TMI Blog2022 (4) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... made submissions on various dates -assessee had inter alia filed the computation of capital gains, details from whom the shares were purchased, their PAN numbers, copies of purchase bills, copies of bank account evidencing payment to sellers, contract note for sale of shares, PAN number and SEBI registration number of the broker, copy of the DMAT account, copy of notice for listing of shares by BSE ledger account in the books of sellers, bank account evidencing payment to sellers, contract note for sale of shares. It is also a fact that the purchasing of shares being off market was also informed to the AO and the complete details from whom they were purchased by the Assessee was also furnished to the AO AO had applied his mind to the information and details furnished by the assessee and after considering the information, he was of the view that the short term capital gains has been correctly computed by the assessee and accordingly accepted the claim, and, which according to us is a possible view. Before us, no material has been placed by the Revenue to demonstrate that the view taken by the AO was wholly unsustainable in law. Further, it is a settled law that the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is an individual who electronically filed his return of income for A.Y. 2015-16 on 20.08.2015 declaring total income of ₹ 6,20,97,150/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 27.12.2017 and the total income was determined at ₹ 6,20,97,150/-, being the returned income. Subsequently, PCIT called for the assessment records of the assessee and after examination of the assessment records, he was of the view that assessment order passed by AO u/s 143(3) on 27.12.2017 was erroneous and prejudicial to the interest of Revenue. PCIT thereafter issued a show-cause notice u/s 263 of the Act on 24.02.2021. Subsequently another notice dated 03.03.2021 was issued to the assessee u/s 263 of the Act and the assessee was asked to show cause as to why the assessment order passed by the AO u/s 143(3) not be set aside in terms of provisions of s. 263 of the Act. 4. In response to the show-cause notice assessee inter alia objected to the initiation of proceedings u/s 263 of the Act and on the merits submitted that during the assessment proceedings various questions were raised by the AO on the issue of short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils/information/evidences were available on the record at the time of assessment proceedings. 3. That having regard to facts circumstances of the case, Ld. Pr.CIT has erred in law and on facts in passing the impugned order u/s 263 and that too without providing the opportunity of being heard and in violation of principles of natural justice. 7. Before us, at the outset the Ld AR submitted that though the assessee has raised various grounds but the sole issue is that the assessee is challenging the assumption of jurisdiction of PCIT u/s 263 of the Act. 8. Before us, the Ld. A.R. submitted that in the present case the pre-requisite conditions specified u/s 263 of the Act for invoking the revisionary proceedings were not satisfied and therefore the proceedings initiated u/s 263 of the Act lacks jurisdiction and are bad in law. He submitted that u/s 263 of the Act, the Ld. CIT/PCIT can revise an order passed by the AO only on the satisfaction of twin conditions namely (i) the order is erroneous and (ii) it is prejudicial to the interest of Revenue. If one of them is absent i.e. if either the order of the Revenue is erroneous but is not prejudicial to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned AR pointed to the copies of assessee s reply dated 18.12.2017 wherein on the observation of the AO to the effect that the parties with whom the transactions were undertaken were not verifiable or they had not responded to the notice u/s 133(6) was also replied to. Learned AR therefore submitted that the AO after being satisfied with the submissions and explanations offered by the assessee, passed order u/s 143(3) of the Act without making any adjustment to the total income and computed the total income at ₹ 6,20,97,150/-. 11. Learned AR submitted that Learned PCIT thereafter issued two notices u/s 263, one on 20.4.2021 and the other on 1.3.2021, to which the assessee made the submissions. The submissions of the assessee were not found acceptable to PCIT. He thereafter set aside the order passed by AO u/s 143(3) of the Act dated 27.12.2017 and directed the AO to make afresh assessment after considering the observations of Pr. CIT in his order. 