BONJOUR ESTATES (P) LIMITED,NEW DELHI vs. PR.CIT-1, NEW DELHI

Date of Hearing : 15.02.2023 Date of Pronouncement : 11.04.2023 ORDER PER CHANDRA MOHAN GARG, J.M.

This appeal filed by the assessee is directed against the order dated 28.03.2021 of the Ld. PCIT(1), New Delhi relating to Assessment Year 2010-11.

Page 2 of 21 2. First of all, we have heard arguments of learned representatives of both the sides on ground no. 7 which read as follows:- 7. That on the facts and circumstances of the case, the Learned Pr. Commissioner of Income Tax, Delhi-1, New Delhi, has erred, both on facts and in law in directing the Assessing Officer to reframe the assessment, despite the fact that the matter has become time-barred as per the ratio laid down by the Apex Court in the case of CIT Chennai U Alagendran Finance Ltd in Appeal (Civil) 3301 of 2007 vide order dated 27.07.2007.

Page 3 of 21 that the reopening was based on information received from DCIT, CC-2(2), Mumbai wherein the AO challenged genuineness of share capital received by the assessee company from two entities viz. Advanced Technology Ltd. and Yantra Natural Resources Ltd. The assessee company during the reassessment proceedings to avoid litigation and to buy piece of mind surrendered the stated transaction and paid due taxes etc thereon. The learned counsel vehemently pointed out that reassessment proceedings were initiated pertaining to said two parties and closed on 31.12.2017 after passing reassessment order by the AO.

Page 5 of 21 9. Louis Berger Group Inc. Vs. Asst. Director of Income tax (International Taxation), Hyderabad [2014] 51 taxmann.com 121 (Hyderabad - Trib.)

Page 6 of 21 which were not subject matter of reassessment proceedings, then the two years period contemplated under sub section (2) of section 263 of the Act would begun to run from the date of original assessment and not from the date of reassessment order dated31.12.2017. He further submitted that for A.Y. 2010-11 when the ITR was processed u/s. 143(1) of the Act by order dated 11.02.2011 then issuing notice on the different issue which was not subject matter of reassessment proceedings, to revise reassessment order dated 31.12.2017 by issuing notice u/s. 148 of the Act on 09.02.2021 has to be held as barred by limitation as the time limit for initiating revisional proceedings u/s. 263 of the Act by issuing notice has expired on 31.03.2013 and thereafter all revisionary proceedings, notice and orders has to be held as barred by limitation and a nullity.

Page 7 of 21 9. On careful consideration of above submissions first of all we note following factual positions which have not been controverted by the Ld. CIT(DR):- (i) the assessee filed return of income for A.Y. 2010-11 on 24.09.2010 which was processed u/s. 143(1) of the Act by order dated 11.02.2011. (ii) subsequently, the Assessing Officer initiated reassessment proceedings based on information received from DCIT, CC-2(2) Mumbai challenging the genuineness of transaction of share capital received by the assessee company from two entities i.e. Advanced Technology Ltd. and Yantra Natural Resources Ltd. The AO accepted the surrendered made by the AO and the taxed the entire amount of Rs. 95 lakhs u/s. 68 of the Act, and the assessee paid due taxes etc thereon. (iii) thereafter the learned PCIT Delhi issued notice u/s. 263 of the Act, on 09.02.2021 and passed impugned revisionary order u/s. 263 of the Act on 28.03.2021.

Page 8 of 21 (iv) based on above factual position it is the legal contention of the assessee that when the AO picket up only two entities while initiating reassessment proceedings and made addition u/s. 68 of the Act in the hands of the assessee and assessee had paid all due taxes etc thereon then such order cannot be alleged as erroneous and prejudicial to the interest of revenue entitling the Ld. PCIT to invoke revisionary proceedings u/s. 263 of the Act. It is the bottom line contention of the learned counsel of the assessee that when a notice u/s. 263 of the Act raises new issues, which were not subject matter of reassessment proceedings, then two year period contemplated under sub section 2 of section 263 of the Act would begun to run from the date of original assessment and not from the date of reassessment.

Page 9 of 21 challenging the genuineness of transaction of share capital received by the assessee from two entities, which was closed by making addition in the hands of the assessee u/s. 68 of the Act.

Page 11 of 21 proceedings calling the assessee to established genuineness of transaction with two entities, which was concluded by making addition u/s. 68 of the Act in the hands of assessee on 31.12.2017 and no issue was left un-adjudicated or adjudicated in favour of the assessee then the said reassessment order cannot be revised u/s. 263 of the Act by alleging the same as erroneous and prejudicial to the interest of revenue. So far as raising new issue by Ld. PCIT regarding other entities is concerned which was not subject matter of reassessment proceedings, then the limitation period of two years as per requirement sub section 2 of section 263 of the Act would reckoned or run from the date of original order which was passed on 11.02.2011 and not from subsequent reassessment order. Therefore as per preposition rendered by Hon’ble Supreme Court and various High Courts as noted above the initiation of reassessment proceedings to revise assessment order dated 11.02.2011 would reckoned from said dated would and on 31.03.2013 and beyond this period revisionary proceedings u/s. 236 of the Act is not permissible as being barred by limitation. Therefore in view of foregoing discussion we reach a conclusion that Page 12 of 21 the Ld. PCIT was not validly entitled to assume revisionary jurisdictional u/s. 263 of the Act to issue notice and to pass impugned order for alleging the same as erroneous and prejudicial to the interest of revenue. At the cost of repetition we again point out that when the Assessing Officer has initiated reassessment proceedings of two entities and made addition of entire amount then the purpose of reassessment proceedings was fully satisfied as the AO did not provide any relief to the assessee and taxed the entire amount picked by him for initiation of reassessment proceedings. So far as other entities are concerned the Ld. PCIT was entitled to initiate revisionary proceedings alleging the order dated 11.02.2011 is making as erroneous and prejudicial to the interest of revenue but the limitation period which was expired on 31.03.2013 does not permit the Ld. PCIT to invoke revisionary proceedings belatedly beyond prescribed time limit. Accordingly ground no. 7 of assessee is allowed and impugned revisionary order u/s. 263 of the Act is set aside being a nullity. Ground no. 4 & 5 read as follows:- 4. Learned Pr. Commissioner of Income Tax, Delhi-1, New Delhi, was not justified in holding that the assessment order

