M/S RAJENDRA AND URSULA HOLDINGS PVT. LTD., JAIPUR,JAIPUR vs. PCIT-1, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’A’ JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM deys’k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 56/JP/2021 fu/kZkj.k o"kZ@Assessment Year :2016-17 cuke M/s Rajendra and Ursula Joshi Skill Principal Commissioner of Vs. Development Pvt. Ltd., Jaipur Income Tax-2, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGCR 4665 R vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 57/JP/2021 fu/kZkj.k o"kZ@Assessment Year :2016-17 cuke M/s Rajendra and Ursula Joshi Principal Commissioner of Vs. Holdings Private Ltd., Jaipur Income Tax-1, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGCR 2862 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Mahendra Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Sh. Manoj Mehar (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 15/03/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/05/2022

vkns'k@ ORDER

PER: RATHOD KAMLESH JAYANTBHAI, A.M. These two appeals filed by the assessee is arising out of an order passed under the provisions of section 263 of the Income Tax Act, 1961 [ here in after referred to as Act ] by the Principal Commissioner of Income Tax- 1 & 2, Jaipur [ Here in after referred

2 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur to as ld. PCIT ] dated 31-03-2021& 30-03-2021 for the assessment year 2016-2017.

APPLICATION U/S 5 OF LIMITATION ACT FOR CONDONATION OF DELAY.

The Hon'ble Members, Income Tax Appellate Tribunal, Jaipur Bench, Jaipur.

Reg: M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. vs. PCIT, Jaipur- 2 Sub: Prayer for Condonation of delay in filing of Appeal for A.Y.2016-17 u/s 263.

May it please your Honours,

3 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur The humble assessee most respectfully begs to submit as under:

"To obviate such difficulties and to ensure that the lawyers/ litigants do not have to come to file such proceedings in respective Courts/ Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under general law or Special Laws whether condonable or not shall stand extended w.ef. 15 March, 2020 till further orders to be passed by this Court in present proceedings."

4 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

It was further observed vide order dated 22.05.2020 by the Hon'ble Court that "In the case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown."

Even thereafter, the Hon'ble Court had been extending time limits again and again for all the concerned to complete their actions which were getting barred by limitation as also time limit for filing replies and making compliance for the notices were also extended. Recently the Hon'ble Court passed an order dated 10.01.2022 in Suo motu Writ Petition (C) No. 3 of 2020 on the issue of law of limitation by observing as follows: "Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, Supreme Court has directed as under:

• The period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.

• In cases where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period limitation remaining, with effect from 1-3-2022 is greater than 90 days, that longer period shall apply.

• The period from 15-3-2020 till 28-2-2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable

5 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."

6.1 It is submitted that the Hon'ble Supreme Court in the case of Collector, Land & Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has advocated for a very liberal approach while considering a case for condonation of delay. The following observations of the Hon'ble Court are notable:

"The legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub serves the ends of justice-that being the life- purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy."

Prayer: It is, therefore, humbly prayed that this application may kindly be allowed by condoning the minor delay of 36 days, taking a sympathetic view, in the interest of justice.

Any other order, which this Hon'ble ITAT deems fit and proper, be also passed in favour of applicant assessee.

6 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 5. It is beyond doubt that there was sufficient cause for not bringing the appeal in time by the assessee as it evident from the petition filed by the company. Considering the rival submission, and the decision of the supreme court relied upon by the assessee we are of the view that there is no intention to file this appeal belatedly but the delay in filing the appeal was due to a reasonable cause beyond the control of the assessee. Accordingly, we condone the delay in filing this appeal and decided to take the appeal on its merits.

7 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur "erroneous & prejudicial to the interest of revenue" needs to be satisfied cumulatively for invoking the provisions of section 263, thus the impugned Order dated 31-03-2021 so passed deserves to be held bad in the eye of law and be quashed and set aside.

8 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur to verify the source of increase in share capital in as much as that the PAN / ITR of the persons from whom the share capital was received was not on file and no explanation was sought from these entities about the nature and source of the money credited in their accounts. During the course of assessment proceeding AO also failed to verify the necessary details from Form No. 15CA, the reasons for large value of foreign remittances.

9 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur selected under complete scrutiny under CASS that included the reasons of 'refund claimed is justified. The share capital is genuine and from disclosed sources, Outward foreign remittances is from disclosed sources, Receipt of foreign remittance has been correctly offered for tax, Deduction claimed on account of business loss is admissible.

In the year under reference assessee received share capital of Rs. 76.50 Cr. from Shri Jayant Joshi, Shri Jalaj Joshi & Shri Nayan Joshi by the company.

Share holders Amount invested Rs. Jayant Joshi 25,50,00,000 Jalal Joshi 25,50,00,000 Nayan Joshi 25,50,00,000 Total 76,50,00,000

It is seen that no details of PAN / ITR of the persons from whom amount of Rs. 76.50 Cr. was received by the assessee was enquired and is not there on the record apart from source of investment by these entities. It is further noted that there is a credit entry of Rs. 15Cr. and of another Rs. 60Cr. on different dates in the bank account of the assessee company though assessee company received share capital of 25.50Cr, each from Jayant Joshi, Jalaj Joshi and Nayan Joshi. In the bank account of the assessee company credit is not reflected in the name of the three individuals but a consolidated credit entry of Rs. 5Cr and 20Cr. each is seen AO did not verify these details and did not enquire into source of money in the hands of these individuals. There is no other documentary evidence on record seeking allotment of equity shares by these entities, meeting of the board of directors authorizing allotment of equity share to these entities. It is important to note that after the proviso was inserted to section 68 of the I.T. Act by the Finance Act, 2012 with effect from 01.04.2013, AO ought to have enquired

10 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur about the source of the amounts so credited / invested along with documentary evidence, which AO failed to do.

There is no detail on record if the company had obtained necessary clearances / licenses as required from the regulatory authorities to start the courses and if any broad outlines / curriculum of the courses to be imparted were drafted / conceived. It seems that this program has eventually been carried forward by setting up a separate university by the assessee. It is also important to note that the Section 263 itself has undergone a change with effect from 01.06.2015 when explanation 2 to section 263 was introduced by the Finance Act, 2015. Explanation 2 is reproduced below for ready reference:

"Explanation 2. - For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if in the opinion of the Principal Commissioner or Commissioner, -

1 the order is passed without making inquiries or verification which should have been made;

2 the order is passed allowing any relief without inquiring into the claim; 3. the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or

11 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 4. the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person."

As it is evident that AO did not verify the necessary details in respect of increase in share capital in as much as the PAN / ITR details are not on record and bank statements were not duly verified as the credits appearing against receipt of share capital of 25.5Cr. each from three different entities are not reflected.