12. Learned AR submitted that notices issued by PCIT to be bad in law. He submitted that assessee received two notices from Learned PCIT u/s 263 of the Act. He pointed to the first notice dated 24.02.2021 which is placed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as unexplained income and taxed accordingly. He submitted that on the contrary, the documents like bank statements, D-mat account, brokers note show that the transactions were genuine and there is nothing on record to demonstrate that the aforesaid companies are bogus. He therefore submitted that the conclusion of PCIT that the capital gains being bogus and constitutes unexplained income does not flow from the facts mentioned therein and therefore the notice is vague and bad in law. 14. Learned AR thereafter submitted that PCIT vide order dated 31.03.2021 concluded that the assessment order passed by the AO u/s 143(3) to be erroneous and prejudicial to the interest of Revenue. He submitted that the summary of the reasons which led the PCIT to conclude that the assessment order passed u/s 143(3) being erroneous and prejudicial to the interest of the Revenue are as under: (i). AO had failed to conduct any field enquiry and/or third party verification to examine the genuineness of the short term capital gain offered by the assessee at 15% u/s 111A of the Act. (ii) The shares of K. D. Trend Wear Ltd. was purchased offline. (iii) DCIT, Circle-1, Faridabad had conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that the case laws relied upon by PCIT are distinguishable on facts and therefore not applicable to the facts of the present case. He submitted that in the case of Gee Vee Enterprises vs. Addl. CIT 99 ITR 375 (Del), Hon ble Delhi High Court has held that the revisionary powers are not confined to correct errors of facts and law but also extend to such orders where the claim of the assessee has been accepted without making inquiry with a view to bring the requisite evidence on record. He submitted that in the case of the assessee, it is not a case where no inquiries were made but on the contrary extensive inquires were made by the AO and thereafter the order was passed by AO. He submitted that the case of the assessee is not that of non inquiry or lack of inquiry by AO. He therefore submitted that the ratio of the aforesaid decision and other decisions relied upon by PCIT are not applicable to the facts of the assessee. He therefore submitted that the order of PCIT be set aside. 18. Learned DR on the other hand took us to the observations of PCIT in the order passed u/s 263 of the Act and submitted that considering the observations made by PCIT, the order of the AO wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. 22. In the present case it is an undisputed fact that the return of income for the year under consideration was selected for limited scrutiny under CASS for making inquiries on four issues including the Short Term Capital Gain u/s 111 of the Act. We find that to examine the issues for which the case of the assessee was selected for limited scrutiny, notice u/s 143(2) and 142(1) of the Act was issued by AO along with questionnaire and the assessee was also asked to submit the various details contained therein. The paper book filed by the assessee reveals that in response to the notice issued by AO, assessee had made submissions on various dates namely on 1.9.2017, 5.12.2017, 13.12.2017, 18.12.2017 and on 21.12.2017. On the aforesaid dates, assessee had inter alia filed the computation of capital gains, details from whom the shares were purchased, their PAN numbers, copies of purchase bills, copies of bank account evidencing payment to sellers, contract note for sale of shares, PAN number and SEBI registration number of the broker, copy of the DMAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which is placed at page 111 of the paper book), we find that vide the notice the assessee was asked to produce supporting documents/information in support of the issues involved but there was no details about the issue for which the assessee was required to file the details. Sec. 263 of the Act confers powers on the CIT/PCIT to revise the assessment order after giving the assessee an opportunity of being heard, and after making and causing such enquiry to be made, as may be deemed necessary. The Hon ble MP High Court in the case of CIT v. Sattandas Mohandas Sidhi [1998] 230 ITR 591 (MP) has observed that the issuance of a valid notice is not a mere procedural requirement and that the notice should state reason for exercising revisional jurisdiction. 24. On the issue of the order of AO being cryptic and therefore the order being passed by non application of mind resulting into justification of the invocation of powers u/s 263 being justified, we are of the view that if a query is raised during the assessment proceedings and responded to by the assessee, the mere fact that it is not dealt with in the assessment order would not lead to a conclusion that no mind had been applied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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