TMI Blog2015 (5) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... erely replacement of the opinion of the Assessing Officer with other possible view. Therefore, in our opinion Ld. Commissioner is not justified to take action u/s. 263. We allow the appeal of assessee and quash the impugned order passed u/s. 263 of IT Act by Ld. CIT. - Decided in favour of assesse. - ITA No. 1164/Ahd/2011 - - - Dated:- 22-5-2015 - Shri G.D. Agrawal and Shri Rajpal Yadav, JJ. For the Appellant : Shri Divyakant Parikh, A.R. For the Respondent : Shri Roopchand, Sr. D.R. ORDER PER : RAJPAL YADAV, JUDICIAL MEMBER:- The present appeal is directed at the instance of assessee against the order of Ld. Commissioner dated 22nd March, 2011, passed u/s. 263 of the Income Tax Act, 1961 in A.Y. 2006-07. The grounds of appeal taken by the assessee are not in consonance with rule 8 of ITAT Rules, 1961. They are descriptive and argumentative in nature. 2. In brief, the grievance of assessee is that ld. CIT has erred in taking cognizance u/s. 263 of the Income tax Act and revising the assessment order passed by the Assessing Officer u/s. 143(3), directing him to treat income from sale of shares as business income instead of income from short term cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance-sheet of the company for the last two to three years, it is discernable that company has purchased shares of only two companies namely, Aarvee Demin and Exports Ltd and Praneta Industries Ltd. The shares of Aarvee Denim were purchased by the assessee 10 years ago and still existing as investments in its balance sheet. Shares of Praneta Industries were purchased on 8th September, 2014, 14th September,2014 etc. Out of this 2,20,000/- shares were sold in the month of April, June, and August, 2005. It was also contended that explanation to section 73 is not applicable on the facts of the assessee s case. Thus, assessee had raised two fold submissions before the Ld. CIT. (a) Ld. Assessing Officer has investigated the issue during the assessment proceedings and accepted the explanation of the assessee which is a plausible view; (b) even on merit the transaction of sale of shares cannot brought within the ambit of explanation appended to section 73. Ld. Commissioner did not make elaborate discussion on the issue. He appeared to be influenced by a Press Release from SEBI. According to this Press Release, Galaxi Broking Ltd and some other brokers had manipulated the prices of vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT take u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open . 10. In the light of above, let us consider the show cause notice issued by the Assessing Officer dated 10-10-2008 which is avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f above facts profit on sale of share of ₹ 19,99,690/- cannot be considered as business income. 4. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx We hope and trust that the above information shall be sufficient for your requirement. In case you need any further details/clarification we shall be pleased to prove the same. Thanking you, Yours faithfully, For RENTEX WEAVER LIMITED Sd/- Director/Authorized Person 12. Perusal of the questionnaire as well as reply given by the assessee exhibits that Assessing Officer has conducted inquiry before accepting the stand of the assessee. In the impugned order, Ld. Commissioner has nowhere pointed out, as to how the order of the Assessing Officer is erroneous. He simply observed that since assessee has earned huge margin on short term investment, therefore, the transaction ought to have been treated as speculative transaction. Even otherwise, the assessee has pointed out that delivery of the shares was taken by it in its Demat account. Speculative transaction means, a transaction in which a contract for the purchase or sale of any commodity including stocks and shares is periodically settled, otherwise tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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