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2019 (1) TMI 1408 - AT - Income TaxRevision u/s 263 - lack of inquiry - exemption claimed u/s 10(38) disallowed due to the fault of the company - allowability of the exemption of the Long Term Capital Gain - Held that:- AO has not applied his mind regarding the allowability of the exemption of the Long Term Capital Gain. This is not the case of inadequate enquiry but is a clear case of lack of enquiry which makes it different from the case of Nirav Modi [2016 (6) TMI 1004 - BOMBAY HIGH COURT]. Obtaining of the information about the transaction cannot be taken as akin to enquiring about the information. This is a clear case of no enquiry for which the PCIT has rightly invoked the provisions of Section 263. PCIT has clearly brought about the error in the assessment order and has also directed the Assessing Officer to take remedial action to take action as per the law after providing due opportunity to the assessee. Thus, it can be said that the PCIT has not exceeded his jurisdiction nor directed the AO to pass the assessment order in any particular way thus not interfering in the judicial function of the AO. It can be observed that the AO has not conducted any enquiry and this is a clear case of lack of enquiry not a case inadequate enquiry. Further non application of mind by the AO can be easily gauzed from the fact that the information available with the AO has not been utilised during the assessment proceedings which makes the case fit for applying the provisions of explanation 2 (a) of section 263. The judgment of the Apex Court in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] wherein the action under section 263 is upheld when the Assessing Officer has accepted the statement of account filed by the Assessee without making any enquiry, the judgment of Hon’ble Supreme Court in the case of Daniel Merchants Pvt. Ltd. [2017 (12) TMI 476 - SUPREME COURT] which held that in the case where AO did not make any proper enquiry, the PCIT is correct in directing the Assessing Officer to carry thorough and detailed enquiry. On going through the questionnaire, assessment order, we have no hesitation to say that the Assessing Officer has not applied his mind to the issue of share transactions for which the detailed information is available regarding the suspicious nature of the transactions. Accordingly to us, based on the facts and circumstances, the case before us is a case of absolute lack of enquiry but not a case of inadequate enquiry by him. Hence, order passed u/s 263 of the act by the Id CIT is upheld and appeal of the assessee is dismissed.
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