REPUTE PROPERTIES P.LTD,MUMBAI vs. CIT 9, MUMBAI

Per Sandeep Gosain, J. M.: The Present Appeals have been filed by two Assessee’s against the order of Commissioner of Income Tax-9, dated 28.03.2014 for A.Y. 2004-05. This is common order covering the disposal of two appeals which have been preferred by two separate assessees against two separate orders of the ld. CIT, Mumbai both

dated same passed u/s 263 of the Act pertaining to Assessment Year 2004-05. 2. Since both the parties agreed that the facts and the issues involved in both

these appeals are identical, therefore the cases have been heard and dispose off by this common order for the sake of convenience and brevity.

the impugned order dated 28.03.2014 which has been passed by the CIT wherein (A.Y. 2004-05) the CIT has invoked his juri iction u/s 263 of the Act for AY 2004-05 which is under consideration before us.

inasmuch as it was prejudicial to the interest of the revenue. The entire issue

revolves around investments of Rs.25 lakhs by way of share application and share

premium in share of M/s. Turkhia Group of Companies. The CIT(A) was also of the belief that the Assessing Officer has not verified the issue regarding high share

premium paid by assessee to M/s. Turkhia Group of Companies and the money

trail while completing the assessment u/s 143(3) r.w.s. 147 for AY 2004-05. Accordingly, the CIT has passed an order u/s 263 of the I.T. Act,1961 thereby

holding that the assessment order u/s 143(3) r.w.s. 147 dated 28-10-2011 for AY

2004-05 is set aside with the direction to the AO to frame afresh assessment in the light of observation made in impugned order against which the assessee has filed

present appeal before us on the grounds mentioned herein below. 1. “On the facts and circumstances of the case and in law, the Ld.

Commissioner of Income Tax has erred in coming to the conclusion that assessment order passed u/s 143(3) r.w.s. 147 dated 28.10.2011 is (A.Y. 2004-05) erroneous and prejudicial to the interest of the revenue without appreciating

the facts of the case.

Commissioner of Income Tax has erred in setting aside the assessment order

passed u/s 143(3) r.w.s. 147 dated 28.10.2011 with a direction to the Assessing Officer to frame fresh assessment.

2004-05 on 15.11.2004 declaring total income at Rs.6,658/-. Thereafter the case

was reopened on 31.03.2011 after obtaining prior approval of Addl. CIT, Range 9

(3), and Mumbai. After considering the case of both the parties, the AO passed

assessment order u/s 143(3) r.w.s. 147 of the I.T. Act on 28.10.2011. Whereby the total income of assessee company was assessed at Rs.6,658/-. CIT noted that the assessee has invested an amount of Rs.25 lakhs by way of share application and share premium in share of M/s. Turkhia Group of Companies and noticed that the assessing officer has not verified the issue regarding the high share premium paid (A.Y. 2004-05) by assessee to M/s. Turkhia Group of Companies therefore after serving show

cause notice and considering reply, the CIT passed order u/s 263 of I.T. Act,1961. 3.1 Aggrieved by the said order the assessee filed the present appeal before us

on the grounds mentioned herein above.

Ground No. 1&2

related therefore we thought it fit to dispose off the same through the present

common order.

officer is neither erroneous nor prejudicial to the interest of revenue and the provision of section 263 were not at all attracted under the facts and circumstances

of the case. It was further submitted by ld. AR that the assessment was reopened on the ground of examination of source of investment made by assessee of Rs.25 lacs

towards acquisition of shares from one company M/s. Turakhia Feromat Pvt. Ltd.

The amount was received from Shirdi Industries Ltd and the bank statement was also submitted on record where in the amount received by the assessee company (A.Y. 2004-05) was reflected. The copy of bank statement of Shirdi Industries Ltd and copy of acknowledgement of said company were also submitted before the AO. Assessing

Officer after detailed examination and making full inquiries in the matter passed

the assessment order and therefore there is no case of the said order being

erroneous. Specific stand taken by the ld. AR is that the assessment order was passed on the basis of evidence on record and inquiries to the source of money and investment made by Assessee Company. And since there is no other new evidences

which has been brought on record to substantial the ground taken by CIT therefore

there is no justification in passing the impugned order u/s 263. The ld. AR further

submitted that the department made inquiries for justification of premium for issuing of shares in the case of recipient company who received the money and issued the shares and since no share application money was received by the assessee therefore the examination of justification of share premium was not at all warranted in the case of the assessee for which the assessee also relied upon judgement of co-ordinate bench in case of M/s. Turakhia Feromat Pvt. Ltd. passed

by ITAT Mumbai Bench and as per the aforesaid mentioned judgement ITAT was pleased to set aside the similar order passed u/s 263 of the I.T. Act in the said case.

passed by CIT(A) u/s 263 of the I.T. Act and it was submitted by ld. DR that since (A.Y. 2004-05) the assessing officer failed to examine the issue of share application and share

premium while completing the assessment u/s 143 r.w.s 147 dated 28.10.2011

therefore, the ld. CIT(A) was right in passing the order u/s 263 of I.T. Act.