In reaching the such conclusions, I am aided by the following judicial rulings:

(i) Malabar Industrial Limited Vs. CIT (SC) 243 ITR 83 (ii) TTK LIG Ltd. Vs ACIT (Mad) 51 DTR 228 (iii) Arvee International Vs. Addl CIT (ITAT-Mum) 101 ITD 495 (iv) CIT Vs. Nagesh Knitwears P. Ltd. 345 ITR 135 (Del- HC) (v) Gee Vee Enterprise Vs. Additional CIT 99 ITR 375 (vi) CIT Vs. Raisions Industries Ltd. 288 ITR 322 (SC) (vii) Seshasayee Paper & Boards Ltd. 242 ITR 490 (Mad)

In view of the above, I hold that the order passed by the AO on 20.12.2018 was passed without conducting necessary inquires and without verifying necessary details which AO ought to have done considering the issues involved and the facts of the case as mentioned in Para's above. The order passed by the AO on 20.12.2018 is therefore, held to be erroneous and prejudicial to the interest of the revenue. The order passed by the AO is also held to be erroneous and prejudicial to the interest of revenue in terms of clause (a) & (b) of explanation (2) to section 263 of the Act. The order passed by the AO, thus, deserves to be set-aside to be made a fresh after giving opportunity to the assessee. The order of the AO is, accordingly, set aside.

The order of the AO is, accordingly, set a side.

12 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 11. Aggrieved on the action of the PCIT by passing the order the assessee company has preferred this appeal challenging the order of the PCIT mainly on two grounds. Since both these grounds are inter related and are in relation to the action of the PCIT under section 263 the same is decided together as even the assessee has filed their submission on both grounds together. The submission / contentions raised by the assessee before us are as under: GOA 1 to 2 Submissions: 1. Legal Position on Sec.263 - Judicial Guideline: Before proceeding, we may submit as regards the judicial guideline, in the light of which, the facts of this case are to be appreciated.

1.1 The pre-requisites to the exercise of jurisdiction by the Pr.CIT u/s 263 of the Act, is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The Pr. CIT has to be satisfied of twin conditions, namely:

(i) The order of the AO sought to be revised is erroneous; and, (ii)It is prejudicial to the interests of the Revenue. If any one of them is absent i.e. if the assessment order is not erroneous but it is prejudicial to the Revenue, Sec.263 cannot be invoked.

This provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to revenue's interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of

13 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC).

1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that:

"The phrase "prejudicial to the interests of the Revenue" in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when the AO adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the AO is unsustainable in law."

1.3 In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113): "... From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue". It is not an arbitrary or unchartered power; it can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials

14 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well accepted policy of law that there must be a point of finality in all legal proceedings that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity. Ratio of these cases fully apply on the facts of the present case in principle.

2.2 This is evident from queries raised and the replies given thereto, reproduced hereunder:

2.2.1 Through the Notice/s u/s 142(1) dated 28.11.2018 (PB 5-7), AO called for explanation as under:

“4. Furnish details of unsecured loans/ deposit taken/repaid during the year including squared up accounts with confirmation of cash creditors/depositors, copy of IT return acknowledgement and if possible copy of balance sheet so as to prove identity/creditworthiness of cash creditors and genuineness of transaction.

15 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 10. Please furnish complete details of outward foreign remittance and source of the same along with documentary evidences.

The assesse has partly responded to the notice vide letter dated 03.12.2018 (PB 10) 15. Details of foreign remittance & source along with documentary evidence

Particulars Amount Source of Remittance Purchase of Assets 1,78,41,931 Out of own funds through banking channels

Share Holder name Amount of Source of Capital share capital Invested invested Shri Jalal Joshi 25,50,00,000 Own funds through banking channels Shri Jayant Joshi 25,50,00,000 Own funds through banking channels Shri Nayan Joshi 25,50,00,000 Own funds through banking channels Thereafter, the assesse has responded in full in continuation to earlier letter dated 03.12.2018 (PB 11)

"In continuation to the reply submitted to your good office dated 03.12.2018 we are hereby submitting following information/documents as required by you:

1.List of shareholders to whom shares were allotted during the year under consideration along with their bank statement in which entries for share application money is reflecting:

16 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

Name Amount of Chequne no.(for share share application) application Shri Jalal Joshi 25,50,00,000 793077 and 113090 Shri Jayant Joshi 25,50,00,000 793054, 793052 and 793051 Shri Nayan Joshi 25,50,00,000 793102 and 113100

Source of funds available with the allotees

Jalaj Joshi

The fund available with Shri Jalaj Joshi is transferred by his uncle Mr. Rajendra Kumar Joshi who is a Non-resident living in Switzerland since 1969) from SB- NRE account no. 61158966195 vide cheque no. 405467, 405469, 405491 and 405496 as a gift. Copy of the bank statement of Mr. Rajendra Kumar Joshi and Mr. Jalaj Joshi is enclosed.

Jayant Joshi

The fund available with Shri Jayant Joshi is transferred by his uncle Mr. Rajendra Kumar Joshi who is a Non-resident living in Switzerland since 1969) from SB- NRE account no. 61158966195 vide cheque no. 405465, 405466, 405490 and 405493 as a gift. Copy of the bank statement of Mr. Rajendra Kumar Joshi and Mr. Jayant Joshi is enclosed.

Nayan Joshi

The fund available with Shri Nayan Joshi is transferred by his uncle Mr. Rajendra Kumar Joshi who is a Non-resident living in Switzerland since 1969) from SB- NRE account no. 61158966195 vide cheque no. 405468, 405470, 405492 and 405497 as a gift. Copy of the bank statement of Mr. Rajendra Kumar Joshi and Mr. Nayan Joshi is enclosed."

17 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur Evidently the AO made all the possible inquiries, sought clarifications on all the relevant aspects to the extent he was supposed looking to the nature of the issue involved, and the evidences and material already available on record together with the material provided during the assessment proceedings.

2.3 The assesse opted for personal hearing. Again, an admitted fact is that the AR CA Rajeev Mathur attended on various occasions on as many as three dates mentioned on the first page of the subjected Assessment Order and produced books of account including filed reply on the line on which notices were issued, submitted necessary details and explanation and filed various other details as required, stated above and also those even though not required, which were duly examined.

Needless to say that, during the course of personal hearing, there is always an exchange of oral information by way of discussion. The AO raised relevant queries discussed the issues of identity and creditworthiness of the shareholders, source of investment, copies of bank statement and the genuineness of the transactions and the AR explained him, in a great detail w.r.t all the aspects. Hence, it cannot be presumed that a quasi-judicial authority having raised the relevant queries would not have asked anything from the AR during the course of the personal hearing and remained a silent spectator. Although in the show cause notice, the fact of non-filing of PAN and ITR was not made a ground as now alleged first time in the impugned order and hence is not a good ground for S. 263 of Act, however, all the shareholders were regular IT assesses with PAN and the AO was having the authority and a technical infrastructure to look into the assessment record of this year as well as the preceding year along with the enclosures filed with or within the ROI by the concerned shareholder,

2.4 Thus, unless there was something negative available on record or so alleged by the ld. Pr. CIT, his attempt to find fault in the actions of the AO, is not legally justified.

18 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

2.5 Short and cryptic does not mean that no inquiry was made. There are various case laws taking this view. Kindly refer case law Maithan International vs. ACIT (2012) 134 ITD 393 (Kolkata ITAT), where it was held as: "We are of the view that if an AO acting in accordance with law makes certain assessments, the same cannot be branded as erroneous by the CIT simply because, according to him, the order does not speak about the issue or the order should have been written elaborately. The order of the AO may be brief or cryptic but that by itself is not sufficient to brand the assessment order as erroneous or prejudicial to the interest of Revenue. Writing an order in detailed may be a legal requirement but the order not fulfilling this requirement cannot be said to be erroneous or prejudicial to the interest of Revenue reasons being the AO has already made enquiries by issuing notice, considering the assessee's reply to the notice issued, deputing Inspector and obtaining several evidences in respect of the claim of the assessee."

