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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against revision order dated 22.03.2022 passed by the Ld. Pr. Commissioner of Income-tax- 4, Mumbai (in short ‘the Ld. PCIT’) for assessment year 2012-13, raising following grounds :
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 2 ITA No. 620/M/2022
1. On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the learned Pr. CIT learned Pr. CIT -4, Mumbai has erred in holding that the 4, Mumbai has erred in holding that the reassessment order passed by the Assessing Officer is erroneous sessment order passed by the Assessing Officer is erroneous sessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue. and prejudicial to the interest of the revenue.
2. On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the learned Pr. CIT learned Pr. CIT -4, Mumbai ought to have appreciated that the 4, Mumbai ought to have appreciated that the reasons recorded under Sect reasons recorded under Section 148(2) as provided to the ion 148(2) as provided to the appellant were referring to transactions in only one scrip which appellant were referring to transactions in only one scrip which appellant were referring to transactions in only one scrip which was alleged to be a penny stock and there cannot be another was alleged to be a penny stock and there cannot be another was alleged to be a penny stock and there cannot be another version of the reasons referring to three scrips as claimed by him. version of the reasons referring to three scrips as claimed by him. version of the reasons referring to three scrips as claimed by him. 3. On the facts and circumstances of On the facts and circumstances of the case and in law, the the case and in law, the learned Pr. CIT learned Pr. CIT -4, Mumbai has erred in holding that the 4, Mumbai has erred in holding that the Assessing Officer failed to deal with the transactions in alleged Assessing Officer failed to deal with the transactions in alleged Assessing Officer failed to deal with the transactions in alleged two penny scrips namely Exelon Infrastructure Ltd. and Scan two penny scrips namely Exelon Infrastructure Ltd. and Scan two penny scrips namely Exelon Infrastructure Ltd. and Scan Steels Ltd. without appreciating that Steels Ltd. without appreciating that - a. a. they a. they were not the subject matter of the reassessment as were not the subject matter of the reassessment as per the reasons recorded by the Assessing Officer; and per the reasons recorded by the Assessing Officer; and per the reasons recorded by the Assessing Officer; and b. b. no addition could have been made with respect to the b. no addition could have been made with respect to the b. no addition could have been made with respect to the transactions in the said two scrips since no addition was transactions in the said two scrips since no addition was transactions in the said two scrips since no addition was made on the issue which was the subject matter of the made on the issue which was the sub ject matter of the reassessment as per the reasons recorded by the Assessing reassessment as per the reasons recorded by the Assessing reassessment as per the reasons recorded by the Assessing Officer. Officer.
Briefly stated, the facts of the case are that the assessee filed its Briefly stated, the facts of the case are that the assessee filed its Briefly stated, the facts of the case are that the assessee filed its return of income for the year under consideration i.e. AY 2012 return of income for the year under consideration i.e. AY 2012 return of income for the year under consideration i.e. AY 2012-13 on 30.09.2022 declaring total i 30.09.2022 declaring total income of ₹34,38,840/- -. Subsequently,
