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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the Pr. Commissioner of Income Tax (central)-1, New Delhi dated 02.03.2016 for the Assessment Year 2008-09 passed u/s 263 of the Income Tax Act 1961. 2. The assessee has raised the following grounds of appeal:- “1 The order of the ld Principal Commissioner of Income Tax is arbitrary against law and facts on records.
2. The learned Pr. Commissioner of Income Tax failed to appreciate that the issuance of notice u/s 263 of the Income Tax Act, 1961 as well as the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.
Page 2 of 6 3. The ld Principal of Commissioner of Income Tax while setting aside the assessment order passed by the Assessing Officer u/s 143(3)/ 153 of the Income Tax Act, 1961 has failed to appreciate the facts of the case and information and explanation submitted during the course of proceeding u/s 263 of the Income Tax Act.
4. The ld Pr. Commissioner of Income Tax while setting aside the assessment order has failed to considered the fact that during the course of search no incriminating documents in respect of share capital have been found and the proceedings in this case already been completed u/s 143(3) of IT Act.”
The brief facts of the case are The assessee is a company engaged in the business of power generation, manufacturing of sponge iron, billets and TMT bar filed its return of income for AY 2008-09 on 26.09.2008. Based on this return of income assessment was made u/s 143(3) of the act at total income of Rs. (-) 166082320/- on 22.12.2010. Thereafter the matter was settled at the level of ITAT vide order dated 17.04.2012.
Subsequently this company belonging to SMC Group was subject to search and seizure operation u/s 132 of the Act on 04.08.2011. Therefore, notice u/s 153A was issued on 11.01.2013 against which the assessee filed its return of income on 06.05.2013 showing loss of Rs. 166353956/-. Consequent to that, assessment u/s 143(3) read with section 153A of the Act was made on 31.03.2014, wherein deduction u/s 80IA claimed by the assessee was reduced to Rs. 69995/- and assessment was framed at a loss of Rs. 166082320/-.
Subsequently on 20.10.2015 notice u/s 263 of the Act was issued to the assessee on examination of the assessment records for AY 2008-09 holding that in AY 2009-10 in the hands of the assessee addition of Rs. 30 crores was made u/s 68 of the Act on account of share application money introduced during the year was required to be made in the impugned AY in appeal. It was further stated that no enquiry in respect of share application money was made during assessment proceedings for AY 2008- Page 3 of 6 09 but in AY 2009-10 and therefore, the addition was made for AY 2009- 10 on this account of Rs. 30 crores. Subsequently the order u/s 263 was passed on 02.03.2016 stating as under:-
6. I have considered the facts of the case, submission of the assessee, proposal and comments of the AO alongwith the provisions of law in this regard. It is undisputed that the share application money of Rs. 30 crores has been received and credited in the books of accounts for a period relevant to AY 2008-09. The claim of the assessee that the cheque was encashed in a subsequent period and shares were allotted in the subsequent period is not relevant because the unexplained amount is to be considered in the assessment year which is relevant to the period, in which such unexplained amount is to be considered in the assessment year which is relevant to the period , in which such unexplained share application money was first credited in the books of accounts. The assessee has also claimed that the common notices were issued for all the years from AY 2006-07 to 2012-13 and therefore, the issue has been considered by the AO. Whereas the AO has not made any addition to this issue in Assessment order for AY 2008-09, the order which is relevant for addition on account of unexplained credit in the books of accounts. Therefore, the assessment for AY 2008-09 is erroneous in so far as it is pre judicial to the interest of revenue. The assessee has claimed that the addition has been made in AY 2009-10 and the same has been deleted by the CIT (A). it is also claimed that o ground on the basis of Assessment year was taken by the assessee and the addition is deleted on merit of the case. whereas, the issue whether a particular ground was taken or not and whether the relief is allowed or not in AY 2009-10 is not relevant to the issue under consideration, because the unexplained credit in the books of accounts on account of share application money is relevant to AY 2008-09, where the amount is first credited in the books of accounts and reflected in the balance sheet. Hence, the assessment order passed by the Assessing Officer for AY 20008-09 is erroneous in so far as it is pre judicial to the interest of revenue, because the addition on account of unexplained credit of share application money in the books of accounts of assessee for AY 2008-09 has escaped assessment. Accordingly, the assessment order for AY 2008-09 is cancelled and the Assessing Officer is directed to make a fresh assessment in the case of the assessee for AY 2008-09 after properly examining the issue of share application money of Rs. 30 Page 4 of 6 crores credited in the books of accounts and reflected in the balance sheet for the period relevant to AY 2008-09 and after affording reasonable opportunity of being heard to the assessee.
