M/s. Sarda Energy & Minerals Ltd. Vs. Pr. CIT (ITAT Raipur)
Preferential Allotment of Share Capital to L.B.India Holdings Mauritius II Limited, an entity based in Mauritius, being an associate of Lehman Brothers Inc. to the extent of Rs.50 Cr. – A Search & Seizure Operation u/s.132(1) conducted by the Investigation Wing – During the course of search & seizure, documents relating to issuance of share to the said entity were found & seized and statements of Chairman/Managing Directors & other persons were recorded – On the basis of information from the Investigation Wing, the Assessing Officer reopened the assessment case under section 147 – After conducting necessary enquiries, the Assessing Officer passed the assessment order under the provisions of section 147 r.w.s. 143(3) accepting the assessee’s submissions and did not make any addition in this regard – Pr.CIT was of the view that the AO did not conduct any enquiry and accepted the documentary evidences at their face value and accordingly held that the assessment order passed by AO was erroneous in so far as it is prejudicial to the interests of the Revenue and hence, set aside the impugned assessment order for conducting further enquiries –
Held, That The Assessing Officer had conducted enquiry and after various rounds of hearing and deliberation with the assessee and scrutinizing the documents filed before him as well as submissions of the assessee, the Assessing Officer had passed an order. Such assessment order is neither erroneous nor prejudicial to the interest of the Revenue. Further, the facts demonstrate that necessary enquiry have been conducted by the Assessing Officer and relevant documents regarding the issue was received by the Assessing Officer still the Ld. Commissioner of the Income Tax may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there is always a difference between any enquiry conducted or no enquiry conducted. Therefore, section 263 gets triggered only when the order is erroneous and also prejudicial to the interest of the Revenue. CIT Vs. Max India Ltd. (2007) 295 ITR 282 (SC) and Malabar Industrial Co. Ltd. Vs. CIT (2000) 109 Taxman 66 (SC) relied on.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal preferred by the assessee emanates from the order of the Ld. Pr. Commissioner of Income Tax (Central), Bhopal dated 20.03.2018 for the assessment year 2008-09 as per the grounds of appeal on record.
2. The crux of the grievance of the assessee in this appeal is assumption of revisionary jurisdiction by the Ld. Principal Commissioner of Income Tax and passing order u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
3. The facts in this case are that the assessee company (formerly known as M/s. Raipur Alloys and Steel Ltd.) has received USD 12,386,202 ( Rs.50,00,00,010/- after conversion into Indian Rupees at the prevailing exchange rate) on 3rd August, 2007 in pursuance to issuance of equity shares to L.B. India Holdings Mauritious-II Limited. The Company had issued 26,21,579/- equity shares at the rate of Rs.190/- per share (including premium of Rs.180/- per share ( on 4th August, 2007). The name of M/s. Raipur Alloys and Steel Ltd. has been changed to M/s. Sarda Energy and Minerals Ltd. with effect from 2nd August, 2007 pursuant to the approval received from the Registrar of Companies. A search and seizure operation was carried out at the premises of the assessee and its various concerns. During the search operation, the amount received in the form of share capital and premium from L.B. India Holding Mauritius-II Limited Hong Kong was examined and the documents related to issuance of the shares to above mentioned foreign company were seized and marked as LPS 41 of Vanijya Bhawan Premises. In this respect the Statements of Shri Kamal Kishore Sarda, Managing Director of the assessee-company and Shri Ghanshyam Das Mundra, Director of the assessee company were recorded in the course of Search operation. Thereafter, it is observed by the Ld. Pr. Commissioner of Income Tax (Central) that no documents relating to payment of dividend, approval thereon or intimation letter to RBI regarding dividend payments were produced. No documents/ evidences, on the basis of which the rate of issue of shares was determined, were produced. Neither details/evidences of meetings of officers of L.B. India Holding Mauritius-II Limited and the officers of SEML were given nor found during the search operation.
4. The Assessing Officer after recording reasons and obtaining necessary approval reopened the assessee‟s case for the assessment year under consideration. Assessment order u/s 147 r.w.s. 143(3) was passed on 29.03.2016. In this assessment order the AO accepted the assessee‟s documentary evidence and did not make any addition with regard to the issue under consideration. On perusal of records it is seen that the AO accepted the assessee‟s documentary evidence without making any enquiries/verification.
5. At the time of hearing the Ld. AR of the assessee submitted that the only reason for passing order u/s.263 of the Act is with regard to L.B. India Holding Mauritius-II Limited. The Ld. AR further submitted that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue since all the enquiries with respect to L.B. India Holding Mauritius-II Limited has been conducted by the Assessing Officer. The Ld. AR of the assessee invites our attention to Page 42 of the paper book wherein the copy of questionnaire along with notice u/s.142(1) of the Act is placed therein and point No.3 states that “please submit documentary evidence in respect of share application received from M/s. L.B. India Holding Mauritius-II Limited and also state why provision of Section 68 of the Income Tax Act, 1961 should not be invoked in respect of the said company for A.Y.2008-09.” The page No.42 of the paper book is made part of this order:
Annexure -1
Office of the Asstt. Commissioner of Income Tax Central
Circle-1, Raipur (C.G.)
Date :-08.02.2016
M/s Sarda Energy & Minerals Ltd.
73-A, Central Avenue,
Nagpur (Maharashtra) – 440018.