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 3 ITA No. 620/M/2022 the assessment was reopened by way of issue of notice u/s 148 of the assessment was reopened by way of issue of notice u/s 148 of the assessment was reopened by way of issue of notice u/s 148 of the Act dated 23.03.2019. During the reassessment proceedings, the the Act dated 23.03.2019. During the reassessment proceedings, the the Act dated 23.03.2019. During the reassessment proceedings, the assessee was asked regarding assessee was asked regarding genuineness of share transaction of share transaction of scrip namely M/s Nivya M/s Nivyah Infrastructure & Telecom Services Ltd. h Infrastructure & Telecom Services Ltd. After considering the submission of the assessee, the return of After considering the submission of the assessee, the return of After considering the submission of the assessee, the return of income was accepted by the Assessing Officer in reassessment order income was accepted by the Assessing Officer in reassessment order income was accepted by the Assessing Officer in reassessment order dated 23.12.2019 passed u/s 147 r.w.s. 143 of the Act. Thereafter, dated 23.12.2019 passed u/s 147 r.w.s. 143 of the Act. Thereafter, dated 23.12.2019 passed u/s 147 r.w.s. 143 of the Act. Thereafter, the Ld. PCIT called for record and ed for record and noticed that assessment was that assessment was reopened in view of reopened in view of in genuineness of trading investment investment by the assessee in following assessee in following three scrips:
F.Y. Name of the ‘penny scrip’ Name of the ‘penny scrip’ Amount of transaction Amount of transaction 2011-12 Nivyah Nivyah Infrastructure Infrastructure & & Telecom Telecom ₹49,90,870/ 49,90,870/- Services Ltd. Services Ltd. 2011-12 Exelon Infrastructure Ltd. Exelon Infrastructure Ltd. ₹60,31,839/ 60,31,839/- 2011-12 Scan Steels Ltd. Scan Steels Ltd. ₹1,98,000/- - 2.1 But the Assessing Offi But the Assessing Officer only examined the trading on cer only examined the trading on one scrip namely M/s Nivyah Infrastructure & scrip namely M/s Nivyah Infrastructure & Telecom Services Ltd. Telecom Services Ltd. Therefore, he held that the assessment order passed by the Therefore, he held that the assessment order passed by the Therefore, he held that the assessment order passed by the Assessing Officer is erroneous in so far as prejudicial to the interest Assessing Officer is erroneous in so far as prejudicial to the interest Assessing Officer is erroneous in so far as prejudicial to the interest
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 4 ITA No. 620/M/2022 of the Revenue. He accordingly set aside the order of the Assessing of the Revenue. He accordingly set aside the order of the Assessing of the Revenue. He accordingly set aside the order of the Assessing Officer and directed to examine Officer and directed to examine genuineness of nuineness of the share transaction in other two scrip also. The relevant finding of the Ld. transaction in other two scrip also. The relevant finding of the Ld. transaction in other two scrip also. The relevant finding of the Ld. PCIT is reproduced as under : PCIT is reproduced as under :
The submissions of the assessee are perused however the same is “5. The submissions of the assessee are perused however the same is The submissions of the assessee are perused however the same is not acceptable for the following reasons: not acceptable for the following reasons:
5.1 The assessment for t 5.1 The assessment for the assessment year 2012-13 was reopened on 13 was reopened on the basis of information received from the lnvestigation wing in respect the basis of information received from the lnvestigation wing in respect the basis of information received from the lnvestigation wing in respect of transactions by the assessee in respect of the following penny scrips: of transactions by the assessee in respect of the following penny scrips: of transactions by the assessee in respect of the following penny scrips: F.Y. Name of the ‘penny scrip’ Name of the ‘penny scrip’ Amount of transaction Amount of transaction 2011-12 Nivyah Nivyah Infrastructure Infrastructure & & Telecom Telecom ₹49,90,870/ 49,90,870/- Services Ltd. Services Ltd. 2011-12 Exelon Infrastructure Ltd. Exelon Infrastructure Ltd. ₹60,31,839/ 60,31,839/- 2011-12 Scan Steels Ltd. Scan Steels Ltd. ₹1,98,000/- The reasons recorded for reopening had the approval of the erstwhile The reasons recorded for reopening had the approval of the erstwhile The reasons recorded for reopening had the approval of the erstwhile Pr. Commissioner of Income Tax Pr. Commissioner of Income Tax-16, Mumbai in respect of all the above i in respect of all the above three penny scrips. three penny scrips.
