Case Law Details
Lovely International Pvt. Ltd. Vs ACIT (ITAT Kolkata)
We find from the discussion at para 5 (supra) of this order and the finding of Ld PCIT given below para 5 corroborates that the AO in fact had issued notice u/s 142(1) and called for all the details of the share subscribers/share premium and pursuant to the notice of AO, the assessee had filed all the documents to substantiate the identity, creditworthiness and genuineness of the share subscription. The source of source of the share subscription was also brought to the notice of the AO as discussed (supra) and we note that the assessee company is a private limited company and it is closely held and has raised share subscription from its own directors and their wives who are all income tax assessee’s and all the money has come through banking channel and their creditworthiness has also been proved by the documents produced and discussed supra. Therefore the Ld. PCIT erred in finding that the source of share subscribers has not been properly enquired by the AO. Therefore, since the condition precedent for invoking the revisional jurisdiction has not been satisfied the Ld. PCIT lacks of jurisdiction to interfere in the assessment order passed by the AO dated 20.12.2018 and therefore we are inclined to quash the same.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal filed by the Assessee company against the order of Ld. PCIT, Kolkata-1, Kolkata dated 25.05.2021 passed u/s 263 of Income Tax Act, 1961 ( hereinafter referred to as the Act) for Assessment year 2016-17.
2. At the outset, the Ld. A.R. of the assessee Shri S. M. Surana assailed the action of Ld. PCIT to have usurped the revisional jurisdiction u/s 263 of the Act without satisfying the condition precedent as stipulated u/s 263 of the Act i.e. without validly holding that the AO’s action in respect of receipt of share capital by the assessee is erroneous as well as prejudicial to the revenue. According to Ld. AR., the Ld. PCIT has accepted in para 5 of his impugned order that the AO has enquired from the assessee company the details of share and share premium quoted. And that the same was raised from the directors of the assessee company and their wives. The Ld. PCIT has also taken note that the share premium of Rs. 200 per share face value of Rs. 10 was in accordance to law [i.e. Rule 11UA(2)(c) of the Income Tax Rules, 1962 (hereinafter referred to as the Rules) read with Section 56(2)(viib) of the Act] and that in this regard the assessee company had produced before the AO the copy of board resolution passed for issuance & allotment of shares. The only fault pointed out by the Ld. PCIT for interdicting the order of the AO was by alleging that source of investment of share capital was not enquired into by issuance of notice u/s 133(6) of the Act. According to Ld. A.R., the AO had specifically asked for the ‘source of source’ and the same has been answered by the assessee by showing that the source of source was from sale of blue-chip scrips in the recognized stock exchange and by selling immovable property (refer Page 55 of PB). So therefore in the light of the aforesaid facts according to Ld. A.R. it is clear that Ld. PCIT misdirected himself by assuming wrong facts to hold that the AO has not enquired the source of source and therefore erred in interfering by passing the impugned order setting aside the assessment passed by the AO dated 20.12.2018 for de novo assessment and to enquire into the source of source of share capital and share premium to the extent of Rs. 1,08,15,000/-. Per contra, the Ld. CITDR supporting the decision of Ld. PCIT does not want us to interfere.
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