the material placed on record as well as the orders passed by the lower authorities

and after considering the same and reading section 263(1) it makes it clear that the pre-requisite to the exercise of juri iction by the commissioner suo motto under section 263 of the Act isthat the order of the AO is erroneous in so far as it is prejudicial to the interest of the revenue. The commissioner has to be satisfied with the twin conditions:

(i) the order of the AO sort to be revised is erroneous and (ii) it is to be prejudicial to the interest of the revenue. If one of the condition is absent it cannot be invoke juri iction u/s 263 of I.T. Act for these observations,

we find support from the decision of Hon’ble Supreme Court, in case of ‘Malabar

Industrial Co. Ltd vs. CIT’ (SC) 243 ITR 83. We have noticed that in this case

order of assessment was passed and subsequently the case was reopened u/s 147 on the similar grounds which have been raised by the Commissioner and thereafter the assessment u/s 143 r.w.s. 147 was completed on 28.10. 11. Since in the present case

the assessment was reopened on the ground of examination of sources of (A.Y. 2004-05) investments made by the assessing officer of Rs.25 lakhs towards purchase of shares from one M/s. Turakhia Feromat Pvt. Ltd, in this respect it was submitted

by assessee that the amount was received from Shirdi Industries Ltd and the bank

statement of Shirdi Industries was also submitted on record along with copy of bank statement of Shirdi Industires and copy of acknowledgement of return of the said company along with the bank statement of assessee company. In the present

case the assessing officer after detailed examination of records had passed the assessment order and the said facts are also mentioned by the assessing officer

while passing the order u/s 143 r.w.s. 147 of the Act wherein it has been categorically mentioned by the AO that the representative of the assessee furnished

relevant details and after discussing the total income of the assessee company was assessed which shows the consideration of all the documents and application of mind by the AO. It is also an undisputed fact that there is no further evidence

which has come on record after passing of order by AO. Since the AO has examined the issue by making necessary enquiries, the assessment order cannot be held erroneous. Since the view taken by the AO is one of the possible views the assessment order cannot be held to be prejudicial to the interest of revenue.

Pvt. Ltd. vs. CIT’ wherein also the issue before the coordinate bench of ITAT was same i.e. u/s 263 of the Act and the companies named above are the recipient

companies who received the money and issued the shares. In their case also the CIT(A) for the year under consideration and for other years had passed orders u/s 263 of the Act on similar grounds and the coordinate bench in the case of recipient

company had set aside the order of the CIT(A) u/s 263 of the Act and it is noteworthy that the coordinate bench orders setting aside the order under section 263 of the Act is in respect of recipient company who actually received the money

from the assessee and issue the shares.

of return of income, computation of income and annual accounts, copy of notice

u/s 148 dated 31.03.2011, copy of reply dated 14/10/2011 submitted to the assessing officer along with details of investment and advances along with confirmation of accounts, copy of bank statement of the assessee as well as recipient company and copy of annual accounts of Shirdi Industries. (A.Y. 2004-05)

further like to mention that the order of AO in the present case may be brief but that by itself is not a sufficient reason to held the order of assessment as erroneous

and prejudicial to the interest of the revenue. The scope of interference u/s 263 is not to set aside merely unfavaourable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act. Power under Section 263 cannot be exercised for starting fishing and roving enquiries. In the garb of exercising power

under Section 263, the Commissioner cannot initiate proceedings with a view to starting fishing and roving enquires in matters or orders which are already

concluded.

to the facts of the present case hence the cited judgement is distinguishable and is not applicable to the facts of the present case. Similar is the position of another

case decided by Kolkata High Court titled ‘CIT vs. Maithan International’ facts of the afore mentioned case are also different and distinguishable and therefore the said judgment is also not applicable to the facts of the present case.

reproduced elsewhere in the order by us, in our considered view the order of CIT

u/s 263 of the Act does not stand on its own leg, we accordingly set aside the order

of CIT u/s 263 dated 28.3.14 and restore that of the AO. This ground raised by the assessee in the appeal is allowed.

Ground No.3 is general in nature and needs no separate adjudication.

Pvt. Ltd. ITA No. 2794/Mum/2014 (A.Y. 2004-05).

by the CIT u/s 263 of the Act where in the CIT has invoked its juri iction for AY (A.Y. 2004-05) 2004-05 on similar issue was involved in the appeal of assessee i.e. Rachana Finance Investments Pvt. Ltd. wherein we have already given our thoughtful consideration to the grounds raised by the ld. Counsel of the assessee as well as the ld. DR and considering the entire facts and the material brought on record, we have already set aside the order passed by CIT u/s 263 of the Act. Since the facts and circumstances of this appeal under consideration are similar. Therefore, following our own decision given in the afore said appeal, we also allow the present appeal of the assessee, namely M/s. Rachana Finace & Investments Pvt. Ltd. and set aside the order dated of CIT u/s 263 of the Act.

आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

उप/सहायक पंजीकार (Dy./Asstt.