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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] - CIT’s 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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