5.2 It is seen that the re 5.2 It is seen that the re-assessment order u/s 143(3) r.w.s 147 dated assessment order u/s 143(3) r.w.s 147 dated 23/12/2019 was completed without making enquiries in respect of 23/12/2019 was completed without making enquiries in respect of 23/12/2019 was completed without making enquiries in respect of other 2 penny scrips i.e. other 2 penny scrips i.e. F.Y. Name of the ‘penny scrip’ Name of the ‘penny scrip’ Trade/Sale Value of Trade/Sale transaction ( transaction (₹) 2011-12 Exelon Infrastructure Ltd. Exelon Infrastructure Ltd. ₹60,31,839/ 60,31,839/- 2011-12 Scan Steels Ltd. Scan Steels Ltd. ₹1,98,000/-
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 5 ITA No. 620/M/2022
5.3 The AO shared the reasons recorded with the assessee for re 5.3 The AO shared the reasons recorded with the assessee for re 5.3 The AO shared the reasons recorded with the assessee for re-opening only in respect of penny scrip of Nivyah Infrastructure & Telecom only in respect of penny scrip of Nivyah Infrastructure & Telecom only in respect of penny scrip of Nivyah Infrastructure & Telecom Services Ltd. of Rs.49.90,870/ ces Ltd. of Rs.49.90,870/-Hence the AO glaringly omitted to deal Hence the AO glaringly omitted to deal with other 2 penny scrips rendering the order us 143(3) r.w.s 147 dated with other 2 penny scrips rendering the order us 143(3) r.w.s 147 dated with other 2 penny scrips rendering the order us 143(3) r.w.s 147 dated 23/12/2019 as erroneous in so far it is prejudicia" to the interest of 23/12/2019 as erroneous in so far it is prejudicia" to the interest of 23/12/2019 as erroneous in so far it is prejudicia" to the interest of revenue
5.4. The various case law relied by the 5.4. The various case law relied by the assessee including the case of CIT assessee including the case of CIT vs Jet Airways (1) Ltd. (2011) 331 ITR 236 (Bom) is not applicable in the Airways (1) Ltd. (2011) 331 ITR 236 (Bom) is not applicable in the Airways (1) Ltd. (2011) 331 ITR 236 (Bom) is not applicable in the instant case as the facts are distinguishable. In the instant the case was instant case as the facts are distinguishable. In the instant the case was instant case as the facts are distinguishable. In the instant the case was reopened by recording reasons which were approved in respect of all 3 reopened by recording reasons which were approved in respect of all 3 reopened by recording reasons which were approved in respect of all 3 penny scrips. The AO during the re nny scrips. The AO during the re-assessment proceedings has only assessment proceedings has only dealt with the transactions in respect of penny scrip of M/s. Nivyah dealt with the transactions in respect of penny scrip of M/s. Nivyah dealt with the transactions in respect of penny scrip of M/s. Nivyah Infrastructure & Telecom Services Ltd of Rs. 49,90870/ Infrastructure & Telecom Services Ltd of Rs. 49,90870/-, Further, the AO , Further, the AO has glaringly omitted to deal with the transactio has glaringly omitted to deal with the transactions in remaining 2 ns in remaining 2 penny scrips namely M/s. Exelon Infrastructure Ltd. and Ms. penny scrips namely M/s. Exelon Infrastructure Ltd. and Ms. penny scrips namely M/s. Exelon Infrastructure Ltd. and Ms. Scan Steels Ltd although information in respect of these 2 scrips formed part of the Ltd although information in respect of these 2 scrips formed part of the Ltd although information in respect of these 2 scrips formed part of the reasons recorded for re reasons recorded for re-opening. Thus the re-assessment order passed assessment order passed by the AO is erroneous a by the AO is erroneous and prejudicial to the interest of revenue. nd prejudicial to the interest of revenue.
5.5 As per clause (a) to Explanation to Section 263 (amended by Finance As per clause (a) to Explanation to Section 263 (amended by Finance As per clause (a) to Explanation to Section 263 (amended by Finance Act, 2015 with Act, 2015 with effect from 01.06.2015), an order passed by the Assessing effect from 01.06.2015), an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudici Officer shall be deemed to be erroneous in so far as it is prejudici Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal the interests of the revenue, if, in the opinion of the Principal the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, the order is passed without making Commissioner or Commissioner, the order is passed without making Commissioner or Commissioner, the order is passed without making enquiries or verification which should have been made. In the instant enquiries or verification which should have been made. In the instant enquiries or verification which should have been made. In the instant case, as mentioned in the preceding paragraph, it case, as mentioned in the preceding paragraph, it is found that the A.O is found that the A.O passed the assessment order without making inquiries and verification passed the assessment order without making inquiries and verification passed the assessment order without making inquiries and verification which were required in facts and circumstances of the case. This non which were required in facts and circumstances of the case. This non which were required in facts and circumstances of the case. This non-
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 6 ITA No. 620/M/2022 verification which was required in the facts and circumstances of the verification which was required in the facts and circumstances of the verification which was required in the facts and circumstances of the case and consequent loss case and consequent loss of revenue has rendered the assessment order of revenue has rendered the assessment order erroneous in so far it is prejudicial to the interest of revenue. erroneous in so far it is prejudicial to the interest of revenue. erroneous in so far it is prejudicial to the interest of revenue. In this regard, the judgment of the Hon'ble Supreme Court in the case of regard, the judgment of the Hon'ble Supreme Court in the case of regard, the judgment of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Limited v. CIT (2000] 243 ITR 83 (SC) may be Industrial Co. Limited v. CIT (2000] 243 ITR 83 (SC) may be Industrial Co. Limited v. CIT (2000] 243 ITR 83 (SC) may be referred to wherein the Hon'ble Court held erred to wherein the Hon'ble Court held
The scheme of the Act is to levy and collect tax in accordance The scheme of the Act is to levy and collect tax in accordance The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the with the provisions of the Act and this task is entrusted to the with the provisions of the Act and this task is entrusted to the Rovenue. If due to an erroneous order of the Income-tax Officer, Rovenue. If due to an erroneous order of the Income Rovenue. If due to an erroneous order of the Income the revenue is losing the revenue is losing tax lawfully payable by a person, it will tax lawfully payable by a person, it will cortainly be prejudicial to the interests of the revenue. The cortainly be prejudicial to the interests of the revenue. The cortainly be prejudicial to the interests of the revenue. The phrase prejudicial to the interests of the revenue has to be read phrase prejudicial to the interests of the revenue has to be read phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing in conjunction with an erroneous order passed by the Assessing in conjunction with an erroneous order passed by the Assessing Officer." Officer."
