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2014 (11) TMI 472 - AT - Income TaxJurisdiction of CIT u/s 263 Failure to make inquiry by AO - LTCG and STCG on sale of shares Gifts received by assessee - Held that:- AO has not asked any query whatsoever with regard to the capital gains - it cannot be said that some enquiry was done by the AO - The assessment order is also very short and does not contain any reference to such enquiry. Hence, it cannot be said that AO has formed any opinion - the long term and short term capital gains have arisen only in respect of dealing of shares of Mawana Sugar Ltd. - frequency and magnitude of transaction are also important factor to decide whether the transaction is business transaction or investment transaction - the magnitude of share transaction does call for any enquiry on the part of the AO as to whether these are investments transactions or business transactions AO is not only an adjudicator but also an investigator - AO has totally failed to make any enquiry - the invocation of section 263 by the CIT is correct. Creditworthiness of the donor is also to be established by the assessee - No document in this regard has been submitted, nor the AO has made any enquiry - AO has not made any enquiry whatsoever in this regard and the same is not at all reflected in the enquiries made and the entries of the order sheet - CIT is correct in holding that this aspect needs further examination - It can also not be said that AO has adopted one of the two possible views when no enquiry has been made, when the same was required CIT rightly observed that AO has made the assessment in haste without applying his mind properly relying upon Gee Vee Enterprises Versus Additional Commissioner Of Income-Tax, Delhi I, And Others [1974 (10) TMI 29 - DELHI High Court] - CITs direction to make enquiry on the issue of capital gain earned by the assessee and the gift received by the assesse is sustainable the order of the CIT is upheld Decided against assessee.
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