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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Salasar Silk Mills P.Ltd. Commissioner of Income Tax, C/o Karnavat & CO. Circle 1 2A Kitab Mahal, 1st Floor, 192 R. No. 387, 3 rd Floor, Aayakar Vs. DR. D.N. RD Bhavan, M.K. RD Mumbai-400 001 Mumbai-20 Appellant .. Respondent PAN No. AAACS8753P Assessee by .. Shri Vijay Mehta, AR Revenue by .. Shri Vidisha Kalra, CIT DR Date of hearing .. 23-03-2017 Date of pronouncement .. 07-04-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the revision order passed by CIT-1, Mumbai, u/s 263 of the Income Tax Act, 1961 (hereinafter ‘the Act’) dated 23-03-2015. The Assessment was framed by ITO ward-1(3)(2), Mumbai for the A.Y. 2010-11 vide his order dated 17-01-2013 under section 143(3) of the Act.
2. The only issue in this appeal of assessee is against the revision order passed by CIT(A) under section 263 of the Act for the reason that the assessment order is erroneous and prejudicial to the interest of the Revenue as the AO has not examined the issue of share capital. The assessee has challenged the revision order on the following two grounds: -
“1. The learned Commissioner of Income-tax had erred in setting aside the assessment order under section 263 of the Income-tax Act 1961 even though the order u/s.143(3) passed by the learned Assessing Officer was neither erroneous nor prejudicial to the interest of the revenue. Under the facts and circumstances of the matter,
Salasar Silk Mills P.Ltd. A.Y:10-11 he ought not to have set aside the assessment u/s.263 of the Act.
The learned Commissioner of Income-tax had failed to appreciate that the learned Assessing Officer has already analyzed the issue of share capital in his order u/s.143(3) and therefore he cannot assume jurisdiction u/s.263 of the Act.”
Briefly stated facts are that the CIT(A) while perusing the assessment records noticed that the assessee has allotted of Rs. 1.25 crore of equity shares at the rate of Rs. 10 per share and premium at the rate of Rs. 90 per share to Janki Textiles and Industries Ltd. According to the CIT(A), the AO has not examined the source of share application and share premium money in term of Section 68 of the Act and also the share premium is in the nature of Revenue receipts chargeable to tax. According to him, the order of AO passed under section 143(3) of the Act is erroneous as well as prejudicial to the interest of Revenue for the reason that the AO has not verified the share application and share premium money under section 68 of the Act. Aggrieved against the revision order passed by CIT(A) under section 263 of the Act, assessee is in appeal before Tribunal.
Before us, the learned Counsel for the assessee first of all took us through the information filed before AO, he referred to the audited accounts i.e. balance sheet and profit and loss account for the year ended 31-03-2010 (which is enclosed at pages 1 to 4 of assessee’s paper book) which is filed with the return of income. The learned Counsel for the assessee took us through the notice issued by the AO under section 142(1)/143(2) of the Act and referred to relevant clause 4 and 5 which reads as under: - “4. Refer Schedule ‘A’ to the Balance Sheet. File party wise details of Subscription to Share Capital during the previous year, along with Name and Address and their PAN.
Salasar Silk Mills P.Ltd. A.Y:10-11
5. Refer Schedule ‘B’ to the Balance Sheet. File party wise details of contribution to Share Premium along with their confirmation and PAN.”
This notice is dated 06-08-2012 issued by the AO to the assessee company. This notice was replied by assessee by filing the details of share capital and share premium along with the name and address and PAN details and also details of investment in mutual fund vide letter dated 20-08-2012 and the relevant Para 4 and 5 reads as under: - “ 4 & 5 Details of share capital and share premium alonwith the name, address & PAN is enclosed herewith.”
This information is enclosed in the page 6 of assessee’s paper book. The relevant details are also given at page 7 at assessee’s paper book with name and addressee, PAN No., number of shares allotted, face value of share premium per share, total share capital and share premium allotted to Janki Textiles and Industries Ltd. In lieu of this information the AO issued notice under section 133(6) of the Ac vide notice dated 17-12-20012to the Principal Officer Janki Textiles and Industries Ltd. and the relevant information call off reads as under: - “Sub :- Information sought in reference to the assessment of M/s. Salasar Silk Mitts Ltd. for A.Y.2010-201 1 - reg.
The assessee M/s. Salasar Silk Mills Ltd.(SSMPL) having PAN: MACS8753P is assessed to tax in this charge and the relevant assessment year is A.Y. 2010-11. In this regard you are required to furnish the following information for the previous year 2009-10 relevant to A. Y. 2010-11. unless otherwise specifically stated.
