RIVET ELECTRICALS PVT LTD,DELHI vs. PR.CIT- FARIDABAD, FARIDABAD

PER YOGESH KUMAR U.S., JM:

This appeal has been filed by Assessee against the order passed by the

Learned Principal Commissioner of Income Tax, Faridabad [“Ld. Pr. CIT”, for

short], dated 28/08/2019 for Assessment Year 2015-16.

“1. That the Ld. Pr. Commissioner of Income Tax erred in law and on facts in assuming jurisdiction u/s 263 of the Act IT Act, 1961 by setting aside the assessment made u/s 263 without appreciating: a. that the assessment order was passed after verification and due enquiry as required under the Act during the course of the assessment Page 1 of 7

ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT b. that assumption of jurisdiction cannot be made merely on surmises, conjectures and misconceived premise.

c. that neither there was any adverse material in respect of credits received by the assessee, found by the AO nor by the Pr. CIT u/s 263 before initiating the proceeding as no enquiry was made by Pr. CIT in arriving at conclusion which is contrary in view of the jurisdictional and other High Courts and the Apex Court. d. that once the sums have been received through banking channels and complete evidences was provided during the course of the assessment, suspicion raised purely on assumptions is wholly unsustainable in law.

The above grounds are without prejudice and independent of each other.

Appellant craves leave to amend, add or modify any of the above grounds of appeal during the course of hearing.”

filed an application for condoning the delay on the ground of the ‘Covid

Situations’ by taking shelter under the order of the Hon'ble Supreme Court in

Re: Cognizance for extension of limitation made in Writ Petition (C) No. 3 of

2020 and submitted that due to post Covid pandemic situations, the earlier

counsel due to his serious illness on account of highly diabetic condition,

unable to file the Appeal on time, therefore prayed for condoning the delay in

filing the present appeal. For the reasons stated in the application for

condonation of delay, the delay in filing the present appeal is condoned.

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ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT 4. Brief facts of the case are that, the assessee filed returned declaring

income of Rs. 1,78,430/- the same was processed u/s 143(1) of the Act,

subsequently case was selected for limited scrutiny and an order u/s 143(3) of

the Act came to be passed accepting the returned income. Vide order dated

28/08/2019 an order u/s 263 of the Act came to be passed by the Pr.

Commissioner of Income Tax (‘PCIT’) declaring that the assessment order made

u/s 143(3) of the Act dated 12/04/2017 is erroneous and also prejudicial to

the interest of the Revenue and cancelled the assessment order. Further, the

Ld. PCIT directed the A.O. to make proper enquiries to verify the issues before

completing the assessment. Aggrieved by the order dated 28/08/2019, the

assessee preferred the present Appeal on the grounds mentioned above.

error in passing the order impugned without appreciating the fact that the

assessment order was passed after verification and due enquiry as required

under the Act, the assumption of jurisdiction cannot be made by the PCIT

merely on surmises, conjectures and misconceived premise. Further submitted

that in the Assessee’s own case in ITA No. 6225/Del/2019- for Assessment

Year 2014-15, the order passed u/s 263 of the Act wherein very same

investors issue was involved which has been quashed by the Tribunal,

therefore submitted that the order of the PCIT is liable to be set aside.

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ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT

of the PCIT submitted that the order impugned has been passed by the PCIT in

accordance with law, which requires no interference and the Appeal is liable to

be set aside.

record. It is seen from the record that the Ld. A.O. during the assessment

proceedings issued notice u/s 142(1) of the Act requiring to furnish the

relevant information and details and also issued notice/questionnaire for

ongoing assessment proceedings u/s 143(3) of the Act. In response, a detailed

reply submitted by the assessee along with the documents such as ITR along

with computation of income of the Assessee Company, Auditors report,

statement of profit and loss and balance sheet for the year ending March 2015.

