|B. R. Baskaran (AM), Sandeep Gosain (JM)
|March 23, 2016 (Date of pronouncement)
|April 1, 2016 (Date of publication)
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|S. 263 revision cannot be initiated to conduct roving inquiries whether share application money share premium constitute undisclosed income
(i) The scope of interference u/s 263 is not to set aside merely unfavourable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act. Power under Section 263 cannot be exercised for starting fishing and roving enquiries.
(ii) We have also perused the orders passed by the coordinate Mumbai bench of ITA Nos. 4148 to 4152/Mum/2013 in case of ‘M/s. Turakhia Ferromet Pvt. Ltd. vs. CIT’ And ITA Nos.3966 to 3969/Mum/2013 in case of ‘M/s. Standard Conduits Pvt. Ltd. vs. CIT’ wherein also the issue before the coordinate bench of ITAT was same i.e. u/s 263 of the Act and the companies named above are the recipient companies who received the money and issued the shares. In their case also the CIT(A) for the year under consideration and for other years had passed orders u/s 263 of the Act on similar grounds and the coordinate bench in the case of recipient company had set aside the order of the CIT(A) u/s 263 of the Act and it is noteworthy that the coordinate bench orders setting aside the order under section 263 of the Act is in respect of recipient company who actually received the money from the assessee and issue the shares.
(iii) In the present case although the AO has mentioned regarding the submissions of documents and discussion carried out but still the CIT has mentioned while passing the order u/s 263 of the Act that the order of AO is erroneous and prejudicial to the interest of revenue. In this respect we would further like to mention that the order of AO in the present case may be brief but that by itself is not a sufficient reason to held the order of assessment as erroneous and prejudicial to the interest of the revenue. The scope of interference u/s 263 is not to set aside merely unfavaourable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act. Power under Section 263 cannot be exercised for starting fishing and roving enquiries. In the garb of exercising power under Section 263, the Commissioner cannot initiate proceedings with a view to starting fishing and roving enquires in matters or orders which are already concluded.
(iv) We have also perused the judgement relied upon by the ld. DR decided by ITAT Kolkata Bench in case of ‘Bisakha Sales (P.) Ltd. vs. CIT’ however in the above cited case the assessee had received share application money with huge and unjustified share premium from corporate entities but in the present case the assessee has not received share application money or share premium from corporate entities. Since the facts of the cited case are different and are not similar to the facts of the present case hence the cited judgement is distinguishable and is not applicable to the facts of the present case. Similar is the position of another case decided by Kolkata High Court titled ‘CIT vs. Maithan International’ facts of the afore mentioned case are also different and distinguishable and therefore the said judgment is also not applicable to the facts of the present case.