It was further held by the Apex Court that the assessment orders was r held by the Apex Court that the assessment orders was r held by the Apex Court that the assessment orders was erroneous if the assessing officer passed the assessment order without erroneous if the assessing officer passed the assessment order without erroneous if the assessing officer passed the assessment order without applying his mind to the case in all perspective. In view of the aforesaid applying his mind to the case in all perspective. In view of the aforesaid applying his mind to the case in all perspective. In view of the aforesaid judgment of the Apex Court, if assessment has been mad judgment of the Apex Court, if assessment has been mad judgment of the Apex Court, if assessment has been made without application of mind in all perspective and there is consequential loss of application of mind in all perspective and there is consequential loss of application of mind in all perspective and there is consequential loss of revenue the order becomes erroneous in so far it is prejudicial to the revenue the order becomes erroneous in so far it is prejudicial to the revenue the order becomes erroneous in so far it is prejudicial to the interest of revenue. interest of revenue.
In view of the facts mentioned in the preceding paragraphs, the 6. In view of the facts mentioned in the preceding paragraphs, the 6. In view of the facts mentioned in the preceding paragraphs, the assessment or assessment order passed u/s. 143(3) r.w.s 147 dated 23.12.2019 is der passed u/s. 143(3) r.w.s 147 dated 23.12.2019 is considered erroneous in so far it is considered erroneous in so far it is prejudicial to the interest of revenue. prejudicial to the interest of revenue. Therefore, the assessment order u/s. 143(3) r.w.s 147 dated 23.12.2019 Therefore, the assessment order u/s. 143(3) r.w.s 147 dated 23.12.2019 Therefore, the assessment order u/s. 143(3) r.w.s 147 dated 23.12.2019 is set aside and restored to the file of Assessing Offi is set aside and restored to the file of Assessing Officer on the above issue cer on the above issue i.e. to examine share transactions in other 2 penny scrips namely M/s. i.e. to examine share transactions in other 2 penny scrips namely M/s. i.e. to examine share transactions in other 2 penny scrips namely M/s.
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 7 ITA No. 620/M/2022 Exelon Infrastructure Ltd. and Ms. Scan Steels Ltd., and the AO is Exelon Infrastructure Ltd. and Ms. Scan Steels Ltd., and the AO is Exelon Infrastructure Ltd. and Ms. Scan Steels Ltd., and the AO is directed to pass a fresh assessment order after giving due opportunity to directed to pass a fresh assessment order after giving due opportunity to directed to pass a fresh assessment order after giving due opportunity to the assessee. The AO the assessee. The AO may also examine and incorporate such may also examine and incorporate such concomitant that arises out of the same in his order. concomitant that arises out of the same in his order.”
Before us, the Ld. Counsel of the assessee filed a paperbook Before us, the Ld. Counsel of the assessee filed a paperbook Before us, the Ld. Counsel of the assessee filed a paperbook containing pages 1 to 11 and copy of the case laws relied upon by to 11 and copy of the case laws relied upon by to 11 and copy of the case laws relied upon by him.
