Pantime Finance Company Pvt. Ltd. Vs ITO (ITAT Mumbai)
ITAT Mumbai held that as entire reasons for reopening were recorded by incorrect assumption of facts, accordingly, reopening was invalid and bad-in-law. Hence, subsequent invocation of revisional jurisdictional under section 263 of the Income Tax Act is untenable in law.
Facts- The only issue to be decided in this appeal is asked whether the learned PCIT was justified in invoking revisional jurisdiction under section 263 of the Act on facts as well as on law.
The moot question to be decided in this appeal is as to whether the learned PCIT had validly assumed revision jurisdiction under section 263 of the Act both on law and also on merits. In this case, the assessment was originally completed under section 143(3) of the Act by the learned AO on 28.02.2015. Later the assessment was sought to be reopened under section 147 of the Act by the learned AO vide issuance of notice under section 148 of the Act on 28.03.2018. However, AO did not made any addition in the entire re-assessment and accepted the return filed in response to notice u/s 148 of the Act in the reassessment completed u/s 143(3) read with section 147 of the Act on 20.11.2018.
Conclusion- We have already held that the reasons recorded by the ld. AO for reopening merely gives him ‘reason to suspect’ and not ‘reason to believe’. Firstly the ld. AO says that the receipt of Rs 15 lacs on sale of shares from Anunay Sales Pvt Ltd was not disclosed by the assessee. This has been proved to be factually incorrect as the ld. AO himself had accepted the fact that the entire purchase and sale transactions of Aditi & Finance Pvt Ltd had been duly disclosed by the assessee in the balance sheet. Hence it could be safely concluded that the entire reasons for reopening were recorded by incorrect assumption of fact.
Even on merits of revision order passed by the ld. PCIT only says that M/s Aditi & Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the ld. AO while framing the reassessment. In this regard, it is pertinent to note that penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. In the instant case, Aditi & Finance Pvt Ltd scrip is not listed in any stock exchange. We hold that the SOP guidelines issued by CBDT cannot be made applicable for unlisted scrips. Hence the ld. PCIT had assumed revision jurisdiction on incorrect assumption of fact and incorrect application of CBDT guidelines. Hence the revision order passed u/s 263 of the Act is to be quashed on this count also.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal in ITA No.636/Mum/2021 for A.Y.2012-13 preferred by the order against the revision order of the ld. Principal Commissioner of Income Tax-5, Mumbai u/s.263 of the Act dated 30/03/2021 for the A.Y.2012-13.
2. The only issue to be decided in this appeal is asked whether the learned PCIT was justified in invoking revisional jurisdiction under section 263 of the Act on facts as well as on law.
3. We have heard the rival submissions and perused the materials available on record. The moot question to be decided in this appeal is as to whether the learned PCIT had validly assumed revision jurisdiction under section 263 of the Act both on law and also on merits. In this case, the assessment was originally completed under section 143(3) of the Act by the learned AO on 28.02.2015. Later the assessment was sought to be reopened under section 147 of the Act by the learned AO vide issuance of notice under section 148 of the Act on 28.03.2018. The reasons recorded by the learned AO for reopening the assessment under section 147 of the Act are as under: –
REASONS FOR REOPENING OF ASSESSMENT U/S 147 OF THE IT ACT 1961
In connection to the above following information have been received from ADIT Unit 6.Kolkata vide latter dated 05/03/2018(copy enclosed):
– This office was in receipt of an information that the company M/s Anunay Sales Pvt Ltd (Account no 020606700000361 of Dhanlaxmi Bank Ltd) was engaged in routing of funds during the FY 2011-12 as observed on perusal of the statement of its bank account. The fund so received by the company had been immediately transferred to other concerns bank accounts. From the said bank account it is further gathered that the account was mainly utilized for routing of funds and finally for providing entries to beneficiaries by crediting its account with the routed funds.
On this count a trail has been prepared and on the basis of the same the following beneficiary has been detected,
