OM SAI VINIMAY PVT. LTD.,KOLKATA vs. CIT-III, KOLKATA, KOLKATA

PDF · subscribers
ITA 1062/KOL/2014Status: DisposedITAT Kolkata01 March 2017AY 2009-20105 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO's failure to conduct a proper inquiry regarding share capital received at a premium empowers the CIT to revise the assessment order under section 263. The CIT can direct the AO to conduct a thorough inquiry, as inadequate inquiry is akin to no inquiry.

What were the facts?

The assessee filed a return with meagre income, and after an intimation under section 143(1), a notice under section 148 was issued due to a small income escapement. The Assessing Officer (AO) made nominal additions after issuing notices under section 133(6) to shareholders regarding share premium, but the jurisdictional CIT found the inquiry inadequate.

What were the issues?

Whether the CIT can revise an assessment order under section 263 due to inadequate inquiry by the AO regarding share capital received at a premium, and if the AO's actions were sufficient.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(1),Section 148,Section 133(6),Section 143(3),Section 147,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCHES : D :

Before: SHRI P.M.JAGTAP, AM & SHRI N.V. VASUDEVAN, JM

Hearing: 27.02.2017

Date of Hearing : 27.02.2017. Date of Pronouncement : 01.03.2017. ORDER Per N.V.Vasudevan, JM

Through this appeal, the assessee assails the correctness of order passed by the Commissioner of Income-tax (CIT) dated 14.3.2014 u/s 263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the captioned assessment year.

2.

Before taking up the disposal of the instant appeal on merits, we consider it expedient to record that this appeal had earlier come up for hearing on 30.1.2017 and the assessee has sought adjournment and accordingly the appeal was adjourned to 3.2.2017. Thereafter the appeal was again adjourned to 27.2.2017. On 27.2.2017, when this appeal was called up for hearing, neither there was any adjournment application nor any body put in appearance at all. We also find that the issue raised in this appeal is squarely covered against the assessee by several orders passed by this bench including Subhlakshmi Vanijya Pvt. Ltd. vs. CIT (infra). Under these circumstances, we are taking up this appeal for disposal on merits ex parte qua the assessee. -Om Sai Vinimay Pvt.Ltd. A.Y.2009-10

3.

Briefly stated the facts of the case in this appeal are similar to the case of Subhlakshmi Vanijya (Infra) in as much as returns were filed by the Assessee with meagre income; intimation was issued u/s 143(1); thereafter notice u/s 148 was issued at the instance of such companies divulging a paltry escapement of income; 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, made 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 on the ground that the enquiry with regard to receipt of share capital as done by the AO in the assessment concluded was not proper or adequate rendering the order erroneous and prejudicial to the interest of the revenue. The correctness of such order has been assailed by the Assessee before the Tribunal.

4.

We have perused the relevant material on record. It is relevant to mention that we have disposed of more than 500 cases involving same issue through certain orders with the main order having been passed in a group of cases led by Subhlakshmi Vanijya Pvt. Ltd. vs. CIT (ITA No.1104/Kol/2014) dated 30.7.2015 for the A.Y. 2009-10.

5.

We find as has also been admitted by the ld. DR that facts and circumstances of the cases under consideration are mutatis mutandis similar to those decided earlier. In our aforesaid order in Subhlakshmi Vanijya Pvt. Ltd., vs. CIT (ITA No. 1104/Kol/2014 A.Y. 2009-10), we have drawn the following conclusions: - A. Contention of the assessee that since the AO of the assessee-company was not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment to section 68 by the Finance Act, 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable. B. Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order, by holding that :- i) the enquiry conducted by the AO in such cases can’t be construed as a proper enquiry; 2 Sai Vinimay Pvt.Ltd. A.Y.2009-10

ii) CIT u/s 263 can set aside the assessment order and direct the AO to conduct a thorough enquiry, notwithstanding the jurisdiction of the AO in making enquiries on the issues or matters as he considers fit in terms of section 142(1) and 143(2) of the Act, which is relevant only up to the completion of assessment ; 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. 3 -Om Sai Vinimay Pvt.Ltd. A.Y.2009-10 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.

6.

It is noticed that all or some of the above conclusions are applicable to the appeals in this batch. In view of the foregoing discussion and following the view taken in Subhlakshmi Vanijya Pvt. Ltd. (supra), we uphold all the impugned orders.

7.

In the result, this appeal is dismissed. The order pronounced in the open court on 01.03.2017.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →