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TMI Blog2012 (3) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(2) was issued on 29.8.2008. Assessing Officer after hearing the assessee passed an assessment order under sec. 143(3) on 29.12.2008. Assessing Officer has made disallowance under sec. 14A amounting to Rs. 17,05,573 as well as added a sum of Rs. 2,54,155 by disallowing the expenditure claimed on account of security transaction tax payment. Assessing Officer further disallowed revenue expenses of Rs. 16,985. In this way, income of the assessee has been determined at Rs. 2,54,71,264. 3. Learned Commissioner on an analysis of the record formed an opinion that though the company was incorporated on 2nd of December 1994 and it was involved in the business of diagnostic and lab testing services but it has discontinued this business and disposed of all its assets related to this services in financial year 2003-04. It has invested the alleged surplus funds in shares and securities. According to the Learned Commissioner at present the company is carrying out loan and investment activities to meet out its running overheads. He further observed that the investment of alleged surplus fund amounts to be a stock in trade instead of capital investment which will result business income. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessment year 2004-05, assessee has declared an income of Rs. 42,23,843 which was accepted by the Assessing Officer. In assessment year 2005-06, assessee has shown investment in shares of Shah Wallace & Co. It purchased 46586 shares on 10.2.2005and sold these shares on 22.2.2005. The purchase cost was of Rs. 94,52,765 and the sale price was Rs. 1,07,50,354. The short term capital gain has been accepted by the revenue. In this year also, Assessing Officer had issued a detailed questionnaire on 7.4.2008. At Sr. No. 24 and 25 of the questionnaire and called for the following details: "24. Details of the share application money received, if any, during the year in the following format: S.NO. Name/Address of party to whom shares issued No. of shares issued Amount Asst. particulars 25. Details of income/loss declared on account of purchase/sale of shares, if any, along with a note on the nature of such income. Please state as to under which head of income such income/loss had been declared". 6. In response to this questionnaire, assessee has submitted as detailed reply on 15.12.2008. Assessing Officer has accepted the version of the assessee that it has made investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diate dates. The assessee alleged to have filed the details on 15.12.2008. It creates a doubt whether Assessing Officer has looked into these details or not. He also produced the original record for our perusal. 7. We have duly considered the rival contentions and gone through the record carefully. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO,Mumbai, 101 TTJ 1095, has analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 as well as Hon'ble Bombay High Court rendered in the case of Gabriel India Ltd. reported in 203 ITR 108 and has propounded the following broader principle to judge the action of CIT taken under section 263. "The fundamental principle which emerge from the above cases may be summarized below" (i) The CIT must record satisfaction that the order of the A.O 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 A,O and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the ITO to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On an analysis of the record, we find that Assessing Officer issued questionnaire on 7.4.2008. No specific details were submitted qua this issue in the letters submitted on the date of hearing taken place in between 23.4.2008 to 15.12.2008. In the details submitted during 263 proceedings and in the detail which alleged to have been submitted vide letter dated 15.12.2008, it is discernible that assessee has undertaken large number of transactions of 39 scripts. The record does not inspire credence with the angle that Assessing Officer has conducted a proper inquiry before accepting the claim of assessee. It gives an impression to us that at the close of the hearing at the most some information were placed on the record which appears to have not come to the notice of the Assessing Officer. In any case, it is not discernible that the Assessing Officer appears to have applied his mind analytically and logically and thereafter he took one of the possible view. Learned Commissioner has not decided the issue on merit. He has remitted it to the file of the Assessing Officer for a fresh inquiry. In view of the above discussion, we do not find any merit in this appeal, it is dismissed. Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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