3.1 Identity Established: The facts are not denied that the assesse had already submitted complete addresses of all the 3 shareholders as also their Permanent Account Number (PAN) which is the best evidence to prove the identity of a shareholder, in the records of AO itself. Moreover, all the transactions with all the shareholders were admittedly made through banking channels only. Thus, their identity is fully established.

3.2 Genuine Transactions: The genuineness of the transaction is duly and established in as much all the investments were made through account payee cheque only and the same was duly verified by the AO from the bank statement (II PB 75-76) of the assesse company as also of the share applicants (PB 15-17) filed before him, wherein the

19 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur fact and the receipt (and payment) of the subjected amount towards the allotment of share, was clearly visible. Admittedly, copies of Bank statements of the doner Late Shri Joshi as also of all the shareholders of the company were also filed and all the transaction of receipt are fully verifiable. Although the confirmations of all the 3 shareholders (PB 20- 21) containing complete details i.e. the amount, date, cheque number etc, were filed before the CIT, however, copies of the bank statements, of the shareholders and the company were filed proving the genuineness of the transaction It is not the case of the Ld Pr. CIT that cash was deposited in their bank accounts so as to justify any suspicion. Pertinently the Ld. Pr. CIT never doubted the explanations and never rebutted all the voluminous evidences submitted herein above. Thus, the above factual position is duly admitted even by the Ld. Pr. CIT. Further, pertinent fact is that even the assessment of all the shareholders stands completed (Though u/s 143(1) but still has evidently value), without making any variation in the declared income therefore, the source of funds in their hands before transferring share application money of Rs. 76.50 Crores to the appellant, stands established beyond all doubts.

Still if the AO doubts the availability of the source in the hands of those shareholders, then the AO/CIT must have taken actions in the hands of those 15 shareholders but not in the case of the assessee. We rely on the CIT vs. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC).

Reliance is placed on the case of Elder IT Solutions (P.) Ltd. vs CIT [2015] 59 taxmann.com 232 (Mumbai Trib.), it was held that:

"18. In the case in hand, there is no dispute that the AO called for financial details of these companies and also examine the parties in order to satisfy himself about the genuineness of the transaction. Therefore, on the basis of the record available before him, the AO accepted the claim of the assessee. The Commissioner has not found any fault with the details and records filed by the assessee in support

20 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur of the claim but has cited the reasons that the AO has not conducted the proper enquiry. When the entire records was available with the Commissioner then he ought to have given a concluding finding that the view taken by the AO contrary to the law as well as facts emerging from the records. However, the Commissioner has not given any such finding and restored the matter to the record of the AO which is not permissible as per the provisions of section 263 when the AO has conducted the enquiry and allowed the claim of the assessee on the basis of the examination of the record as well as the parties in person. We further note that the assessee has also filed the bank statements of these companies showing the transaction of payment of share premium as well as loans to the assessee. The transactions were also reflected in the return of income filed by these companies, therefore, in any case if the Department has any doubt about the genuineness of arranging the funds by these share applicant companies, the enquiry and investigation should have been conducted in those cases as held by the hon'ble Delhi High Court in the case of Lovely Exports (P.) Ltd. (supra) which has been confirmed by the hon'ble Supreme Court by dismissing the special leave petition filed by the Department."

3.3 Source of receipt of Share Capital Amount- Established: Further the creditworthiness of the shareholders also stands fully established in as much as the direct source of the amounts given was the gift received by the shareholders from Dr. Rajendra Kumar Joshi, which fact cannot be denied as the transaction have made through account payee cheque/account transfer, reflected in the bank statement of donor as well as the donees and also mentioned in the Gift deed signed by both the parties (PB 13-14 others were before the CIT). The assessee has not only submitted their PAN details but also provided copies of acknowledgement of filing return of income which contains the computation of total income. (PB-II 86-88)

Needless to say that the entire information of that particular shareholder being the ITR, details of income declared,

21 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur subjected transactions done with the assesse company in the current year as also his creditworthiness/ financial capacity must have been duly verified by the AO, with the help of the portal. The Ld. Pr. CIT, in fact, did not apply his mind on this aspect and ignored that the AO was empowered legally and technically to have examined online the veracity of the claim made by the assessee with regard to the creditworthiness of the shareholders.

3.4 The relevant extract from the submissions made u/s 263 are strongly relied upon and reproduced hereunder:

"1. Source of Increased Share Capital:

Company has issued the share Capital of Rs, 76.50 Crores to three existing Shareholders namely Mr. Jayant Joshi son of Mr. Jitendra Kumar Joshi; Mr. Jalaj Joshi son of Mr. Jitendra Kumar Joshi & Mr. Nayan Joshi son of Mr. Vinod Kumar Joshi. In lieu of issuance of the share capital to these three shareholders, the Company has received the share capital amount through banking channel transfers from the bank accounts of these three shareholders, into the Company's bank account No. 662920110000752 held in the Bank of India, New Sanganer Road, Jaipur, Copy of the Statement of the Company's bank account No. 662920110000752, Bank of India for the financial year 2015- 2016 and PAS 3 for allotment of shares is attached for your kind perusal. Further, Details of source of Investment of each of the three shareholders is also explained in detail as follows:

(a) Mr Jayant Joshi: The company has issued share capital of Rs.25.50 Crores to Mr Jayant Joshi during the year under consideration. It is to inform you that Mr Jayant Joshi has invested Rs.25.50 Crores in the share capital of the Company from the funds received from his uncle Dr. Rajendra Kumar Joshi (relation- Father's Brother) as gift. The Copy of declaration of Gift in favour of Mr. Jayant Joshi from Dr. Rajendra Kumar Joshi is hereby attached as Annexure "A" for your kind perusal.

22 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

(b) Mr Jajaj Josht:- The company has issued share capital of Rs.25.50 Crores to Mr Jalaj Joshi during the year under consideration. It is to inform you that Mr Jalaj Joshi has invested Rs.25.50 Crores in the share capital of the Company from the funds received from his uncle Dr. Rajendra Kumar Joshi (relation- Father's Brother) as gift. The Copy of declaration of Gift in favour of Mr. Jalaj Joshi from Dr. Rajendra Kumar Joshi is hereby attached as Annexure 'B' for your kind perusal.

(c) Mr Nayan Joshi: The company has issued share capital of Rs.25.50 Crores to Mr Nayan Joshi during the year under consideration. It is to inform you that Mr Nayan Joshi has Invested Rs.25.50 Crores in the share capital of the Company from the funds received from his uncle Dr. Rajendra Kumar Joshi (relation- Father's Brother) as gift. The Copy of declaration of Gift in favour of Mr. Nayan Joshi on behalf of Dr. Rajendra Kumar Joshi is hereby attached as Annexure "C" for your kind perusal.