We have heard rival subm We have heard rival submission of the parties on the issue ission of the parties on the issue-in- dispute and perused the relevant material available on record. and perused the relevant material available on record. and perused the relevant material available on record. Before us, the Ld. Departmental Representative (DR) submitted that Before us, the Ld. Departmental Representative (DR) submitted that Before us, the Ld. Departmental Representative (DR) submitted that initially the assessment was reopened in view of initially the assessment was reopened in view of information of information of the share transaction for one scrip namely M/s Nivyah Infrastructure & r one scrip namely M/s Nivyah Infrastructure & r one scrip namely M/s Nivyah Infrastructure & Telecom Services Ltd. amounting to Telecom Services Ltd. amounting to ₹49,90,870/- -. Subsequently, information in respect of trading information in respect of trading by the assessee in other two scrip in other two scrip namely “Exelon Infrastructure Ltd. ( Exelon Infrastructure Ltd. (₹60,31,839/-)” and and “Scan Steels Ltd. (₹1,98,000/-)” was received and therefore, was received and therefore, the Assessing Officer the Assessing Officer recorded another reasons to believe that income escaped in relation another reasons to believe that income escaped in relation another reasons to believe that income escaped in relation
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 8 ITA No. 620/M/2022 to transaction in above three scrips. These reasons were duly above three scrips. These reasons were duly above three scrips. These reasons were duly approved by the appropriate authorities. However, the Assessing approved by the appropriate authorities. However, the Assessing approved by the appropriate authorities. However, the Assessing Officer shared the reasons recorded with the assessee for reopening fficer shared the reasons recorded with the assessee for reopening fficer shared the reasons recorded with the assessee for reopening only in respect of the scrips of M/s Nivyah Infrastructure & Telecom only in respect of the scrips of M/s Nivyah Infrastructure & Telecom only in respect of the scrips of M/s Nivyah Infrastructure & Telecom Services Ltd. This fact has been duly recorded by the Ld. PCIT also in Services Ltd. This fact has been duly recorded by the Ld. PCIT also in Services Ltd. This fact has been duly recorded by the Ld. PCIT also in his para 5.3 reproduced above. We find that the L his para 5.3 reproduced above. We find that the L his para 5.3 reproduced above. We find that the Ld. PCIT has nowhere pointed out lack of inquiry or any inadequate inquiry in nowhere pointed out lack of inquiry or any inadequate inquiry in nowhere pointed out lack of inquiry or any inadequate inquiry in respect of the scrip namely M/s Nivyah Infrastructure & Telecom respect of the scrip namely M/s Nivyah Infrastructure & Telecom respect of the scrip namely M/s Nivyah Infrastructure & Telecom Services Ltd. The Ld. PCIT has only pointed out that the Assessing Services Ltd. The Ld. PCIT has only pointed out that the Assessing Services Ltd. The Ld. PCIT has only pointed out that the Assessing Officer has not carried out the inquiry in respe Officer has not carried out the inquiry in respect of other two scrips ct of other two scrips namely Exelon Infrastructure Ltd. and Scan Steels Ltd. The issue namely Exelon Infrastructure Ltd. and Scan Steels Ltd. The issue namely Exelon Infrastructure Ltd. and Scan Steels Ltd. The issue, thus arise in this case is thus arise in this case is, which reasons recorded have been supplied which reasons recorded have been supplied by the Assessing Officer to the assessee. If the Assessing Officer has by the Assessing Officer to the assessee. If the Assessing Officer has by the Assessing Officer to the assessee. If the Assessing Officer has only supplied set of reasons recorded consisting only one scrip M/s only supplied set of reasons recorded consisting only one scrip M/s only supplied set of reasons recorded consisting only one scrip M/s Nivyah Infrastructure & Telecom Services Ltd. or he has supplied Nivyah Infrastructure & Telecom Services Ltd. or he has supplied Nivyah Infrastructure & Telecom Services Ltd. or he has supplied the reasons recorded consisting of three scrips which were duly ns recorded consisting of three scrips which were duly ns recorded consisting of three scrips which were duly
