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TMI Blog2015 (5) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... ng total income at Rs. 47,13,718/-. The case of the assessee was selected for scrutiny assessment and a notice u/s. 143(2) of the Income Tax Act was issued on 21st October, 2007. The Assessing Officer thereafter issued a questionnaire u/s. 142(1) on 23rd June, 2008. After hearing the assessee, he passed the assessment order on 4th December, 2008 u/s. 143(3) of the Income Tax Act. The Ld. Assessing Officer has made the addition of Rs. 18,750/- to the declared income of the assessee and in this way, the total income has been determined at Rs. 47,32,470/- as against declared income at Rs. 47,13,718/-. 4. On verification of the assessment record, Ld. Commissioner formed an opinion that assessee had income from capital gain at Rs. 19,99,677/-. The assesse, besides, doing normal business, had traded in shares. The Assessing Officer had treated the income arising out of the sale of shares as short term capital gain, whereas in view of explanation appended to section 73 of the Income Tax Act, 1961, trading in share was required to be treated as speculation business and profit from such speculation business was required to be assessed as speculation income. According to the Ld. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner was not able to point out other circumstances for doubting the transaction. 6. Ld. counsel of the assesse, while impugning the order of CIT contended that Assessing Officer issued show cause notice on the particular issue and conducted an inquiry. After explanation of assessee, he accepted the stand of the assessee. Therefore, Ld. Assessing Officer has taken one of possible view and Ld. Commissioner while exercising his power u/s. 263 cannot replace the possible view taken by the Assessing Officer. In the second fold of submission, he pointed that explanation appended to section 73 is not applicable in the present case. 7. We have duly considered the rival contentions and gone through the record carefully. Section 263 has a direct bearing on the controversy, therefore, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an order or injunction of any court shall be excluded." 8. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under:- "To The Principal Officer Rentex Weavers Ltd (Formerly known as Kalpesh Investment Ltd) B/116, Shree Ghantakaran Mahayk Cloth Mkt. O/s Rainpur Gate, Ahmedabad Sir, Sub: Assessment Proceedings for A.Y. 2006-07 Please refer to this office notices issued from time to time and also your submission dated 26.06.2008. In this regard, you are requested to submit the following further information:- 1. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 2. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 3. Why profit on sale of shares of Rs. 1999697 may not be treated as business income of the company? 4. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. 5. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx The above details may please be filled within 3 days of receipt of this letter. Yours Faithfully Sd/- (R.H. GOHEL) Dy. Commissioner of Income-tax Circle. 5. Ahmedabad" 11. In response to this query, Assessee has submitted a reply on 28th October, 2008 contending therein as under:- 20th October, 2008 "To, Dy. Commissioner of Income Tax, Circle-5, 2nd Floor, C.U. Shah Chambers Ashram Road, Ahmedabad Dear Sir, Sub: Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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