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The Tax Publishers2012 TaxPub(DT) 0915 (Del-HC) : (2012) 048 (I) ITCL 0214 : (2012) 341 ITR 0240 INCOME TAX ACT, 1961 --Revision under section 263--Erroneous and prejudicial orderLack of enquiries--AO reopened the assessment on ground that assessee had made investment in form of FDR of Rs. 20 lakhs but in the assessment order passed under section 147/143(3) AO accepted that assessee had established and proved the source and their capacity to invest Rs. 20 lakhs and accordingly no addition was made on this account. The return filed by assessee showing loss was accepted. CIT viewed that AO had earned in determining loss after issue of noice under section 148 as no necdessary enquiries conducte dby AO in respect of share application money. Tribunal held that the order of AO could not be regarded as erroneous even if AO had failed to carry out necessary verification and required enquiries in respect of share application money, as no addition had been made on account of the reasons for reopening, which were recoded before issue of noticed udner section 148. Thus AO had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening, which were recorded before issue of notice under section 148 of the Act. It has been held that the AO could not have made an addition on account of share application money as no addition has been made on account of FDRs of Rs. 20 lakhs. Held: AO did not make any addition for the reason recorded at the time of issue of notice under section 148. That position was not disputed and disturbed by CI. Sequitur was that AO could not have made an addition on account of share application money in the assessment proceeding under section 147/148. Accordingly, assessment order was not erroneous. Thus CIT could not have exercised jurisdiction under section 263. Income Tax Act, 1961 Section 263 IN THE DELHI HIGH COURT SANJIV KHANNA & R.V. EASWAR, JJ. CIT v. Software Consultants ITA 914/2010 17 January, 2012 Appellant by : Kiran Babu, Sr. Standing Counsel, Respondent by : Salil Aggarwal, Advocate, ORDER This appeal under section 260A of the Income Tax Act, 1961 (Act, for short) impugns the order dt. 26-9-2008 passed by the Income Tax Appellate Tribunal (tribunal, for short) in ITA No. 2554/D/2004 in the case of Software Consultants (India) Private Limited. The appeal pertains to the assessment year 1993-94. 2. By order dt. 17-10-2011, the following substantial question of law was framed : 'Whether the tribunal was right in law in holding that the Commissioner of Income Tax had wrongly invoked jurisdiction under section 263 of the Income Tax Act, 1961.' 3. The assessee is a company and for the assessment year 1993-94 did not file their return of income. During the course of assessment proceedings for the assessment year 1997-98, it was noticed that Central Bureau of Investigation had conducted search in the premises in which FDRs worth Rs. 20 lacs relating to assessment year 1993-94 were found in possession of Poonam Rani Singh, a director of the respondent company. However, Poonam Rani Singh claimed that the FDRs though in her name, actually belonged to the respondent assessee. This stand was accepted by the Commissioner (Appeals) in his order dt. 16-2-2001 in the appeal filed by Poonam Rani Singh. 4. Thereafter, the assessing officer in the case of the respondent assessee issued notice under section 148 of the Act on 29-3-2001. In response to this notice, the respondent assessee on 16-8-2001 filed a return showing loss of Rs. 1,02,756. By assessment order dt. 28-3-2002 the assessing officer accepted that the respondent assessee had established and proved the source and their capacity to invest Rs. 20 lacs and accordingly no addition was made on this account. The return filed by the assessee showing loss of Rs. 1,02,756 was accepted. No addition was made. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0915 (Del-HC) : (2012) 048 (I) ITCL 0214 : (2012) 341 ITR 0240

INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial orderLack of enquiries--AO reopened the assessment on ground that assessee had made investment in form of FDR of Rs. 20 lakhs but in the assessment order passed under section 147/143(3) AO accepted that assessee had established and proved the source and their capacity to invest Rs. 20 lakhs and accordingly no addition was made on this account. The return filed by assessee showing loss was accepted. CIT viewed that AO had earned in determining loss after issue of noice under section 148 as no necdessary enquiries conducte dby AO in respect of share application money. Tribunal held that the order of AO could not be regarded as erroneous even if AO had failed to carry out necessary verification and required enquiries in respect of share application money, as no addition had been made on account of the reasons for reopening, which were recoded before issue of noticed udner section 148. Thus AO had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening, which were recorded before issue of notice under section 148 of the Act. It has been held that the AO could not have made an addition on account of share application money as no addition has been made on account of FDRs of Rs. 20 lakhs. Held: AO did not make any addition for the reason recorded at the time of issue of notice under section 148. That position was not disputed and disturbed by CI. Sequitur was that AO could not have made an addition on account of share application money in the assessment proceeding under section 147/148. Accordingly, assessment order was not erroneous. Thus CIT could not have exercised jurisdiction under section 263.

Income Tax Act, 1961 Section 263

IN THE DELHI HIGH COURT

SANJIV KHANNA & R.V. EASWAR, JJ.

CIT v. Software Consultants

ITA 914/2010

17 January, 2012

Appellant by : Kiran Babu, Sr. Standing Counsel,

Respondent by : Salil Aggarwal, Advocate,

ORDER

This appeal under section 260A of the Income Tax Act, 1961 (Act, for short) impugns the order dt. 26-9-2008 passed by the Income Tax Appellate Tribunal (tribunal, for short) in ITA No. 2554/D/2004 in the case of Software Consultants (India) Private Limited. The appeal pertains to the assessment year 1993-94.

2. By order dt. 17-10-2011, the following substantial question of law was framed :

'Whether the tribunal was right in law in holding that the Commissioner of Income Tax had wrongly invoked jurisdiction under section 263 of the Income Tax Act, 1961.'

3. The assessee is a company and for the assessment year 1993-94 did not file their return of income. During the course of assessment proceedings for the assessment year 1997-98, it was noticed that Central Bureau of Investigation had conducted search in the premises in which FDRs worth Rs. 20 lacs relating to assessment year 1993-94 were found in possession of Poonam Rani Singh, a director of the respondent company. However, Poonam Rani Singh claimed that the FDRs though in her name, actually belonged to the respondent assessee. This stand was accepted by the Commissioner (Appeals) in his order dt. 16-2-2001 in the appeal filed by Poonam Rani Singh.

4. Thereafter, the assessing officer in the case of the respondent assessee issued notice under section 148 of the Act on 29-3-2001. In response to this notice, the respondent assessee on 16-8-2001 filed a return showing loss of Rs. 1,02,756. By assessment order dt. 28-3-2002 the assessing officer accepted that the respondent assessee had established and proved the source and their capacity to invest Rs. 20 lacs and accordingly no addition was made on this account. The return filed by the assessee showing loss of Rs. 1,02,756 was accepted. No addition was made.