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 9 ITA No. 620/M/2022 approved by the appropriate authorities. The Ld. DR was approved by the appropriate authorities. The Ld. DR was approved by the appropriate authorities. The Ld. DR was accordingly asked to file a report accordingly asked to file a report from the Assessing Officer whether the Assessing Officer whether the reasons recorded which were duly approved by the appropriate the reasons recorded which were duly approved by the appropriate the reasons recorded which were duly approved by the appropriate authorities were supplied to the assessee. Despite providing es were supplied to the assessee. Despite providing es were supplied to the assessee. Despite providing sufficient opportunity of being heard, sufficient opportunity of being heard, the Ld. DR the Ld. DR could not substantiate whether the reasons which substantiate whether the reasons which were duly approve were duly approved by the appropriate authority, appropriate authority, were supplied to the assessee. Thus it is were supplied to the assessee. Thus it is beyond doubt that the assessee was hat the assessee was supplied with the reasons with the reasons, which were in relation to only one scrip namely M/s Nivyah which were in relation to only one scrip namely M/s Nivyah which were in relation to only one scrip namely M/s Nivyah Infrastructure & Telecom Services Ltd. Obviously, this reason Infrastructure & Telecom Services Ltd. Obviously, this reason Infrastructure & Telecom Services Ltd. Obviously, this reason to believe which was supplied to the assessee supplied to the assessee was not duly approved not duly approved by the appropriate authority. Further, the scrip referred into the authority. Further, the scrip referred into the authority. Further, the scrip referred into the reasons recorded which the Assessing Officer has supplied to the reasons recorded which the Assessing Officer has supplied to the reasons recorded which the Assessing Officer has supplied to the assessee, the AO has made no addition in the reassessment order. In has made no addition in the reassessment order. In has made no addition in the reassessment order. In such circumstances, in view of decision of the Hon’ble Bombay High such circumstances, in view of decision of the Hon’ble Bombay High such circumstances, in view of decision of the Hon’ble Bombay High Court in the case of CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 10 ITA No. 620/M/2022 (Bom), the Assessing Officer is precluded from making addition in he Assessing Officer is precluded from making addition in he Assessing Officer is precluded from making addition in respect of issues other than the issue on f issues other than the issue on which the assessment was which the assessment was reopened. It is settled law in view of decision of the Hon’ble reopened. It is settled law in view of decision of the Hon’ble reopened. It is settled law in view of decision of the Hon’ble Supreme Court in the case of Supreme Court in the case of GKN Driveshaft (India) Ltd. v. ITO GKN Driveshaft (India) Ltd. v. ITO (2003) 259 ITR 19 (SC) (2003) 259 ITR 19 (SC), the Assessing Officer was was required to provide copy of the reasons recorded duly approved provide copy of the reasons recorded duly approved provide copy of the reasons recorded duly approved (i.e. containing three scrips) whereas the Assessing Officer has supplied whereas the Assessing Officer has supplied whereas the Assessing Officer has supplied incorrect reasons (i.e. containing one scrip containing one scrip) and therefore, assessment and therefore, assessment completed, is not in accordance in accordance with the law. The reassessment with the law. The reassessment order itself deserved to be quashed and the Ld. PCIT cannot revive order itself deserved to be quashed and the Ld. PCIT cannot revive order itself deserved to be quashed and the Ld. PCIT cannot revive order which itself is illegal. The Hon’ble Delhi High Court in the case order which itself is illegal. The Hon’ble Delhi High Court in the case order which itself is illegal. The Hon’ble Delhi High Court in the case of Commissioner of Income Commissioner of Income-tax v. Software Consultants [2012] tax v. Software Consultants [2012] 21 taxmann.com 155 (Delhi 21 taxmann.com 155 (Delhi) set aside the revision proceedings set aside the revision proceedings where assessment was reopened on the issue of investment and where assessment was reopened on the issue of investment and where assessment was reopened on the issue of investment and FDR whereas the Ld. PCIT invoked proceedings u/s 263 of the Act FDR whereas the Ld. PCIT invoked proceedings u/s 263 of the Act FDR whereas the Ld. PCIT invoked proceedings u/s 263 of the Act
M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 11 ITA No. 620/M/2022 for non-verification of receipt of share application money. The verification of receipt of share application money. The verification of receipt of share application money. The relevant finding of the relevant finding of the decision is reproduced as under : on is reproduced as under :
