CA Sandeep Kanoi
The CIT’s sole reason for invoking section 263 jurisdiction alleges lack of verification in respect of 11 share and premium applicants to the tune of Rs. 56 lacs. This has made him to restore the matter back to the Assessing authority for carrying out necessary inquiries with reference to identity and creditworthiness of 11 of these share applicants and genuineness of the share application transactions.
We find from the case file that the Assessing Officer issued section 142(1) notice dated 25-05-2011 at page 40 of the paper book. The assessee placed on record necessary details. The CIT himself acknowledges the very fact. A perusal of the reassessment framed on 29-08-2011 states these facts. That being the case the question that arises for our consideration as to whether the present case can be treated as that of no inquiry by the Assessing Officer or not. In view of the above said facts and circumstances and specific inquiry of the Assessing Officer and equally elaborate assessee’s reply, we hold that this case does not fall in the above stated category. We notice from the case file that the assessee’s details forming part of discussion in reassessment led to addition of Rs. 26 lacs being made on account of bogus share application and premium.
We observe in these facts that the Assessing Officer examined this issue and confirmed this addition of Rs. 26 lacs only. The hon’ble Bombay high court in case of CIT vs. Garbiel India (1993) 71 Taxman 585 (Bom) deals with a similar situation wherein the CIT revised an assessment on the ground that the same did not contain discussion in regard to a deduction claim which alleging non application of mind. Their lordship observe that the Assessing Officer had made inquiries in view of all necessary explanation. It is held that the Assessing Officer had allowed the claim on being satisfied with assessee’s version and the same cannot be held erroneous merely because the assessment sought to be revised did not contain an elaborate discussion.
The hon’ble Delhi high court in case of (2010) 189 Taxman 436 (Del) CIT vs. Sunbeam Auto Ltd has also rejected Revenue’s arguments in identical facts and holds that the Assessing Officer in assessment order is not required to give detailed reasons in respect of each and every item. Their lordship draw a fine distinction between lack of inquiry; and inadequate inquiry and hold that if there was an inquiry even inadequate that would not by itself give an occasion to the Commissioner to invoke jurisdiction u/s. 263 of the Act. We reiterate the facts of the instant case making it amply clear that the present is not a case of lack of inquiry. The CIT is of the opinion that no proper verification appears to have been made. We accept assessee’s arguments accordingly and reject those of the Revenue’s that the ld. CIT has merely directed the Assessing Officer to make an elaborate inquiry. Our these findings render the assessee’s arguments propounding merger theory in view of the CIT(A)’s order (supra) and merits to be academic. The CIT’s order under challenge is accordingly reversed.