1) Details of transactions with M/s. SSMPL during F.Y.2009-10. 2) Copy of account of the above party a M/s SSMPL. in your books of accounts for F.Y.2009-10 and 200509. Page 3 of 7
Salasar Silk Mills P.Ltd. A.Y:10-11
3) Furnish details of subscription to Share Capital / Share Premium in M/s. SSMPL giving details regarding proof of subscription, source, copy of Accounts for F.Y.2009•10 and 2008-09 and supported by Bank Statements. PAN etc. 4) Your PAN, Assessing Officer details etc. The above details should reach this office on or before 27.12.2012, positively... This information is called for as per the provisions of Section 133(6) of the I.T. Act, 1961 and on failure to comply, you should be Unable fur proceedings u/s.272A (2) of the I.T. Act, 1961.”
The relevant notice under section 133(6) of the Act is enclosed at page 8 of assessee’s paper book. The Janki Textiles and Industries Ltd. replied this notices of the Revenue vide letter dated 24-12-2012 by filing the relevant details and the relevant letter which reads as under: - “With reference to your above letter dated 17.12.2012, we would like to inform you that we have shifted our office address from Gauri Business Centre, Shantiniketan Building, 8, Camac Street,4th Floor, Room No.409, Kolkata - 700 017 To 36/1A, Elgin Road, Kolkata - 700 020, with effect from 15/06/2011 (Copy of form 18 With ROC receipt enclosed for your ready reference). Further we are furnishing herewith following information as required by you as follow: -
1) Ledger Copy. with Details of Transaction with M/S Salasar Silk Mills Ltd. For F.Y. 2008-09 & 2009-10 enclosed. 2) Details of Subscription to share capital / share premium in M/s SSMPL.: As per Annexure-A 3) Source of Fund with Bank Statement Copy 4) Proof of Subscription 5) Our PAN No. AABCJ3131F 6) Our Assessing Officer: Income Tax Officer Ward 6(2)! Kolkata Aayakar Bhawan Page 4 of 7
Salasar Silk Mills P.Ltd. A.Y:10-11
P-7, Chowranghee Square Road Kolkata - 700 069.” This letter is enclosed at Page 9 of assessee’s paper book.
The details filed along with the reply to the AO by Janki Textiles and Industries Ltd. is enclosed at page 10 to 15 of the assessee’s paper book. From these details the learned Counsel for the assessee drew our attention to the payments of Rs.1.25 crore paid by Janki Textiles and Industries Ltd. to the assessee on 19-03-2009. This is the copy of account of assessee in the books of Janki Textiles and Industries Ltd., the copy of which is enclosed at page 10 of the assessee’s paper book, which clearly reveals that this payment pertains to assessment year 2009-10 falling in FY 2008-09. The relevant AY under dispute before us is AY 2010-11 relevant to FY 2009-10. In view of these facts the learned Counsel for the assessee stated that the AO during the assessment proceedings under section 143(2) /143(3) of the Act, has examined each and every aspect of the share application and share premium capital charged on account of the allotment of shares to Janki Textiles and Industries Ltd. According to him, the AO formed an opinion and found that the share application money is totally explained and does not require to be added. In view of these facts, the learned Counsel for the assessee stated that even if assuming that this to be added, without conceding, the same is to be added in AY 2009-10 relevant to previous year 2008-09 because the source of money pertains to AY 2009-10. In view of the above, the learned Counsel for the assessee requested for quashing the revision order passed by CIT(A) under section 263 of the Act. On the other hand, the learned CIT DR. heavily relied on the revision order and argued that no harm is to be done to the assessee in case he expects that the AO will accept the expansion.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the above facts that the AO examined the details of share money and share premium money received by assessee from M/s Janki Textiles and Industries Ltd. during the course of assessment proceedings and after taking into consideration all the information he has framed Page 5 of 7
Salasar Silk Mills P.Ltd. A.Y:10-11 in assessments. We find from the facts that the assessee before the AO filed complete detail in respect to share application money received from Janki Textiles and Industries Ltd. on 19-03-2009 at Rs. 1.25 crores. Even in response to notice u/s 133(6) of the Act, Janki Taxtiles and Industries Ltd. replied to the AO and the reply is enclosed at page 10 of the assessee’s paper book, which clearly reveals that this payment relates to AY 2009-10 and not to the relevant AY 2010-11. We find that the AO examined each and every aspect of share application money and share premium charged on account of allotment of shares to Janki Textiles and Industries Ltd. According to us, the AO has formed an opinion that the share application money and share premium is fully explained and framed assessment u/s 143(3) of the Act. Accordingly, we are of the view that the assessee has produced relevant material and offered of explanations in pursuance of the notices issued u/s 142(1) and 133(6) of the Act and after considering the material and explanations, the AO came to a definite conclusion and merely the fact that a different view can be taken, it cannot be basis u/s 263 of the Act and such action, if taken cannot be held to be justified because the material was there on record and the said material was considered by the AO and a particular view was taken. This view of ours is supported by the decision of Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. V. CIT, (2000) 243 ITR 83 (SC). Relying on this decision of Hon’ble Supreme Court, we quashed the revision order of CIT and allow the appeal of the assessee.
In the result, the appeal of assessee is allowed. Order pronounced in the open court on 07-04-2017.