TMI Blog2022 (5) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2000 (2) TMI 10 - SUPREME COURT] . We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Ground of appeal raised by the assessee is thus allowed. - ITA No. 54 /Ahd/2021 - - - Dated:- 28-4-2022 - Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Nupur Shah, A.R. And Shri Dhiren Shah, A.R. For the Revenue : Shri Sushil Kumar Madhu, CIT-D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Pr. Commissioner of Income Tax (Central), Ahmedabad in Order no. ITBA/REV/F/REV5/2020-21/1032088429(1) vide order dated 31/03/2021 passed for the assessment year 2014-15. 2. The assessee has raised following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Evidence Act and the essentials that come into operation resultantly it must be presumed that the AO had performed his duty in the manner expected of him, that is, after examining and forming an opinion on all aspects of the return as well as various submissions, documents, evidences submitted during the course of assessment proceedings, though he has not been articulate about the same in the assessment order. 5. In view of the aforesaid facts and cogent material evidence placed by the appellant on record establishes that the Long Term Capital Gain earned by the appellant in the share of Looks Health Care Services Ltd is genuine long term capital gain which has been claimed as exempt u/s. 10(38) of the IT. Act, 1961 and hence the order passed by the Ld. AO u/s. 153A r.w.s. 143(3) on 30.12.2018 is neither erroneous nor prejudicial to the interest of revenue. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. PRAYER The appellant therefore respectfully prays that:- 1. The order passed by the Ld. CIT passed u/s. 263 of the Act dated 31.03.2021 settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t examined the genuineness of the long term capital gain claimed u/s. 10(38) of the Act is incorrect as the Ld.AO issued detailed show cause notice running into 12 pages in relation to scrip of Looks Health Care Service Ltd . Since, the Ld. AO has examined various details and explanations provided during the course of assessment proceedings from time to time and after due application of mind to such details and explanation he passed assessment order, it cannot be said that the order passed in erroneous and prejudicial to the interests of the Revenue. 6. The Ld. Pr. CIT however rejected assessee s arguments and held that the order passed by the Ld. AO is erroneous and prejudicial to the interests of the Revenue by holding as under 8. I have carefully and thoroughly gone through the submission of the assessee. The contentions of the assessee stated in its reply are not acceptable for the following reason:- The assessee contended that all the relevant documents and explanation in respect of the claim of long-term capital gain u/s 10(38) of the Act from the sale of shares of Looks Health Care Services Ltd was submitted vide reply dated 12.12.2018. In this case, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as they are prejudicial to the interest of revenue . In this regard, it is reiterated that monetary quantum is not the only criteria to decide whether the order passed by the A.O. is prejudicial to the interest of revenue. Therefore, the only criteria to decide whether the order passed by the A.O. is prejudicial to the interest of revenue, is whether the A.O. has gone into the crux of the matter, made proper inquiries and made well reasoned and sustainable addition. Further, Hon ble Apex Court in the case of Mahalaxmi Sugar Mills, 160 ITR 920(SC) has held that the there is a duty cast on the ITO to determine the true figures of assessee s taxable income and the consequential tax effect. In the present case, the funds were borrowed for purchase of share, which was returned back immediately after LTCG. This indicates the intention of assessee to create capital without any cost or tax. The Assessing Officer has not examined the potential of M/s Looks Health Care Services Ltd and its balance-sheet with reference to sudden price rise in its share. No enquiries made with reference to the trading pattern in the market in the shares of company, its other buyers and shares, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the Ld. AO s queries regarding the company and rationale behind investment in the scrip, details of shareholders of the company, the fact that transaction took place on listed stock exchange, all transactions took place through banking channels, details of share capital and details of revenue from operations of the company etc. were furnished during the course of assessment proceedings and duly considered by Ld. AO while passing the assessment order. The Counsel for the assessee invited our attention to Para 3, page 2 of assessment order, wherein the Ld. AO made mention of the above notice dated 11-12-2018 ( in which he had enquired into details of the scrip namely M/s Looks Health Care Services Ltd.) to contend that the Ld. AO had given due application to the issue of investment made in the aforementioned scrip. The Counsel further submitted that while passing order u/s 153A of the Act, views of Ld. Jt. CIT are also sought and therefore, the assessment order passed u/s 153A r.w.s. 143(3) of the Act was passed after due application of mind. The Counsel relied on the Ahmedabad ITAT decision in the case of Anupama Bharat Gupta v. ITO in ITA No. 1685/ Ahd/ 2018 (at para 10) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. --- From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 9.4 The Mumbai ITAT in the case of Sh. Narayan Tatu Rane Vs. ITO, I.T.A. No. 2690/2691/Mum/2016, dt. 06.05.2016 examined the scope of enquiry under Explanation 2(a) to section 263 in the following words: 20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provison shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis- -vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(3) of the Act, 1961 on the aspect of unsecured loans shown by the respondent assessee. The Hon ble Supreme Court made the following observation while deciding in favour of the assessee: Thus, the Tribunal has considered in detail the aspect of revisional power to be exercised by the PCIT in the facts of the case and has given a finding of facts that the Assessing Officer has made inquiries in detail and after applying mind, accepted the genuineness of loans received by the respondent assessee from the aforesaid two companies and such view of the Assessing Officer is a plausible view, and therefore, the same cannot be said to be erroneous or prejudicial to the interest of the Revenue. 9.7 The Supreme Court in another recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates*[2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revisional order making addition to assessee's income under section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of on-money receipts and said view was also confirmed by High Court, SLP filed against decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.9 The Supreme Court in the case of Principal Commissioner of Income-tax- -8 Mumbai v. Sumatichand Tolamal Gouti [2019] 111 taxmann.com 287 (SC) held that where High Court upheld Tribunal's order holding that AO had made detailed enquiries while allowing assessee's claim for deduction of business expenditure and, thus, revisional order passed by Commissioner was not sustainable, SLP filed against High Court's order was liable to be dismissed. The facts of this case were that in course of assessment, Assessing Officer allowed assessee's claim for deduction of certain expenditure on purchase of CDs on Jain Religion by expending an amount of ₹ 10.4 crores, after due examination. The Commissioner passed revisional order holding that Assessing Officer had not carried out any enquiries as to nature of expenditure being capital or not. The Tribunal, however, allowed assessee's appeal holding that Assessing Officer had carried out detailed enquiries and taken a view which was a plausible view. Accordingly, Tribunal set aside revisional order passed by Commissioner. The High Court upheld order passed by Tribunal. The Supreme Court on consideration of above f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts. In the instant set of facts, the Ld. AO had made detailed enquiries vide notice dated 11-12-2018 and Ld. AO vide reply dated 12-12-2018 submitted that the transaction of purchase and sale of shares were duly supported by contract notes, demat account and payments were made through banking channel, assessee produced details of share-holders, details of revenue earned by the company over the years and gave a detailed rationale for investment in shares of M/s Looks Health Care services Ltd. After consideration of material placed on record, Ld. AO allowed claim of exemption on sale of shares of M/s Looks Health Care services Ltd. u/s 10(38) of the Act. Now on the issue that the Ld. AO passed a cryptic order and did not discuss in detail regarding assessee s claim of the allowability of exemption u/s 10(38) of the Act on sale of shares of M/s Looks Health Care services Ltd, in our view it is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed detailed submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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