Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 1015 - AT - Income TaxRevision u/s 263 - Claim of long term capital loss - Held that:- It is the responsibility of the AO to bring on record any incriminating material to support the view that fair market value is the full value of the consideration of the transferred asset. In the case of bargain transactions and in the absence of any such material, the addition made by the AO by relying on the fair market value is unsustainable in law. Thus, in our view, the AO examined this issue of claim of loss of ₹ 20.23 Crs in the regular assessment proceedings made u/s 143(3) of the Act. Further, we have no confusion in our mind to mention here that AO has gone through the specific issues relating to the cost of acquisition of shares of CESC; SAREGAMA and PHILIPS CARBON BLACK LTD. The documents cited above would contain the invoice of the purchase and sale transactions confirm our decision. In any case, the fair market value related additions are unsustainable in law. CIT cannot recommend such unsustainable additions as the case of revenue loss while revising the order of the AO. CIT can assume jurisdiction only when the AO assumed the law erroneously ie incorrect assumption of law. CIT has not made out any such erroneous assumption of law in this case either in matters of cost of acquisition or in matters of sale transactions. We also dismiss the CIT / CIT-DR‟s vehement argument that AO failed to apply his mind and AO failed to conduct meaningful inquiries into these aspects. There is an evidence for raising this issue in the regular assessment proceedings, there is a volume of letters between the AO and the assessee on this issue and the above extracts are heavily relied. Therefore, in our opinion, it is not a case of non-application of mind by the AO to the various aspects of this issue of loss of ₹ 20.23 Crs Premium of ₹ 715/- per share – If AO failed to make a any inquiry - Held that:- Issue of share premium was the subject matter of scrutiny by the AO in the regular assessment proceedings. AO is also aware of the undisputed fact of the assessee calculating premium at ₹ 715/- per share from SSL. It is not clear from the record what is the revenue loss on this issue from the CIT‟s point of view? If the premium is excessive from the Department‟s point of view, it is the gain f the assessee. In our opinion, there is no revenue loss on this issue to the assessee. Further, it is obvious that capital loss cannot be the ground for the CIT to assume jurisdiction u/s 263 of the Act. The capital receipt on this kind is tax neutral so for as this assessee is concerned. Amended provisions of section 56(2)(vii)(b) of the Act do not apply to the AY 2011-12 under consideration. Thus, assessment order cannot be invalid on the ground of erroneous assumption of law or fact. What would AO do even if he probe this issue further, when there is no revenue implications legally? Therefore, as argued by the Ld Counsel for the assessee, this issue of premium falls in the capital field with no revenue implication on the income assessed by the AO. On these facts, we are of the opinion that the arguments of the CIT / CIT-DR is misplaced qua the provisions of section 263 of the Act. In assessment, AO accepts various claims of the assessee made in the returns after scrutinizing or auditing the accounts of the assessee and made few additions / disallowed few claims. Not all such acceptances fall in the category of "inadequate inquiry or improper inquiry or perfunctory inquiry". Therefore, Principal CIT cannot resort to "hit and run" approach. He is under legal obligation to enlist the details of inquiries not done by the AO, the manner of conducting such inquiries etc and quantify or demonstrate the revenue in clearly expressed language in his order. Therefore, on the facts of the present case and the settled legal propositions in force, we are of the opinion that the Principal CIT wrongly assumed jurisdiction u/s 263 of the Act on all these issues raised by him. Considering the inquiries done by the AO clearly made out in the records above, we are of the opinion that this is not the case of "inadequate inquiry or improper inquiry or perfunctory inquiry" - Decided in favour of assessee.
|