M/S KHERA MOTORS FINANCE PVT. LTD.,,KOLKATA vs. CIT, KOLKATA-1, KOLKATA

Through this appeal, the assessee assails the correctness of order dt.18.02.2014 passed by the Commissioner of Income-tax (CIT) u/s 263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the captioned assessment year.

2 M/s. Khera Motors Finance Pvt. Ltd. A.Yr.2008-09 3. Briefly stated the facts of the case of the assesse is similar to the group of cases already decided by the Tribunal referred to in the earlier paragraph. The modus operandi of the assessee was that the assessee with meagre income would file returns of income showing receipt of huge share capital and huge share premium without any financial justification. Intimation was issued u/s 143(1); thereafter notices u/s 148 was issued either at the instance of such companies divulging a paltry escapement of income or otherwise ; assessment order was passed u/s 143(3) read with section 147 after making nominal additions and the AOs, during the course of such assessment proceedings, would make some formal enquiries about shares issued by such companies at huge premium by issuing notices u/s 133(6) to some of the shareholders and getting satisfied without any further investigation. The jurisdictional CITs have passed orders u/s 263 in all such cases, which have been assailed before the Tribunal.

2)For that the show cause notice issued by ld. CIT u/s 263 is barred by limitation.

3) For that the order of Ld. CIT having been served on the assessee through AO on 20.02.2015 is bared by limitation.

4) For that the Ld C.I.T erred in invoking the provisions of section 263 on the ground that he order passed u/s 147/143(3) was erroneous and prejudicial to the interest of revenue when the assessment u/s 148 was reopened on the specific issue and the assessment completed u/s 147 was not erroneous and prejudicial to the interest of revenue. 2

5) For that the Ld. C.I.T erred in applying the provisions of sec. 263 when the order passed by the AO was not erroneous and therefore not prejudicial to the interest of Revenue, the assessment order having been passed after making proper enquiry in accordance with law.

6) For that the ld. C.I.T erred in applying the provisions of sec. 263 when there was nothing on record that no enquiry was made with regard to the identity and creditworthiness of the shareholders when all the shareholders were assessed to tax, their PAN were submitted and there was nothing on record to doubt the identity and creditworthiness of the said applicants.

7) For that the direction of the ld. CIT to the AO to verify various layers is bad in law since the AO has no power to seek details of source of source since the assessee has nothing to do with the source of source.

8) For that on the facts and circumstances of the case the order of the CIT is modified and the assessee be given the relief prayed for.

9) For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing.”

4 M/s. Khera Motors Finance Pvt. Ltd. A.Yr.2008-09 iii) Inadequate inquiry conducted by the AO in the given circumstances is as good as no enquiry and as such, the CIT was empowered to revise the assessment order ; iv) The order of the CIT is not based on irrelevant considerations and further in the present circumstances, he was not obliged to positively indicate the deficiencies in the assessment order on merits on the question of issue of share capital at a huge premium ; and v) the AO in the given circumstances can’t be said to have taken a possible view as the revision is sought to be done on the premise that the AO did not make enquiry thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue on that score itself. C. In the given facts and circumstances of all such cases, the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases. D. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit. E. The CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 andnot other CIT. F. Addition in the hands of a company can be made u/s 68 in its first year of incorporation. G. After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid. H. Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. I. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT. J. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. K. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act.

5 M/s. Khera Motors Finance Pvt. Ltd. A.Yr.2008-09 6. It is noticed that all or some of the above conclusions are applicable to this appeal also . In view of the foregoing discussion and following the view taken in Subhlakshmi Vanijya Pvt. Ltd. (supra), we uphold the impugned order.

Order pronounced in the Court on 31.07.2017.