S.No. Name of Value in Value in INR Purpose Acknowledgeme Date of form the party foreign nt no. of 15 form 15 CA currency 15 CA 1 EMCO EURO 7,19,572 Purchase of 581552641 25.06.2015 MAIER 10014.92 Machinery 250615 GesmbH 2 SMC EURO 2,128,090 Purchase of 570517261 12.05.2015 Espana 29232 Machinery & tools 120515 3 USINES CHF 8,47,864 Purchase of 570515841 12.05.2015 METALLU 12077.84 Machinery & tools 120515 RGIQU ES DE VALLORB E SA 4 EMCO EURO 14,142,000 Purchase 569184991 05.05.2015 MAIER 200000 of 050515 GesmbH Machinery Total 17,837,526

23 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

With reference to the observation of non-submission of FORM 15CA for the foreign outward remittances, we would like to emphatically and conclusively inform you that FORM ISCA has been filed by the company for each and every foreign outward remittance. We hereby attach the Form 15CA along with vendor Invoices, Foreign remittance advices and Form 15CB as Annexure "D" for your kind perusal.

During the year under consideration, the company has made foreign outward remittances. of. Rs. 1,78,37,526/- (One Crore Seventy-Eight Lakhs thirty Seven thousand five hundred twenty six only) and the same has been verified by the Assessing officer at the time of Assessment. Summary of Foreign payments are as follows:

4.1 AO acted as per Judicial Guidelines:

The AO framed the assessment in accordance with the available judicial guideline. This contention is all the more further established when binding decisions of the Hon'ble jurisdictional High Court in various cases (infra) have propounded the principle in the context of S.68 being only the examination of the identity of the shareholder concerned his/her the confirmation of the fact of providing/ transferring subjected amount to the assesse but the AO was not legally bound to examine source of source, once the immediate source is available.

In the present case, with the help of the portal, the AO was having complete details of the identity in the shape of PAN number, Aadhar & address, etc. (PB - II 81-85). As stated, he was able and he looked into the file of the shareholders in the portal of the department. Thus, in view of the binding judicial guideline, the AO was not obliged still to ask the assessee to provide source of source under the pretense examination of the creditworthiness of the shareholder. (Even though he was satisfactorily explained and the AO duly verified source of sources.)

24 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

4.2 Following decisions of Hon'ble Rajasthan High Court are directly relevant for the purpose.

4.2.1 Kindly refer Labhchand Bohra V/s ITO (2008) 8 DTR 44 (Raj.) dated 28.04.2008 (DPB) held that

"Cash credit-burden of proof-identity of the creditors established and the confirmed the credit. This discharged the burden of appellant to prove genuineness. However, capacity of the lender to advancement money to appellant was not a matter which the appellant could be required to establish and that would amount to calling upon him to establish the source of source. Hence addition cannot be sustained."

4.2.2 In Aravali Trading Co. v/s ITO (2008) 8 DTR 199 (Raj) dated 25.01.2007 (DPB) held that:

"Once the existence of the creditors is proved and such persons own the credits which are found in the books of the appellant, the appellant's onus stand discharged and the latter is not further required to prove the sources from which the creditors could have acquired the money deposited with him and, therefore the addition u/s 68. cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the appellant itself."

4.3. The law is well settled that where the AO acted following the decisions of the judicial High Court his order cannot be termed as erroneous. Kindly refer CIT v. G. M. Mittal Stainless Steel (P.) Ltd. [2003] 263 ITR 255 (SC), wherein it is held:

"Precedent-Binding nature of judgment-Decision of the jurisdictional High Court-Where the decision of the jurisdictional High Court has not been set aside or at least has not been appended from it would be binding-In view of this CIT proceeding on the basis of the High Court other than jurisdictional High Court on the basis that jurisdictional High Court was erroneous and that the AO who had acted in

25 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur terms of the High Court's decision had acted erroneously, was not justified"

5.1 In the case of CIT v. Vijay Kumar Koganti [2020] 120 taxmann.com 430 (Mad) where it was held that: "Section 69, read with section 263, of the Income-tax Act, 1961- Unexplained investment (Share application money) Assessment year 2014-15 Assessee filed its return for relevant assessment year Case was selected for scrutiny to consider (i) substantial increase in capital investment and, (ii) mismatch in sale consideration of property in return of income and AIR - Assessing Officer after perusal of documents, verification of income tax returns of assessee and making enquiries with company where assessee held shares, passed assessment order - Principal Commissioner invoked revisionary jurisdiction under section 263 and set aside assessment order mainly on ground that substantial increase in capital investment reflected by assessee in his balance sheet as compared to preceding year was not examined by Assessing Officer Tribunal set aside revisional order observing that these issues were raised by Assessing Officer in scrutiny assessment and that assessee had given proper explanation, which was taken note of by Assessing Officer while completing assessment under section 143(3) Whether since Pr. Commissioner did not point out anything specifically as to how assessment order was erroneous, no question of law arose out of impugned order of Tribunal - Held, yes (Paras 10 and 13] [In favour of assessee]" 5.2 In the case of Hill Queen Investment (P.) Ltd. Vs PCIT, Kolkata [2021] 127 taxmann.com 682 (Kol - Trib.) it was held that:

"Section 68, read with section 263, of the Income-tax Act, 1961- Cash credit (Bogus sales) - Assessment year 2015-16- Assessee company filed its return of income for relevant year - Case was selected for limited scrutiny on ground of mismatch in sales turnover and suspicious sale transaction in shares - Assessment was completed under section 143(3) - Thereafter, Commissioner issued a show cause notice to

26 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur assessee under section 263 proposing to revise assessment order passed under section 143(3) - Assessee stated that Assessing Officer had already verified issue of shares at time of assessment proceedings before finalizing assessment order, therefore, proceedings under section 263 could not be invoked - It was found that Assessing Officer during course of assessment proceedings had issued notice under section 142(1), along with a questionnaire and directed assessee to furnish documents and evidences of sale transactions of shares and assessee had given point wise reply and transactions were supported by documentary evidences notes, bills, bank transactions and transactions were done on platform of stock exchange - Whether since Assessing Officer had called for and verified all details and documents in connection with purchase and sale of shares in question and after examining same, had taken a possible view that transactions were genuine, revision of assessment order under section 263 by Commissioner being bad in law was to be quashed and set aside - Held, yes (Paras 9, 11 and 12][In favour of assessee]"

5.3 In the case of Nilkanth Stone Industries Vs PCIT, Valsad [2021] 128 taxmann.com 416 (Surat-Trib.) it was held that: "Section 69A, read with section 263, of the Income-tax Act, 1961- Unexplained moneys (Revision) - Assessment year 2014-15 - Assessee-firm, engaged in business of stone crushing and selling of crushed stones, filed its return of income - Case was selected for scrutiny and an assessment order was passed under section 143(3) making certain addition - Subsequently, Pr. Commissioner invoked revision under section 263 on ground that Assessing Officer had not examined issue related to advance of certain amount given by assessee to one AIP and also had not examined issue related to payments of commission to two persons Thus, impugned assessment order was erroneous and prejudicial to interest of assessee - It was noted that assessee had furnished all relevant details regarding loan and advances given to AIP and explained that said advance was returned back in next year and also furnished copy of ledger account - Further, assessee had also submitted all evidence and

