bad in law in the absence of twin conditions of the order passed by the A.O. being erroneous as well as prejudicial to the interest of the Revenue having been satisfied.
2 Ravindera Hire Purchase & Finance Pvt. Ltd. 3(i). On the facts and circumstances of the case, the learned Pr.CIT has erred both on facts and in law in ignoring the fact that the issues raised by him in notice under Section 263 werebefore the A.O. and as such the jurisdiction on these issues under Section 263 cannot be assumed by him.
(ii). On the facts and circumstances of the case, the learned Pr.CIT has erred both on facts and in law in ignoring the contention of the appellant that the proceeding under Section 263 cannot be used for substituting opinion of the A.O. by that of the Pr.CIT.
4. On the facts and circumstances of the case, the learned Pr. CIT has erred both on facts and in law in invoking the provisions of Explanation 2 to section 263(1) of the Act, despite the fact that the conditions prescribed therein are not satisfied in the present case.
5. On the facts and circumstances of the case, the learned Pr. CIT has erred both on facts and in law in setting aside the matter to the file of the A.O. to assess afresh without himself giving a finding as to the error and prejudice caused to the revenue by the assessment order.
(i) On the facts and circumstances of the case, Id. Pr. CIT has erred both on facts and in law, in rejecting the contention of the assessee that the identity and creditworthiness of the share holders are duly explained and the genuineness of the transactions is duly proved.
(ii) On the facts and circumstances of the case, Id. Pr. CIT has erred both on facts and in law, in holding that the share application of Rs. 1,90,50,000/- was not examined properly by the Id. AO.”
3. The assessee is engaged in the business of finance and hire purchase. The assessee filed return of income on 30.09.2013 declaring an income of Rs.2,06,380/-. As per the 3 Ravindera Hire Purchase & Finance Pvt. Ltd. trading and profit & loss account, the AO noticed that the assessee has claimed expenses of Rs.5,28,000/- on account of staff salary, Rs.12,400/- on account of printing & stationary, Rs.20,260/- on account of vehicle running & maintenance charges, Rs.53,417/- on account telephone expenses and after making due enquiries as deemed fit, the AO made disallowance of Rs.70,000/- on account of expenses and determining the total income at Rs.2,76,380/-.
The case has been taken up for proceedings u/s 263 of the Income Tax Act, 1961 by the ld. PCIT by issuing a show cause which is as under:
“3. As such, the order passed by the Assessing Officer vide order u/s 143(3) of the Income Tax Act, 1961 dated 21.03.2016 was clearly erroneous and prejudicial to the interest of the revenue, and therefore, proceedings u/s 263 of the Income Tax Act, 1961 were initiated and show cause notice u/s 263 was issued to the assessee on 21.02.2017 for compliance on 02.03.2017 which is reproduced as under: -
“2. On a perusal of the case record, I find that the assessee company has shown share application money of Rs.3,29,00,000/- as on 31.03.2013 as against Rs.1,38,50,000/- as on 31.03.2012. The assessee company is stated to have received share application money during the year under consideration from the following parties: -
M/s Space Build Well India Pvt. Ltd. Rs.60,00,000/- 2. M/s Latta Resorts Pvt. Ltd. Rs.25,00,000/- 3. Sh. Gajender Singh Rs.50,00,000/- 4. M/s Common People Welfare Society Rs.18,00,000/- 5. Sh. Dinesh Bhardwaj, Sector-48 Rs.12,50,000/- 6. M/s Singh, LPO Rs. 75,00,000/- 4 Ravindera Hire Purchase & Finance Pvt. Ltd.
As per questionnaire issued on 22.12.2015 the assessee company was required to furnish the complete details of share capital with its source of payments etc. However, tie details filed by the assessee during the assessment proceedings in respect of the certify of the depositors and their creditworthiness are inadequate as there is no complete address, PAN, copy of ITR or bank statements provided by the assessee to ascertain the genuineness of the transactions and identity and creditworthiness of the parties from whom the share application money is stated to have been received.
