INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Invocation of second time revisional jurisdiction on the ground of time revisional jutisdiction on the ground of no enquiry as regards share capital/premium received by assessee -

Pr.CIT excercised second time revisional jurisdiction under section 263 on the reasoning that AO passed assessment order without carrying out detailed investigation/verification/independent enquiry regarding creditworthiness of shareholders and also genuineness of transactions relating to share capital and share premium and merely accepted submission of assessee in this regard. Held: AO during 2nd round of re-assessment pursuant to specific direction of Pr.CIT issued 2nd round of summons under section 131 to directors of assessee-company. Pursuant to the summons, director of assessee-company appeared before AO and also filed document such as PAN, bank statement, income-tax acknowledgement and audited financial statement of subscriber companies and it was vivid that all the share applicants were income tax assessee's, and were filing their return of income, share application form and allotment letter were available on record, and share application money was made by account payee cheques. In none of the transactions AO found deposit in cash before issuing cheques to assessee company, applicants were having substantial creditworthiness which was represented by a capital and reserve. Thus, view taken by AO was plausible and could not be held to be unsustainable view in facts or law. Accordingly, condition precedent for usurping revisional jurisdiction under section 263 was absent and, therefore, Pr. CIT lacked jurisdiction to assume second time revisional jurisdiction under section 263.

Relied:>Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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