27 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur explained services in relation to sales provided by such two persons to whom it paid commission along with copy of sales register, profit and loss account and confirmation of parties before Assessing Officer - It was again furnished in revision proceedings and that nothing was found wrong against those documents by Pr. Commissioner - During scrutiny assessment assessee filed reply to all queries raised Assessing Officer and produced all relevant evidences and after considering those materials and explanation, Assessing Officer came to a conclusion regarding advances and commission payments in question though it was not mentioned explicitly in assessment order - Whether, on facts, impugned invocation of revision under section 263 was unjustified-Held, yes [Paras 10, 11, 16 and 17] [In favour of assessee]"

5.4 In the case of Meerut Roller Flour Mills (P.) Ltd. Vs CIT [2019] 110 taxmann.com 170 (Allahabad) it was held that:

"Section 69A, read with section 263, of the Income-tax Act, 1961- Unexplained money (Loan) - Assessment year 2007- 08- For relevant year, assessee filed its return declaring certain taxable income - Assessee's case was selected for scrutiny and a notice was issued under section 143(2) to which assessee replied along with documentary evidence - Assessing Officer being satisfied, passed assessment order under section 143(3) - Commissioner subsequently passed a revisional order directing Assessing Officer to examine matter relating to unsecured loans obtained by assessee - Tribunal confirmed said revisional order - It was noted that in course of assessment, Assessing Officer had raised various queries from assessee in respect of unsecured loan which were duly replied by assessee along with documentary evidence in regard to each of query Whether in aforesaid circumstances, unless Commissioner exercising power under section 263 brought on record any evidence showing that order of Assessing Officer was erroneous, as same was passed without application of mind or Assessing Officer had made an incorrect assessment of fact or incorrect application of bus, rectaional order passed by him unsustainable Held,

28 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur yes Whether since Commissioner failed to do so, impugned versional order was to be set aside Held, yes (Paras 21 and 221 ) [ in favour of assessee ]

5.8 In the case of POIT, Bikaner va Dilip Kumar Swami (2019) 106 taxmann.com 50 (Ra) it was held that "Section 68, read with section 26.3 of the Income tax Act, 1961 Cash credits (Bank deposits) Assessment year 2009- 10 Assesse filed his return declaring certain taxable income In course of assessment, Assessing Officer noted that assessor had deposited certain amount in his bank account. On being enquired about source of sold deposit, assesse explained that it represented amount received from various purchasers against sale of goods i.e. tractors and accessories thereof Assessing Officer accepted assessee's explanation and completed assessment Commissioner taking a view that cash deposits not being satisfactorily explained, passed a revisional order setting aside assessment Tribunal, however, set a side revisional order so passed It was noted that order passed by Assessing Officer that deposits stood reconciled was preceded by a proper inquiry it was also found that assessee had produced statement of bank account, copies of bills issued to purchasers of tractors as also books of account showing entries of deposits made in bank- Moreover, Assessing Officer had recorded a categorical finding that entries in bank account were verifiable from cash book and also bills produced by assessee Whether in view of aforesaid, Tribunal was justified in setting aside revisional order passed by Commissioner Held, yes [Para 111 in favour of assesse"

5.6 In the case of CIT, Central-III vs. Nirav Modi [2017] 77 taxmann.com 78 (BC) it was held that:

"Section 68, read with section 263 of the Income tax Act, 1961 Cash credit (CH) Assessment years 2007-08 and 2008- 09 During relevant years, assessed received certain amount as gifts from his father and sister who were non residents in India Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and

29 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur creditworthiness of donors He thus accepted transaction of gift declared by assessee Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh Tribunal set aside revisional order It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous Whether on focts, it won a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order Held, yes (Paras 9 and 121 (In favour of assessee

5.7 In the case of CIT vs Nirav Modi (2016) 71 taxmann.com 272 (Bombay) it was held that:

"Section 68, read with section 263, of the Income tax Act, 1961 Cash credit (Gif) Assessment years 2007-08 and 2008- 09 Assessee received certain amount as gifts from his father and sister who were non residents in India Assessing Officer after making detailed enquiries, took a view that assensee had duly proved identity, source and creditworthiness of donors Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh-It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous - High Court by impugned order held that it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order Whether Special Petition filed against impugned order was to be dismissed Held, yes [Para 2] [In favour of assessee]"

30 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 5.8 In the case of CIT Mumbai Vs Reliance Communication Ltd. [2016] 76 taxmann.com 226 (SC) it was held that:

"Section 68, read with section 263, of the Income-tax Act, 1961- Cash credits (FCCBs) - Assessee raised funds by way of FCCBS during year under consideration - Assessing Officer completed assessment accepting income declared by assessee - Commissioner noticed that no investigation was carried out by Assessing Officer to establish name and address, genuineness and creditworthiness of actual subscribers to FCCBs in terms of section 68 - He thus passed a revisional order setting aside assessment - Tribunal noted that Assessing Officer had made detailed enquiries about aforesaid aspect and mere fact that he did not make any reference to said issue in assessment order, could not make said order erroneous and prejudicial to interest of revenues - High Court by impugned order held that finding recorded by Tribunal being a finding of fact, no substantial question of law arose therefrom- Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes (Para 11] [In favour of assessee]"

5.9 In the case CIT vs Kamal Galani [2019] 110 taxmann.com 213 (SC) it was held that:

"Section 69A, read with section 263, of the Income-tax Act, 1961- Unexplained money (Revision) Block period 1-4-1996 to 25-7-2002 Assessee was subjected to block assessment proceedings During such proceedings, Assessing Officer found that there was introduction of amount in capital account of assessee - Further, assessee had received loan from his brother - With respect to introduction of capital, assessee had pointed out that he was an NRI for over two years and he had made foreign remittances over a period of time - As regards unsecured loan received from his brother, assessee pointed out that he was running a successful business of trading, was engaged in various commercial and non-commercial activities and he was man of standing and means - Assessing Officer accepted explanation of assessee and did not make any addition in respect of those amounts -

31 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur Whether once Assessing Officer carried out detailed inquiries, it was not open for Commissioner to reopen issues on mere apprehension and surmises - Held, yes - Whether, therefore, Tribunal was justified in setting aside impugned revisional order - Held, yes [Para 20] [In favour of assessee)"

6.1 Beyond the scope of enquiry contemplated u/s 263: The admitted fact was that although the case was selected for complete scrutiny so as to examine whether the funds received in the form of share capital are from disclosed sources and whether the share capital is genuine as per notice issued u/s 142(1) dated 28.11.2018 (PB 5-7). Hence, the scope of enquiry was limited to the extent of the issues made a basis for selection of the case. Evidently, there was no pointed reference made to S.68 therefore, the technical requirement of S. 68 being establishing the identity and creditworthiness of the creditor, could not have been presumed by the Ld. Pr. CIT and consequently, he could not have expected the AO to get the same proved by the assesse to the hilt. However, no permission was sought to expend the scope of the scrutiny. The fact that the subjected amount received towards share application was fully established as received from disclosed sources and share capital was genuine.

6.2. Supporting Case Laws:

The law is well settled that in the limited scrutiny assessment, the AO can be expected to make enquiry only to the extent of the reason/ basis of selection of the case for the limited scrutiny and the Pr. CIT cannot invoke S. 263 on the issues which were not made basis for selection of the case.