The assessee has also submitted one more reply on 10/04/2017 along with

following documents and the same have been reproduced before us in the

paper book, which are as under:- • Bank account statement along with the Bank Book of 16-19 assessee company. • Form PAS-3 along with List of allotees. 20-23 • Share Certificate issued by assessee co. in favour of M/s 24-26 Rishikesh Buildcon Pvt. Ltd., M/s Metalcity Constructions Kovai Pvt. Ltd. and M/s Goodluck Industries Ltd. (Investor companies) 27-32 • ITR along with computation of income 33-50 • Ledger confirmation of accounts • Balance Sheet and P/L 51-83 • Valuation report 84-85 • Form 26AS 86-87

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ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT 8. After verifying the above documents, the total income returned by the

assessee was accepted by the A.O. The Ld. CIT(A) while exercising power

conferred u/s 263 of the Act was of the opinion that the Assessing Officer has

not made any enquiry with regard to genuineness and creditworthiness of the

investor Companies i.e. Share Premium of Rs. 45,00,000/- from M/s Metal city

Construction Pvt. Ltd. and M/s Rishikesh Buildcon Pvt. Ltd. Accordingly, the

Ld. PCIT, revised the assessment order, vide order dated 28/08/2019 by

exercising the power conferred u/s 263 of the Act.

the Act by the PCIT on 29/03/2019 for the A.Y 2014-15 and as against the

said order, the assessee preferred an appeal before the ITAT and the

Coordinate Bench of the Tribunal vide order dated 15/11/2022 in ITA No.

6255/Del/2019 (A.Y 2014-15) quashed the order of the PCIT passed u/s 263 of

the Act wherein various Companies investments including M/s Metal City

Construction Pvt. Ltd. and M/s Rishikesh Buildcon Pvt. Ltd. have been

examined and held as under:-

“13. In the case in hand in sum and substance, the contention of

Ld. Counsel for the assessee is that order so revised by Ld. Pr. CIT

is not erroneous and prejudicial of the interests of the Revenue. The

Ld. Pr. CIT has revised the assessment primarily on the ground that

the AO had completed the scrutiny assessment without making any

requisite verification. He further observed that AO did not make any

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ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT inquiry to examine the genuineness of claim of the assessee.

However, Ld. Counsel for the assessee has pointed out that AO had

carried out requisite inquiry regarding genuineness of claim of the

assessee regarding share application money. We find that the AO

issued detailed questionnaire to the assessee and in response

thereto, the assessee made submissions and also submitted the

valuation arrived at as per Rule 11 UA of the Income Tax Rules,

1962. Ld. Pr. CIT has not pointed out that the valuation of shares as

arrived at by the assessee, is not correct. In absence of such finding

and coupled with the fact that the Ld. Pr. CIT did not revise the order

on the basis which notice u/s 263 of the Act was issued. Moreover,

there is no specific finding above the prejudice being caused to the

Revenue. Therefore, in the absence of a specific finding by Ld. Pr.

CIT regarding both the conditions i.e. order is erroneous and

prejudicial to the interest of Revenue, the impugned order cannot be

sustained as it fails the test of law. Therefore, respectfully following

the binding precedents, we hereby set aside the impugned order

and restore the original assessment order. Thus, grounds raised by

the assessee are allowed.”

share capital from M/s Metalcity Construction Pvt. Ltd. and M/s Rishikesh

Buildcon Pvt. Ltd. have been already examined by the Tribunal for Assessment

Year 2014-15, wherein the order revising the assessment order u/s 263 of the Page 6 of 7

ITA Nos. 1885/Del/2022 Rivet Electricals Pvt. Ltd. vs. Pr.CIT Act was quashed by the Tribunal and apart from the same, even in the year

consideration, since the assessee had furnished all the relevant documents

pertaining to investments before the A.O., during the assessment proceedings,

the impugned order made by the PCIT u/s 263 of the Act dated 28/08/2019 is

liable to be set aside, accordingly we allow the grounds of Appeal of the

assessee and the impugned order made u/s 263 of the Act by the PCIT is set

aside and the Appeal of the assessee stands allowed.

Order pronounced in open Court on 30th August, 2023

Sd/- Sd/- (DR. B.R.R.KUMAR) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 30/08/2023 Pk/R.N Sr.ps