Case Number: ITA 458/DEL/2021
Appellant: Reinforce Recruiter Private Limited, New Delhi
Respondent: Pr. CIT – 7, Delhi
Assessment Year: 2015-16
Case Filed On: 2021-04-19
Order Type: Final Tribunal Order
Date of Order: 2022-09-09
Pronounced On: 2022-09-09
The case involves the appeal filed by Reinforce Recruiter Private Limited against the order of the Principal Commissioner of Income Tax (Pr. CIT) – 7, Delhi, under section 263 of the Income Tax Act, 1961. The primary contention of the appellant was that the jurisdiction assumed by Pr. CIT under section 263 was erroneous and prejudicial to the interest of revenue.
The appellant filed the case to challenge the order dated 24.03.2021, where the Pr. CIT – 7, Delhi, held that the assessment order dated 29.09.2017 framed under section 143(3) of the Income Tax Act was erroneous and prejudicial to the interest of the Revenue. The main points of contention were:
The tribunal found that the Pr. CIT had assumed jurisdiction under section 263 without proper basis. The appellant had filed its return of income on 28.09.2015, declaring a loss of Rs. 1,00,912/-. The return was processed under section 143(1) of the Act at NIL income, and the case was later selected for limited scrutiny.
The statutory notices were issued, and the appellant furnished the details of investment in unlisted equities and the sources of these investments. After considering the submissions, the assessment order was framed on total income of Rs. NIL.
The Pr. CIT, however, issued a show cause notice dated 14.11.2018, stating that the assessment order was erroneous and prejudicial to the interest of revenue. The main reason cited was the non-examination of the provisions under section 56(2)(viia) related to the valuation of fair market value of shares.
The tribunal observed that the Pr. CIT was well aware of the limitations of the Assessing Officer (AO) in assessing the income in the case of limited scrutiny. The tribunal noted that non-enquiry under section 56(2)(viia) did not render the assessment order erroneous and prejudicial to the interest of revenue, especially when the provisions of section 56(2)(viia) for AY 2015-16 pertained to taxability as income from other sources in the hands of the company receiving the shares, not the company investing in equity shares.
The tribunal concluded that the basis of the Pr. CIT in assuming jurisdiction under section 263 was erroneous and bad in law. The assessment order framed by the AO could not be faulted with, and therefore, the tribunal set aside the order of the Pr. CIT dated 24.03.2021 and restored the assessment order dated 29.09.2017 framed under section 143(3) of the Act.
Order Pronounced in the Open Court on 09/09/2022.
Accountant Member: N.K. Billaiya
Judicial Member: Kul Bharat
Reinforce Recruiter Private Limited, New Delhi vs. Pr. CIT – 7, Delhi – ITA 458/DEL/2021
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