6.2.1 In Nayek Paper Converters vs. ACIT (2005) 93 TTJ (Cal) 574, it was held that:

"Revision-Erroneous order and/or order prejudicial to Revenue-Limited scrutiny assessment by AO under s. 143(2)(1)-Exercise of revisional jurisdiction by CIT directing

32 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur AO to make comprehensive scrutiny assessment under s. 143(2)(ii)-Invalid-It is the exclusive discretion of the AO to proceed under s. 143(2)(i) or 143(2)(ii) in a given case-AO having chosen to make assessment under s. 143(2)(i) after obtaining approval of Addl. CIT and making proper enquiries, order of AO could not be said to be erroneous and prejudicial to the interest of Revenue-Further, time limit for issue of notice under s. 143(2)(i) had also expired-Still further, only miniscule cases were to be taken up for comprehensive scrutiny under s. 143(2)(i) as per guidelines issued by CBDT"

The ld. CIT in para 5 has directed the AO to verify Form 15CA which were submitted before him vide reply dated 12.03.2021 relating to large outward of foreign remittance towards purchase of machinery, for this, he made clause (a) of Explanation 2(a) of S. 263 Act. The ld. CIT however, completely failed to understand that no such verification and inquiry of Form 15CA was required made in as much as such forms are being filed online u/r 37BB and are available and

33 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur visible to the AO on the portal of the department like Form 26AS and even were duly verified. The ld. CIT did not doubt the acquisition of the plant and machinery and the claim of the deprecation made in relation there to. When there is absolutely nothing adverse on record brought by the ld. CIT necessitating the AO to make inquiry to particular aspect, on such small issues which does not lead anywhere or does not result to any revenue loss, this appears to be the case of misuse of powers conferred vide the Explanation 2(a) of S. 263 of Act. Hence no S. 263 action was required.

10.1.1 It is not the case of complete/total lack of inquiry: The law is well settled that the Assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry. Unless there is an established case of total lack of enquiry. Kindly refer CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del) (DPB), wherein Delhi High Court was considering the aspect, when there is no proper or full verification, and it was held that:

"One has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open."

10.1.2 In another case of Narain Singla v. PCIT [2015] 62 taxmann.com 255 (Chandigarh Trib.) (DPB) it was held that

34 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

when AO was fully aware of - matter, he had appraised evidences filed by assessee and then had formed a view to accept same, Commissioner was unjustified in invoking jurisdiction under section 263. Whether if there was an enquiry, even inadequate, that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has a different opinion in matter; it is only in case of lack of inquiry' that such a cause of action can be open.

10.1.3 In CIT vs. Chemsworth Pvt. Ltd. (2020) 275 Taxman 408 (Kar) (DPB. it was held that:

"Revision-Erroneous and prejudicial order-AO taking plausible view-AO completed the assessment without considering expenditure which was not allowable under s. 14A-CIT that non-consideration of disallowable expenditure under s. 14A was erroneous and is prejudicial to the interest of the Revenue-Not correct-CIT has held hat the enquiry conducted by the AO was inadequate and has assumed the revisional jurisdiction Assessee has filed all the details before the AO and AO has accepted the contention of the assessee that no expenditure was attributable to the exempt income during the relevant assessment year-Thus, while recording the said finding, the AO has taken one of the plausible views in allowing the claim of the assessee-Therefore, CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry-Order passed by the CIT was not sustainable in law hence, the Tribunal rightly set aside the impugned order of the CIT."

The ld. Pr. CIT is completely silent on this aspect.

10.2 Even the amendment (Expl. 2(a)) does not confer blind powers: It is held that despite there being an amendment, enlarging the scope of the revisionary power of the ld. PCIT u/s 263 to some extent, it cannot justify the invoking of the Expl. 2(a) in the facts of the present case. Before referring to that Explanation, one has to understand what was the true

35 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur meaning of the Explanation in the context of application of mind by a quasi-judicial authority.

10.2.2 This aspect is directly covered by recent decision of Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Surat-2 Vs. Shreeji Prints (P.) Ltd. [2021] 130 taxmann.com 294 (DPB 43-48) wherein vide the Hon'ble Supreme Court held as under:

"Section 69, read with section 263, of the Income-tax Act, 1961- Unexplained investments (Unsecured loans) Assessment year 2013-14 Assessee-company had received unsecured loans from two different companies - Commissioner noting that said loans were shown as investment in assessee's name in balance sheet of respective companies exercised his revisionary powers and passed an order without giving an opportunity to assessee of being heard, invoking Explanation 2 to section 263 - High court by impugned order held that since Assessing Officer has made inquiries in details and accepted genuineness of loans received by assessee, such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial to interest of revenue - Whether SLP against said impugned order was to be dismissed - Held, yes [Para 21 [In favour of assessee)"

10.2.3 In the case of Narayan Tatu Rane Vs. ITO Itat, (2013) 7 NYPTTJ 1493 (Mum) it was held that newly inserted Explanation 2(a) to S. 263 does not authorize or give unfettered powers to Commissioner to revise each and every order, if in his (subjective) opinion, same has been passed without making enquiries or verification which should have been made. As submitted above here also the AO having already applied its mind (directly or indirectly), the assessment order was not erroneous.

11.1 Kindly refer CIT v/s Rajasthan Financial Corporation (1996) 134 CTR 145 (Raj). (DPB) held that:

36 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

"Once AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Offer allowed the claim being satisfied with the explanation of assessee, the decision of the AO cannot be held to be erroneous simply because in his order not make an elaborate discussion in that regard."

11.2 In CIT v/s Ganpat Ram Bishnoi (2005) 198 CTR (Raj) 546 (DPB) held that from the record of the proceedings, in the present case, no presumption can be drawn that the AO had not applied its mind to the various aspects of the matter. In such circumstances, without even prima facie laying foundation for holding that assessment order is erroneous and prejudicial to interest in any matter merely on spacious ground that the AO was required to make an enquiry, cannot be held to satisfy the test of existing necessary condition for invoking jurisdiction u/s 263. Jurisdiction u/s 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiry ought to have been conducted to find something.