Page 13 of 21 passed by Assessing Officer is erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income Tax and cancelling the aforesaid order and in directing the Assessing Officer to reframe the assessment. 5 That on the facts and circumstances of the case, the Learned Pr. Commissioner of Income Tax, Delhi-1, New Delhi, has not appreciated that the Assessing Officer has examined the issue and completed the assessment and thus the assessment order passed by Assessing Officer is not erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income Tax.

Page 16 of 21 15. Placing rejoinder to the above the learned counsel of the assessee submitted that the learned PCIT has only examined the issue pertaining to two entities for which the AO has made addition of entire amount of Rs. 95 lakhs in the reassessment order. So far as other entities are concerned the learned PCIT without any examination of voluminous documentary evidences filed by the assessee before the AO during reassessment proceedings which was again filed before the learned PCIT was sufficient to discharge onus lay on the shoulders of assessee as per requirement of section 68 of the Act, and in such a situation the reassessment order cannot be alleged as erroneous and prejudicial to the interest of revenue in a particularly when the Assessing Officer after taking into consideration entire documentary evidences submitted by the assessee pertaining to all investors has taken a view and allowed taxing the two entities u/s. 68 of the Act. Therefore revisionary order deserve to be set aside on both the accounts that is on account of barred by limitation on account of sufficient and adequate enquiry by the AO and plausible view taken by the AO. The learned counsel also pleaded that the investments were made

Page 17 of 21 during FY 2009-10 and the learned PCIT initiated revisionary proceedings by issuing notice on 09.02.2021 and in such a situation if one or two document could not be furnished due to lapse of time then without raising any doubt or dismissing the voluminous documentary evidence of the assessee. The assessment order cannot be alleged as erroneous and prejudicial to the interest of revenue especially when the AO has taken a plausible view excepting the explanation of assessee pertaining to other entities and taxing the two entities. In such a situation the learned PCIT is not entitled to invoked revisionary powers u/s. 263 of the Act.

Page 18 of 21 proceedings regarding other entities which were not subject matter of reassessment proceedings then the limitation as per requirement of sub section 2 of section 263 of the Act, will run from the date of first assessment order which was passed after process of return u/s. 143(1) of the Act on 11.02.2011. However if we further logically evaluate the impugned revisionary order passed by the learned PCIT u/s. 263 of the Act, then we all find that in para 6.3 the learned PCIT alleged that in some cases financial statements was not furnished. Further he alleges the copy of return of income was not furnished in any case and thereafter he further noted a contradictory stand that only copy of acknowledgment of ITR was furnished. In our humble understanding the assessee furnished all possible evidence under his command before the AO during the reassessment proceedings and also before learned PCIT during revisionary proceedings but without pointing out any particular defects and examination the learned PCIT proceeded to alleged the assessment order as erroneous and prejudicial to the interest of revenue. In the present case the Assessing Officer has called documentary evidences which was furnished by the assessee and Page 19 of 21 the Assessing Officer after being satisfied with the documentary evidence filed by the assessee found himself satisfied regarding other entities except two entities for which he made a addition in the hands of assessee u/s. 68 of the Act, which were also subject matter of initiation of reassessment proceedings. Therefore when the Assessing Officer has taken a plausible and sustainable view then the view taken by the AO cannot be alleged as erroneous and prejudicial to the interest of revenue. In the case of CIT vs. Kelvinator of India Ltd. the Hon’ble jurisdictional High Court of Delhi held that when Assessing Officer has adopted one courses permissible in law, where two views are possible and the AO has taken one view with which the learned PCIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is unsustainable in law. The similar view has been reiterated by Hon’ble jurisdictional High Court in its subsequent judgment in the case of CIT vs. DLF Ltd. (supra).

Page 20 of 21 proceedings from two entities to all entities and after considering and verifying the documentary evidences filed by the assessee has taken a causable view u/s. 68 of the Act, taxing the entire amount received by the assessee from two entities and accepting that the assessee has discharged onus as per requirement of section 68 of the Act, pertaining to other entities. In such a situation the learned PCIT is not empowered to invoke revisionary proceedings u/s. 263 of the Act, merely because he is not agree with the view taken by the AO thus, the assessment cannot be treated as erroneous and prejudicial to the interest of revenue unless he establishes that view taken by the AO is unsustainable in law. Therefore impugned revisionary notice, revisionary order u/s. 263 of the Act is hereby quashed being bad in law. Accordingly, grounds no. 4 & 5 of assessee are also allowed.