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TMI Blog2012 (5) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds shall be numbered consecutively." 2.1 Turning to the issue on hand, the grievance of the assessee, to be precise, is that "the impugned order of the ld. CIT passed under section 263 of the Act is void and deserves to be annulled." 3. The assessee company engaged in the business of trading in agro products, dealing in shares, debentures, securities, commodities etc., during the year under consideration, furnished its return of income, declaring total income at Rs.Nil which was initially processed u/s 143(1) of the Act. Subsequently, the assessment was concluded u/s 143(3) of the Act by making disallowance u/s 14A of the Act. 3.1. On suo motu action under section 263 of the Act, the ld. CIT, on verification of records of the assessee, observed that though the assessee had earned a profit of Rs.9,54,15,842/- from speculation business for the assessment year under dispute which was wrongly adjusted towards the brought forward speculation loss of Rs.89,70,10,352/- pertaining to the assessment year 2001-02 and the balance loss was carried forward. However, in view of the amended provisions of section 73(4) of the Act, no loss of speculation business shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of these shares should be treated as Short Term Capital Gain and not as LTCG as claimed by the assessee. From the above facts, it is apparent that during the assessment proceedings the AO has neither sought assessee's explanation on these issues nor has he called for any details to verify the veracity of assessee's claim. The AO has allowed the claim of assessee without proper inquiry and verification. It is settled legal issue that if the AO has completed any assessment without making proper inquiry/verifications, then such order will always be erroneous and prejudicial to the interest of revenue. S.263 of the Act empowers the CIT to call for and examine the record of any proceeding under the I.T. Act and he considers that any order passed by the ITO is erroneous and prejudicial to the interests of revenue, he may, after complying with the principles of natural justice, pass such orders thereon as the circumstances of the case require including an order enhancing or modifying the assessment or canceling the assessment and directing a fresh assessment." 3.3 Citing various case-laws as recorded in his order, the ld. CIT had, further, observed: "7. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion that the assessment order was erroneous. It was, further, submitted by the Ld. A.R that the CIT assumed jurisdiction u/s 263 of the Act under the erroneous impression that it was a settled legal position that if the AO had completed the assessment without making proper enquiry/verification, such order will always be erroneous and prejudicial to the interests of revenue; that the ruling of the Supreme Court reported in 231 ITR 53 was not an authority on any such proposition as he had suggested and far from it, it actually held to the effect that the CIT acting u/s 263 may pass such orders as the circumstances of the case required including an order enhancing or modifying the assessment or canceling the assessment and directing a fresh assessment if(but only if) he considered that the order in question was erroneous and prejudicial to the interests of the revenue; that the CIT had failed to establish that the assessment was made without proper enquiry/verification of the issues raised by him; 4.1. The ld. A R further argued that the CIT had grossly erred in proceeding on the basis of assuming jurisdiction under section 263 that the AO had granted set off of loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1963) or a unit of a Mutual Fund specified under clause (23D) of section 10 or a zero coupon bond, the provisions of this clause shall have effect as if the words 'thirty-six months' the words 'twelve months' had been substituted.' That it was only axiomatic that after that amendment another amendment was made w.e.f. 1.4.206, the proviso contained the following five separate and independent categories of capital assets, viz: (1) a share held in a company; (2) any other security listed in a recognized stock exchange in India; (3) a unit of UTI established under the UTI Act, 1963; (4) a unit of a Mutual Fund specified under clause (23D) of s.10; (5) a zero coupon bond Therefore, it was clear that the requirement of listing in a recognized stock exchange in India applied only to the second of the five categories referred above and not to other four categories including the first category viz., 'a share held in a company' which was the capital asset sold by the appellant this year; (v) that it cannot be opened to the CIT to conclude that the AO, even as he had acted in conformity with what was only axiomatic, had committed any error ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to the interest of revenue and also erroneous. To support his view, the ld. D R relied on the following case laws: (i) CIT v. Himachal Pradesh Financial Corporation(2010) 186 Taxman 105 (HP) (ii) CIT v. Sunil Goyal (2009) 176 Taxman 184 (Uttarakhand); (iii) CIT v. Bhagwan Das (2005) 142 Taxman 1 (All) 6. We have heard the rival submissions made and perused the materials available from the records and also the paper books furnished by the ld. A R during the course of hearing. The core issue for consideration is that, according to the ld. CIT under section 263 of the Act, the ld. AO, during the course of assessment proceedings u/s 143(3) of the Act, had allowed wrong set off of speculation loss against the profit of Rs.9,54,5,842/- earned from speculation business by the assessee during the period under consideration i.e., assessment year 2006-07. It was the stand of the ld. CIT that in view of amended provisions of section 73(4), no loss of speculation business shall be carried forward under section 73 for more than four assessment years immediately succeeding the assessment year in which the loss was first computed. In the case of the present ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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