4. The Assessing Officer erred in accepting the genuineness of share application money of Rs.1,90,50,000/- (3,29,00,000 - 1,38,50,000) without verifying the identity of the depositors and their creditworthiness as there was no complete address, PAN, Copy of ITR of Bank statement which were necessarily to be provided by the assessee to ascertain the genuineness of the transactions, identity of the depositors and creditworthiness of the concerned parties.”
…………………….
In view of these facts, it is apparent that the assessment order under consideration is out rightly erroneous and patently prejudicial to the interest of the revenue as the Assessing Officer accepted the receipt of share application money to the tune of Rs.1,90,50,000/- without verifying the identity and creditworthiness of the depositors and genuineness of the transaction as the assessee had failed to discharge its onus as it had failed to submit the requisite documents. The assessment order passed by the Assessing Officer in assessee’s case on 21.03.2016 to the above extent is set aside to be framed afresh after following the procedure laid down in law and allowing the assessee to explain its case and make further enquiries as warranted in the matter.”
5 Ravindera Hire Purchase & Finance Pvt. Ltd.
Before us, the letter of the ITO, Ward-2(2), Faridabad has been produced by the assessee:
F.No IT0/W-2 (2)/FBD/16-17/378 Office of the Income Tax Officer Ward-2(2), Faridabad Dated: 03.02.2017 To The Pr. Commissioner of Income Tax Faridabad (Through the Joint Commissioner of Income Tax, Range-2, Faridabad)
Respected Madam,
Sub:- Proposal u/s 263 of the I.T Act, 1961 in the case of M/s Ravlndra Hire Purchase and Finance Pvt. Ltd., E-1/58, Soctor-11, Faridabad for the A.Y. 2013-14 - Matter Regarding – Kindly refer to the subject noted above.
In this regard, it is submitted that the return of income in the case of the above assesses company was e-filled on 30.09.2013 declaring total income of Rs. 2,06,375/-. The case was selected for complete scrutiny through CASS module. The reasons for scrutiny selection were - large share application money received against un-allotted shares and introduction of capital in NBFC/investment Companies. Subsequently the assessment was completed u/s 143(3) on 21.03.2016 and income was assessed at Rs. 2,76,380/- after addition of Rs. 70,000/- on account of disallowance of expenses found of personal nature on agreed basis.
On going through the assessment records and details filed by the assessee during the assessment proceedings as available on records, it has been found that the assessee company shown share application money of Rs. 3,29,00,000/- as on 31.03.2013 as against Rs. 1.38,50,000/- as on 31.03.2012. The assessee company received
6 Ravindera Hire Purchase & Finance Pvt. Ltd. share application money during the year under consideration from the following parties:- i) M/s Space Build Well India Pvt. Ltd, Rs. 60,00,000/- ii) M/s Latta Resorts Pvt. Ltd. Rs. 25,00,000/- iii) Sh. Calender Singh Rs. 50,00,000/- iv) M/s Common People Welfare Society Rs. 18,00,000/- v) Sh. Dinesh Bhardwaj, Sector-49 Rs. 12,50,000/- vi) M/s Singh LPO Rs. 75,00,000/- As per questionnaire issued on 22.12.2015 the assessee company was required to furnish the complete details of share capital with its source of payments etc. However, the details filed by the assessee during the assessment proceedings in respect of the identity of the depositors and their creditworthiness are inadequate as there is no complete address, PAM, copy of ITR or bank statements were provided by the assessee to ascertain the genuineness and creditworthiness of the transactions.
Keeping in view the facts of the case as stated above it appears that the assessment order passed u/s 143(3) on 21.03.2016 in the case of the company assessee is “erroneous in so far as it is prejudicial to the interests of the revenue”. Therefore, the case is submitted for action under section 263 of the IT Tax Act, The report along with the assessment records in one volume is submitted for your kind consideration.