11.3 The facts of the present case are squarely being covered by the recent decision of Hon'ble bench in the case of Annu Agrotech (2021) 214 TTJ 1118 (JP) (DPB), is directly relevant in the present context wherein it was held that,

"The Authorised Representative produced books of account including cash book, ledger, subsidiary records and various other details as required, which were duly examined. The AO made all the inquiries, sought clarifications on all the relevant aspects to the extent he was supposed looking to the nature of the issue involved, the past accepted history of the case and the evidences and material already available together with the material provided during the assessment proceedings. AO was having complete details of the identity of the shareholders in the shape of PAN and address. He

37 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur was also having confirmation of the parties duly signed by the shareholders. He looked into the file of the shareholders in the portal of the Department. In view of the above, the AO raised very specific and directly relevant queries/called for explanation and evidences w.r.t. source of amount received by the company from the shareholders. The facts are not denied that the assessee had already submitted complete addresses of all the three shareholders as also their PAN which is the best evidence to prove the identity of a shareholder, in the records of AO itself. Moreover, all the transactions with all the shareholders were admittedly made through banking channels only. Thus, their identity is fully established. The genuineness of the transaction is fully established inasmuch as all the payments were made through account payee cheques only and the same were duly verified by the AO from the bank statement of the assessee company filed before him, wherein the fact and the receipt of the subjected amount towards the allotment of shares was clearly visible and was duly verified by the AO. Apart from the bank statement, the AO was also having the ledger accounts of the bank in the account books maintained by the assessee and produced before him as also through the confirmation of all the three shareholders containing complete details i.e.. the amount, date, cheque number, etc. It is not the case of the Revenue that the borrowing was made in cash so as to justify any suspicion. There was no cash deposit made in their bank account just prior to issue of cheques to the assessee-company. Creditworthiness of the shareholders also stands fully established inasmuch as the direct source of the amounts given was the income declared year to year by the respective shareholders in their returns of income (accumulated savings) and loan taken from outsiders but finally deposited in the respective bank accounts by the shareholders. The assessee not only submitted their PAN but also provided copies of acknowledgement of filing return of income which contains the computation of total income. The AO directly inquired deeper into the assessment record of the concerned shareholder on the portal of IT Department with reference to the respective PAN given by the assessee. Needless to say that the entire details of each shareholder

38 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur te., lance sheet, income declared, transactions done with the assessee-company as also his creditworthiness/financial capacity was duly verified by the AO. Oral explanation were also made during the personal hearing. The Principal CIT, in fact, did not apply his mind on this aspect and ignored that the AO was empowered legally and technically to have examined the veracity of the claim made by the assessee with regard to the creditworthiness of the shareholders. Therefore, the allegation and the expectation of the Principal CIT from the AO acting as quasi-judicial authority, examine the receipts in context with s. 68 and requiring the assessee to prove the credit to the hilt, is clearly beyond the scope of s. 263, inasmuch as he was supposed only to examine the fact that the amount so received towards the share premium was not from undisclosed sources (if one strictly goes by the reason of selection for limited scrutiny).-Labh Chand Bohra us. ITO (2008) 8 DTR (Raj) 44: (2008) 219 CTR (Raj) 571 and Aravall Trading Co. us. ITO (2008) 8 DTR (Raj) 199: (2008) 220 CTR (Raj) 622 followed."

11.4 In case of Rajmal Kanwar v. CIT-I [2017] 82 taxmann.com 119 (Jalpur - Trib.) it was held that orders prejudicial to interest of revenue - Assessment year 2011-12- Where AO had made sufficient enquiries, considered survey records and surrender made by assessee and after considering submissions of assessee completed assessment proceedings under section 143(3), assessment order could not be held to be an erroneous order which was prejudicial to interest of revenue.

11.5 In the case of Abdul Hamid v. Income-tax Officer (2020] 117 taxmann.com 986 (Gauhati Trib.) it was held that only probability and likelihood to find error in assessment order is not permitted u/s 263.

11.6 CIT v/s Vikas Polymers 341 (2012) ITR 0537 (Del)

12.1 The allegations made by the Pr.CIT are completely baseless, hold no good: The allegation and the basis of

39 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur holding the Assessment Order erroneous etc. to the effect that no details/PAN of the shareholders was enquired apart from sources, is incorrect in as much as the AO was competent and hence enquired from the portal. Moreover, source was duly examined. The substantive fact fully established is that all the 3 shareholders had received the amount of Rs. 76.50 Cr through E-banking channels. The availability of the fund in the NRI A/c of late Dr. Joshi (PB 18- 19) and flowing of the funds from that account to the different relative shareholders to their respective accounts, was elaborately discussed and demonstrated before the AO (and also before the ld. Pr.CIT as well) wherein, he could not find any fault. Also Gift deed signed by both the parties, were filed before the CIT, who did not adversely comment. Even assuming the subject résists were not from gift, then it could be a receipt of a loan or maybe receipt of any nature whatsoever. But at the end of the day, the fact is that the shareholders were in receipt of funds of Rs 76.50 Cr from the donor late Dr. Joshi, which fact, has not at all been doubted by the Ld. Pr.CIT what to talk of disapproving the same.

12.2 His allegation that in the bank account of the company credit is not reflected individually but consolidated credit entry of Rs. 5Cr and and Rs. 20cr is each is seen which the AO did not verify which, is nothing but a suspicion. Kindly refer at a glance chart (PB II 74) which has established the flow of fund. Interestingly, the ld Pr.CIT himself refers to the bank statements of the company as also the bank statements of the investors and admits the fact of receipt of the funds from the shareholders. The Ld Pr. CIT himself admitted the receipt of funds and availability thereof prior to making of investment and he also admitted the utilization of the funds for making the investments towards the share capital of the appellant company.

12.3. All the three shareholders were allotted shares and copies of PAS 3 and share certificate (PB 22-31) were also submitted but appears to have been ignored.

40 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur The AO was fully satisfied with the fact of the receipt of the fund from 3 shareholders, which was the immediate source of investment made of Rs 76.50 Cr in the appellant company. More particularly, he was also having the source of source being the amount transferred by late Dr. Joshi to the bank accounts of the shareholder. Therefore, there was nothing left for the AO to make enquiry on the aspect of the gift or nature of receipt.

The ld. CIT at page 4-7 of the order have cited certain decision. However, there is no dispute on the principal propounded in those cases which are not meant for or against any party. However, the principles applied in those cases are not applicable on the facts of the present case and therefore they are distinguishable or in any case does not come against the assesse. The ld. CIT has not at all applied his mind on the facts available of those cases and the peculiar facts available in the case in hand but blindly applied these cases with a preconceived notion to confirm the impugned addition.

In view of the above submissions and the Judicial Guideline, the impugned order passed u/s 263 deserves to be quashed.

41 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur of the inward fund is not placed on record even though the same was asked by the AO. The fact stated in the gift deed that a sum of Rs. 43,54,03,651 is mentioned as gift given whereas the confirmation of deed filed speaks for only for an amount of Rs. 25.50. Thus, facts are contradictory. The ld. DR argued that section 263 has to be examined on the basis of the records which were made available at the time of the assessment proceedings. The documents placed before the Pr. CIT where never placed before the Assessing Officer the gift deed, CA certificate were not filed before the AO. The flow chart of money before the Bench were never placed before the PCIT or the Assessing Officer and these records may be considered a fresh submission by the assessee. He has stated that examination (2) to section 263 has to be considered in light of the amendment made with effect from 01.06.2015 and the source of money introduced is relating to genuineness of transaction which is under question. Therefore, he heavily relied on the order of Pr. CIT. As regards the issue of notice u/s 148 of share-holders has no bearing on the company’s case on account of amendment in the section 68 of the I.T. Act and therefore, he supported the arguments of the PCIT and submitted his argument.