“14. For exercise of power under Section 263 of the Act, it is mandatory 14. For exercise of power under Section 263 of the Act, it is mandatory 14. For exercise of power under Section 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and that the order passed by the Assessing Officer should be erroneous and that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the prejudicial to the interest of the Revenue. In the present case, the prejudicial to the interest of the Revenue. In the present case, the Assessing Offic Assessing Officer did not make any addition for the reasons recorded at er did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is the time of issue of notice under Section 148 of the Act. This position is the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his not disputed and disturbed by the Commissioner of Income Tax in his not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the order under Section 263 of the Act. Sequitur is that the Assessing Officer Assessing Officer could not have made an addition on account of share application money could not have made an addition on account of share application money could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the in the assessment proceedings under Section 147/148. Accordingly, the in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income assessment order is not erroneous. Thus, the Commissioner of Income assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised Tax could not have exercised jurisdiction under Section 263 of the Act. jurisdiction under Section 263 of the Act.” 4.1 Further, the Tribunal in the case of Aishwarya Rai Bachchan v. Further, the Tribunal in the case of Aishwarya Rai Bachchan v. Further, the Tribunal in the case of Aishwarya Rai Bachchan v. PCIT [2022] 135 taxmann.com 225 (Mumbai PCIT [2022] 135 taxmann.com 225 (Mumbai-Trib.) has held that Trib.) has held that illegal order cannot be subject matter u/s 263 proceedings. The illegal order cannot be subject matter u/s 263 proceedings. The illegal order cannot be subject matter u/s 263 proceedings. The relevant finding of the Tribunal is reproduced as under: the Tribunal is reproduced as under: the Tribunal is reproduced as under:
“4.1. One more excruciating fact that needs to be addressed in the 4.1. One more excruciating fact that needs to be addressed in the 4.1. One more excruciating fact that needs to be addressed in the instant case is that the ld. PCIT herein is only seeking to revise the order instant case is that the ld. PCIT herein is only seeking to revise the order instant case is that the ld. PCIT herein is only seeking to revise the order passed by the ld. AO u/s.143(3) r.w.s. 147 of the Act dated 12/12/2018. passed by the ld. AO u/s.143(3) r.w.s. 147 of the Act dated 12/12/2018. passed by the ld. AO u/s.143(3) r.w.s. 147 of the Act dated 12/12/2018. In the said re-assessment proceedings, the ld. AO had not even made any assessment proceedings, the ld. AO had not even made any assessment proceedings, the ld. AO had not even made any addition despite the fact that he had reason to believe that income of addition despite the fact that he had reason to believe that income of addition despite the fact that he had reason to believe that income of M/s Globalworth Securities Ltd. M/s Globalworth Securities Ltd. 12 ITA No. 620/M/2022
Rs.11,55,330/- - had escaped assessment in the hands of the assessee had escaped assessment in the hands of the assessee which was sought to be taxed u/s.56 of the Act as which was sought to be taxed u/s.56 of the Act as per the reasons per the reasons recorded. Hence, when the very basis of reasons recorded by the ld. AO recorded. Hence, when the very basis of reasons recorded by the ld. AO recorded. Hence, when the very basis of reasons recorded by the ld. AO was ultimately not added by the ld. AO in the re was ultimately not added by the ld. AO in the re-assessment proceedings, assessment proceedings, then the primary reason to believe that income of the assessee had then the primary reason to believe that income of the assessee had then the primary reason to believe that income of the assessee had escaped assessment fails and escaped assessment fails and such re-assessment cannot be treated as a assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab valid order in the eyes of law. The same is to be declared as void ab valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of the initio. Reliance in this regard was rightly placed on the decision of the initio. Reliance in this regard was rightly placed on the decision of the Hon‟ble Jurisdictional High Court in the case of Jet Airways reported ‟ble Jurisdictional High Court in the case of Jet Airways reported ‟ble Jurisdictional High Court in the case of Jet Airways reported in 331 ITR 236. When an assessment framed by the ld. AO is unsustainable 331 ITR 236. When an assessment framed by the ld. AO is unsustainable 331 ITR 236. When an assessment framed by the ld. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject in the eyes of law, the said invalid and illegal order cannot be subject in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order matter of section 263 proceedings. On this count also, the revision order matter of section 263 proceedings. On this count also, the revision order passed by the ld. PCIT u/s.263 of t passed by the ld. PCIT u/s.263 of the Act deserves to be quashed. he Act deserves to be quashed.” 4.2 In view of aforesaid discussion, we quash aforesaid discussion, we quash the impugned revision order passed by the Ld. PCIT. Accordingly, the grounds revision order passed by the Ld. PCIT. Accordingly, the grounds revision order passed by the Ld. PCIT. Accordingly, the grounds raised by the assessee are allowed. raised by the assessee are allowed.
In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed.