M/S SARDA ENERGY & MINERALS LIMITED,NAGPUR vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), BHOPAL

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ITA 59/RPR/2018Status: DisposedITAT Raipur16 May 2019AY 2008-0914 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, was set aside. The Tribunal found that the Assessing Officer (AO) had conducted necessary enquiries and scrutinized the documents and submissions filed by the assessee concerning the transactions with M/s. L.B. India Holding Mauritius-II Limited. The assessee had provided specific documentary evidence and detailed written submissions in response to the AO's specific queries. The Tribunal reiterated the principles laid down by the Supreme Court in *Malabar Industrial Co. Ltd.* and *Commissioner of Income Tax Vs. Max India Ltd.*, emphasizing that for Section 263 to be invoked, the order must be both erroneous and prejudicial to the interest of the revenue. The Tribunal concluded that the AO's assessment order, after conducting enquiries and considering the evidence, was neither erroneous nor prejudicial to the revenue. Therefore, the PCIT's revisionary order was not sustainable. The appeal of the assessee was allowed.

What were the facts?

The assessee, M/s. Sarda Energy & Minerals Limited (formerly M/s. Raipur Alloys and Steel Ltd.), received USD 12,386,202 (Rs. 50,00,00,010) on August 3, 2007, from L.B. India Holdings Mauritious-II Limited for issuing equity shares. A search operation was conducted at the assessee's premises. The Assessing Officer (AO) reopened the case for Assessment Year 2008-09 and passed an order under Section 147 read with Section 143(3) on March 29, 2016, accepting the assessee's documentary evidence without making any additions. The Principal Commissioner of Income Tax (PCIT), Bhopal, invoked revisionary jurisdiction under Section 263 of the Income Tax Act, 1961, by order dated March 20, 2018, holding the AO's order to be erroneous and prejudicial to the revenue. The assessee's appeal is against this revisionary order.

What were the issues?

1. Whether the order passed by the Assessing Officer (AO) for Assessment Year 2008-09 is erroneous and prejudicial to the interest of the Revenue, thereby justifying the invocation of revisionary jurisdiction under Section 263 of the Income Tax Act, 1961? Assessee's contentions: The assessee argued that the AO had conducted sufficient enquiries regarding the share application money received from M/s. L.B. India Holding Mauritius-II Limited, as evidenced by the questionnaire issued under Section 142(1) of the Act and the detailed documentary evidence submitted by the assessee. The assessee contended that the AO's order was neither erroneous nor prejudicial to the revenue. They relied on the Supreme Court's decision in *Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax* to emphasize that the twin conditions of the order being erroneous and prejudicial to the revenue must be satisfied for Section 263 to apply. The assessee also cited *Commissioner of Income Tax Vs. Max India Ltd.* for the proposition that every loss of revenue or a view taken by the AO, with which the Commissioner disagrees, does not automatically make the order erroneous and prejudicial. Revenue's contentions: The revenue relied on the order passed by the PCIT under Section 263, which found the AO's order to be erroneous due to a lack of proper enquiry.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 143(3),Section 142(1),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURYAND

For Appellant: Shri Nikhilesh Begani
For Respondent: Shri P.K. Mishra
Hearing: 15.05.2019Pronounced: 16.05.2019

आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr. Commissioner of Income Tax (Central), Bhopal. 4. The Joint Commissioner of Income Tax (Central), Raipur. 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, रायपुर बेंच, रायपुर / DR, ITAT, Raipur Bench, Raipur. गार्ा फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

धनजी सधचव / Private Secretary आयकर अपीलीय अधधकरण, रायपुर / ITAT, Raipur.

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