42 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur an order is erroneous as also prejudicial to revenue’s interest, that the provision will be attracted. He further argued that every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of revenue. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. It is submitted by the Ld. AR of the assessee that as regards the share capital receipts before the ld. AO every detail called for were submitted and verified by him. He has raised specific query and was replied in the proceeding before the AO. He has thus, drawn our attention to the notice dated 28.11.2018 and the reply of the same submitted before the ld.AO. on 03.12.2018. Thus, he submitted that all the possible enquiries were conducted and AO’s clarification were made. Thus, unless there was something negative available on record or so alleged by the ld. PCIT his attempt to find fault in the action of the AO is not legally justified. He has submitted that the identity, bank statement and source were established and legal onus is discharged by the assessee by submitting the details of the shareholder and source thereof. The transaction is routed through normal banking channel. He has also submitted that the details regarding foreign remittance were submitted and placed a chart showing the details submitted in the assessment proceedings. The order being Short and cryptic does not mean that no inquiry was made. Thus, he has submitted that the allegations made by the PCIT are completely baseless as all the necessary details were placed on record and after satisfying all the details, he has passed an order accepting the version of the

43 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur assessee. He has submitted that all the decision cited by the ld. PCIT are on different fact distinguishable, whereas, he has relied upon the various judgements as referred here in above in their submission are equally applicable and the ratio given in that judgement should be followed.

Amendment of section 68.

44 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 22. In section 68 of the Income-tax Act, the following provisos shall be inserted with effect from the 1st day of April, 2013, namely:— "Provided that where the assessee is a company, (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.". Here in the case of the person in whose name such shares are credited and recorded in the books of account of the company where in the details of the some so credited is alleged as gift but the relevant bank realisation certificate for inward remittance even though called for by the AO vide his notice annexure point no. 13 dated 28.11.2018 is not placed on record. Not only that even the PCIT has not observed that such details were kept on record, as AO’s order has no such reference. Even the standing of the person giving the gift is also not placed on record merely the transaction are done through the banking channel the fund so credited in the account of the company cannot be considered as established. Not only that the name of institution is of the person who is giving the gift of the money to buy the shares of the company established in

45 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur their name and that too when both the person whose name the company are available, all these set of facts are not correctly analysed by the AO and not dealt in the assessment order. The stake of revenue is heavily involved and in the light of the amendment even though the case law are relied we are inclined to differentiate those judgement in the light of the above facts. Even when in the proceeding before the ITO vide notice dated 03.12.2018 the assessee was specifically asked to submit the details of source of share capital received where in the assessee has own its own sage not submitted that the investment in shares from own fund the relevant extract of AO and reply of the assessee is extracted here in below :

Query of the Assessee

Reply of the assessee

46 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur 16. It is evident from the above information furnished before the AO when the AO was asking the specific details about the details of the foreign remittance received the assessee on its own wisdom giving the details of outward remittance. Assessee company has not filed foreign Inward remittance certificate (FIRC) issued by the recipient's bank though for this gift. This document includes details such as but not limited to the name and account numbers of the sender and recipient, the purpose of the transfer, the exchange rate applied to the transaction etc. It is also not specified that fund was in Indian currency or it poured from the country of the person giving the gift. Not only that when the AO has asked for the source of the capital received assessee company intelligently submitted that the source is from the own funds realising that mistake, they have given an undated letter where in the details of cheque and its gift source is declared there is no reference in the assessment order or evidence given by the assessee that whether that letter was submitted by an email or not?. The assessing officer has not recorded how many submissions that the assessee has submitted whether the same were filed physically or through an email as it is without any acknowledgment or date of submission. The assessing officer is to carry out all necessary enquiries and investigation to establish the correctness of the documents filed. Here they knowingly or unknowingly failed to submit the proof that the details were placed on record and on which date. When there is no proof of having been submitted the details or there is no discussion in the assessment order it is to be believed that the same was not made available before the AO at the time of passing the order, as

47 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur there is no discussion in the assessment order for the substantial increase in share capital. Thus, the benefit of the doubt goes in the favour of the revenue that whether these details were filed and having been filed analysed by the AO or not?. In the light of these facts, how can the assessment order be not prejudicially to the interest of the revenue. The judicial case laws relied upon by the assessee before the amendment in the law and are totally on different fact where in those cases assessee has filed all most all details such ITR, PAN, Bank Statement details of the source of investment made (specifying the loan, sale of assets or saving) , whereas in this case the assessee even though called upon to file these details have not furnished the complete details that the investment is made out of the gifts received and stated that from own fund through banking channel here also miserably failed to give correct and necessary information required by the assessing officer. Merely submitting the bank statement, share allotment details and share certificate will not prove the credit made in the books of account of the assessee company. It is the duty of the assessee company to place on record the details specially asked for and it is observed that the assessee is not coming with the correct facts and giving the details required by the assessing officer.

48 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur A. Y. 2016-17, but the records says that the Co-ordinate Bench has already upheld the decision of PCIT u/s 263 for A.Y 2015-16 on identical facts. It is also noted that learned brother (Judicial Member) is one of the judicial officer of this court was one of the signatory of that judgement of the co-ordinate bench and the assessee failed to draw our attention of this very important fact of information for the reasons best known to the assessee. Thus, we respectfully considering judicial discipline, we do not find any reason to deviate the finding of the Co-ordinate Bench in ITA No. 288/JP/2000 wherein the Co-ordinate Bench on the identical facts given considered view and the same is given in paras 22-23 which reads as under:-

“22. Having said that, when the matter was selected for the precise reason of examination of substantial increase in share capital, it is ordinarily expected that the Assessing officer shall examine these transactions thoroughly and record his satisfaction rather than just relying on the statement and basic information submitted by the assessee company. It is not a question of kind and extent of enquiry and hence, a difference of approach and methodology of examination of a particular transaction as done by the AO or suggested by the Id Pr CIT. No doubt every Assessing officer has his unique style of functioning and no hard and fast rule can be laid down as to how he should conduct the enquiry in discharge of his statutory functions. However, where the factual scenario of a case prima facie indicates claim of substantial capital infusion during the year which is also a matter and reason for selection of case under complete scrutiny and thus cry for looking deep into it, then a mere acceptance of information simplicitier without any evidence of source of such capital infusion and without conducting any further verification and examination cannot be held as

49 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

conducting an enquiry. In our considered view, it is a clear case of no enquiry and lack of application of mind on part of the Assessing officer and the order thus passed is clearly erroneous and prejudicial to the interest of the Revenue.

50 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur

assessing officer is erroneous and prejudicial to the interest of the revenue and therefore, in view of the facts and circumstances, both the grounds of the assessee in ITA No. 56/JPR/2021 for assessment year 2016-17 is dismissed.

In the result, the both the appeals of the assessee are dismissed.

51 ITA No. 56/JP/2021 M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd. Vs. Pr. CIT, Jaipur Order pronounced in the open court on 05/05/2022.

Sd/- Sd/- ¼ jkBkSM deys’k t;arHkkbZ ½ ¼ lanhi xkslkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 05/05/2022 *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- M/s Rajendra and Ursula Joshi Skill Development Pvt. Ltd., Jaipur. M/s Rajendra and Ursula Holdings Pvt. Ltd., Jaipur. 2. izR;FkhZ@ The Respondent- Pr. CIT-1, Jaipur Pr. CIT-2, Jaipur 3. vk;dj vk;qDr@ CIT vk;dj vk;qDr@ CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZ QkbZy@ Guard File {ITA Nos. 56 & 57/JP/2021} 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत