TMI Blog2014 (11) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 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. - I.T.A. No. 1649/Del/2011 - - - Dated:- 29-1-2014 - SHRI BHAVNESH SAINI AND SHRI SHAMIM YAHYA, JJ. For The Appellant : Sh. Ajay Vohra, Sh. Rohit Garg, Advocates For The Respondent : S h. Adhir Jha, CIT(DR) ORDER PER SHAMIM YAHYA: AM This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es only. Therefore, the activity of the assessee is not a normal investment activity. This Is certainly a business activity and such income should have been considered to be taxed accordingly. The investment of ₹ 6.83 crores in the shares on which LTCG has been claimed was made in the A Ys 2004-05 and 2005-.06. The genuineness and the source of investment should have been verified which is not done. Even the assessment records for these years have not been made available despite of request made. It has been indicated by the AO that such records were not made available to him on transfer of this case to his Circle. Therefore, the AO did not examine this aspect at all. As far as STCG is concerned, it is observed at out of the total number of shares of 7,00,000, the cost of 6,79,000 shares is being shown as zero. It should have been verified from where these shares have come. During the year under consideration the assesse has also received gifts of ₹ 7.92 crores from his mother and ₹ 1.83 lacs from father. Although a confirmation from mother has been obtained, there is nothing to indicate about the source of her income from where these gifts were allowed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is an admitted position that investment had been made in A. Yrs. 2004-05 and 2005-06. This fact has been duly accepted by the Assessing Officer. It is submitted that order of assessment passed for A. Y. 2006-07 cannot be said to be erroneous and prejudicial to the interest of revenue on the ground that investments made in earlier years had not been verified,. In any case there can be no impact resulting from verification of source of investment made in earlier years on the income assessable in A. Y. 2006-07. It has been further stated in the notice issued u/s 263 of the Act that out of 7 lacs shares on which STCG. was earned, cost of 6,79,000 shares was shown as zero and this fact should have been verified. It is stated in this regard that the assessee had shown total sale consideration as chargeable to tax and tax thereon has been duly paid. There could be no position of the assessee adverse than showing total sale consideration as taxable capital gain. Hence, the order passed by the Assessing Officer cannot be said to be erroneous and prejudicial to interest of revenue. It is further stated in this regard that assessee had duly submitted details regarding computation of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the order passed by the ITO which might set a bad trend or pattern which might be thought to be prejudicial to the revenue administration. The above said views are also supported by judgments in the case of G. V. Enterprises 99 ITR 375 (Del.), Swarup Vegetable Pdts. India. Ltd. 187 ITR 412 (All.), Mukur Corporation 111 ITR 312 (Guj.) and Seshai papers Board Ltd. 242 ITR 490. 6. Considering the above, Ld. CIT concluded as under:- that the major issues involved in this case have not at all be taken up for examination which has resulted into complete failure of the purpose of taking up the case for scrutiny assessment. Therefore, the assessment order made in the case is held to be erroneous so far as it is prejudicial to the interests of revenue. Although the replies on the issues have been submitted during the proceedings u/s 263 of the IT Act, 1961, the details can not be verified since the proceedings are for the limited purpose of examining whether the provisions of this section are applicable in the case or not. Accordingly, the assessment completed u/s 143(3) of the IT Act, 1961 ill the case is hereby set aside with the directions to the AO that all the major issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere enquiry has not been done by the AO, Ld. CIT cannot direct for detailed enquiry. Furthermore, when two views are possible and the AO has adopted one of the views, action u/s. 263 cannot be invoked. 11. We have carefully considered the submissions. We have also gone through the assessment records. We find that AO has not asked any query whatsoever with regard to the capital gains. Hence, 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. From the details attached with the return of income, we find that the long term and short term capital gains have arisen only in respect of dealing of shares of Mawana Sugar Ltd. The long term capital gain has arisen on account of 15 transactions in the shares of the said company during the financial year. Again the short term capital gain has arisen on account of three transactions of acquisition of shares and one transaction of sale of shares. 11.1 It is settled law that that frequency and magnitude of transaction are also important factor to decide whether the transaction is business t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 of the I.T. Act. 15. Ld. CIT has further observed that during the year under consideration the assessee has received gift of ₹ 7.92 crores from his mother and ₹ 1.83 lacs from father. Although the confirmation from the mother has been obtained. There is nothing to indicate the source of income from where these gifts were received. This aspect should have been examined further. 16. In this regard, it has been submitted by the assessee that order cannot be considered to be erroneous or pre-judicial on the ground that source of source has not been examined. The gift was received from the mother and confirmation in respect thereof has been submitted to the AO. The AO has accepted the position after due verification. Therefore, no action u/s. 263 of the Act is called for on this ground also. In this regard, also Ld. Counsel of the assessee has relied upon the case for the proposition that Ld. CIT cannot direct for making further enquiries. If the AO has adopted one view of the possible view, the same cannot be considered to be liable for action under section 263. 17. We have carefully considered the submissions and perused the records. We find that vide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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