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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI PROMOD KUMAR & MS. SUCHITRA KAMBLE
PER MS. SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order u/s 263 of the Income Tax Act, 1961 dated 22.03.2019 passed by Pr. Commissioner of Income Tax-14, Mumbai (in short ‘Pr. CIT’) for assessment year 2009-10.
The assessee has raised following grounds of appeal is as under :
1. The Learned Pr. Commissioner of Income Tax - 14, Mumbai has erred in law and infacts by passing a revision order dated 22.03.2019 by setting aside the order u/s.143(3)r.w.s. 147 of the Income-tax Act, 1961 dated Galaxy Infraprojects & Developers Pvt. Ltd. 2 13.10.2016 passed by the Ld. AssessingOffice (A) by holding that the same is erroneous and prejudicial to the interests of therevenue
2. The Learned Pr. Commissioner of Income Tax - 14, Mumbai has further erred inholding that the Ld. AO has not examined the source of high share premium receivedby the appellant disregarding the fact that the reason for re-opening of the appellant’s case u/s. 148 of the Income-tax Act, 1961 was high share premium and completedetails regarding the source and source of sources has been duly submitted during thecourse of reassessment proceedings.
3. The assessee-company filed return of income on 29.09.2009 for assessment year 2009-10 declaring loss of ₹32,050/- and thereafter revised the return vide filing the same on 29.09.2009 declaring total loss of ₹2,46,55,771/-. The case was reopened by issuance of notice u/s 148 on 30.03.2016 after taking necessary approval. The assessment u/s 143(3) r.w.s. 147 of the Act was completed on 13.10.2016 accepting loss of ₹32,050/- by the Assessing Officer. The Pr. CIT vide notice dated 29.01.2019 asked the assessee as to why the assessment order dated 13.10.2016 not erroneous in so far as it is not prejudicial to the interest of Revenue within the meaning of section 263 of the Act. Pr. CIT observed that the assessee-company received share capital of ₹9,00,000/- and share premium to the tune of ₹8,91,00,000/- from 10 subscribers and all the 10 subscriber entities have shown meagre or Nil income from business activity and filed Nil return of income. All these entities have received share premium and unsecured loans from other entities. The Pr. CIT observed that no inquiry with regard to source of high share premium received by the subscriber entities was conducted by the Assessing Officer during the proceedings u/s 147. Therefore, the Pr. CIT set aside the assessment order and directed the Assessing Officer for fresh Galaxy Infraprojects & Developers Pvt. Ltd. 3 adjudication on the issue of high share capital/premium with reference to the genuineness of transactions and creditworthiness of the subscriber parties.
Being aggrieved by the order u/s 263 passed by the Pr. CIT the assessee is before us.
The Ld. AR submitted that the reopening u/s 147 was on the very basis of the reasons that all the 10 share subscriber entities have shown meagre or Nil income from business activities and filed the Nil return of income. The reply of the assessee before the Pr. CIT clearly set out that due to the recession and business expansion plan, the assessee-company decided to raise its capital base by fresh issue of equity shares. The investment by the subscribers were made out of their own as well as borrowed funds and the details were produced before the Assessing Officer during the course of assessment proceedings u/s 147. The reasons for reopening of the case was ‘high share premium’ as recorded by the Assessing Officer. The Pr. CIT has not commented that the reasoning was not proper. In fact, the revision is on the identical issue in the proceedings u/s 263 itself. But the Pr. CIT has taken second opinion and therefore, the revision u/s 263 is not proper and just. The Ld. AR relied upon the decision of CIT vs. Nirav Modi 71 Taxman 272. The Ld. AR relied upon the following decisions: Malabar Industrial Co, Ltd v. CIT (2000) 243 ITR 83 (SC), CIT v. Lovely Exports Pot. Ltd. (216 CTR 195) (SC), ACIT-1(1) v. M/s. Gagandeep Infrastructure Pot. Ltd. (ITA No.5784/MUM/2011). Commissioner of Income Tax vs P. Mohanakala (SC) 2540 of2007. CIT v. Devi Prasad Khandelwal& Co. Ltd. 81 ITR 460 (BombayHC). Poonam Bhotikav/s ITO(ITA no 665/Kol/2017.
Galaxy Infraprojects & Developers Pvt. Ltd. 4
The Ld. DR relied upon the order u/s 263 and submitted that the Assessing Officer in the reopening proceedings has not made any inquiry and therefore revision order u/s 263 is valid. The Ld. DR relied upon the Hon’ble Supreme Court decision in Pr. CIT vs. NRA Iron and Steel Pvt. Ltd. [SLP (Civil) No. 29855 of 2018) judgment dated 05.03.2019] 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Pr. CIT has observed that no inquiry with regard to source of high share premium received by the subscriber entities were conducted and for the very same reason i.e. the reopening u/s 147 was done which is quoted by the Pr. CIT as high share premium. The assessee vide submissions dated 15.06.2016, 03.08.2016 and 16.10.2016 has given the details about the statement of allotment of shares duly submitted to Registrar of the company in respect of 90,000 equity shares which has been allotted on 25.03.2009 to various stake holder as well as balance sheet, ITR acknowledgment of said subscribers for the relevant assessment year and also the audited balance sheet of the assessee-company. In fact, after perusing the records which were produced before the Assessing Officer at 147 proceedings, it can be seen that the creditworthiness as well as the genuineness and the identity of the said subscriber was properly established by the assessee. The assessee explained to the Assessing Officer all the documentary evidences at the time of reassessment proceedings. Merely not commenting on the evidences in assessment order by the Assessing Officer does not tantamount to non-application or non-verification of documents. The Pr. CIT cannot exercise revisionary power in the decided issue which was specifically reopened on the very same ground and for which Galaxy Infraprojects & Developers Pvt. Ltd. 5 ITA No. 3315/M/2019 the assessee has submitted the details. The revisionary power u/s 263 can be issued/exercised when the assessment order is erroneous and prejudicial to the interest of the Revenue. But in the present case the element of prejudicial to the interest of revenue element does not come into picture as the relevant inquiries were made by the Assessing Officer. The decision relied by the Ld. DR that of the Apex Court in case of NRA Iron and Steel Pvt. Ltd. (supra) is not applicable in the present case as in that decisions as per the facts of that case Assessee Company - Respondent failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the Assessee’s income. But in the present case, the assessee company has discharged its onus required in respect of high share premium. Thus, order under Section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax is not just and proper. The appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.