The ld AR submitted that ld CIT has taken recourse to the provisions of section 263 of the Act consequent to the order of the ld CIT (A) for AY 2009-10 wherein he held that the addition of Rs. 30 lakhs made by the ld Assessing Officer is not tenable in that year but should have been examined for this year i.e. 208-09. He further referred to page No. 106 of the paper book wherein the queries were raised during the original assessment about the issue of shares. Therefore his statement was that the reasons stated by the CIT that there was no enquiry made during the assessment proceeding is incorrect. His main argument was that the original assessment has been made u/s 153A of the Act where the additions are required to be made on incriminating material unearth during the course of search and therefore he relied on the decision of coordinate bench in dated 08.06.2016. he further submitted that CIT has set aside the matter to the file of Assessing Officer for making a fresh assessment, which according to him is not permissible.
The ld DR vehemently supported the order of the ld CIT and stated that there is no error in the order u/s 263 as it has merely set aside the matter for examination to the file of ld Assessing Officer. 8. We have carefully considered the rival contentions. On the basis of records produced before us there are two orders passed in this case, one u/s 143(3) of the act on 22.12.2010 and second u/s 153A of the act dated 31.3.2014. Admittedly, the original order passed u/s 143(3) of the act cannot be revised as time limit for its revision was got over on 31.3.2013. Therefore, here the attempt was made to revise the assessment order passed u/s 153A of the act 31.3.2014. It is an admitted fact that original assessment was made u/s 153A of the Act is required to be made Page 5 of 6 on the basis of incriminating material found during the course of search. Action u/s 263 of the act can be permitted of such order only if the incriminating documents found during the course of search based on which order u/s 153A of the Act made by the Assessing Officer is found to be erroneous so far as it is prejudicial to the interest of revenue. The Ld CIT has attempted to revise the order on the ground that assessee has accepted share application money in the impugned assessment year which was not properly verified by the ld AO. Hence in the present case the ld CIT has not referred to any document which was found during the course of search relating to share application money amounting to Rs. 30 crores based on which the assessment is sought to be revised u/s 263 of the Income Tax Act. The coordinate bench has decided the identical issue in ITA No. 1347/Del/.2014 wherein it has been held as under:- “Thus, in the present case the issue of deemed dividend does not arise from the provisions of section 153A of the Act and there is no seized material unearthed at the relevant time. Thus, it is beyond Assessing Officer’s power to address the said issue in proceedings initiated under section 143(3) read with section 153A of the Act. The CIT was wrong in directing the examination of taxability of deemed dividend under section 2(22)(e) of the Act, in the proceedings u/s 153A of the Act while passing order u/s 263 of the Act when the proceedings u/s 153A itself has not unearthed the said issue. Thus, the Cit do not have power under section 263 of the Act to give its own opinion when there is no new material unearthed. The issue taken up by the CIT was not within the purview of the Assessing Officer at the inception of assessment proceedings.”
The ld DR could not controvert the above decision or also could not cite any other decision of higher forum , which could justify the action of the ld. CIT. The power for revision u/s 263 of the Act vest with the CIT when he finds that order passed by the Assessing Officer is erroneous as far as it is pre judicial to the interest of revenue. The provisions of section 153A provides for framing a assessment in search case on the basis of