TMI Blog2018 (11) TMI 1928X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Moreover, on appraisal of the notice, we noticed that the commissioner has taken cognizance on account of this fact that the Sunrise Asian Ltd. has been marked in the list of penny stock company but nowhere has proved or discussed that the transaction with the penny stock company is against law and facts. There is nothing on record in which circumstances, the order passed by AO can be branded as erroneous and prejudicial to the interest of the revenue. It is mandatory on the part of the commissioner to arrive at this conclusion that the order as passed by AO is erroneous, which he did not hold. Asit is apparent on record that the AO has asked the query which was properly replied by assessee along with necessary documents, therefore, after his satisfaction, the AO nowhere made an adverse remark in the order but a legally tenable view has been taken so the commissioner has no power to invoke the provision u/s 263 of the Act in view of the law settled in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] , MAX INDIA LTD. [ 2007 (11) TMI 12 - SUPREME COURT] and GABRIEL INDIA LIMITED [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] - Appeal of assessee allowed. - I.T.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain was on account of sale proceeds of the shares of Sunrise Asian Ltd., which was marked in the list of penny stock company. As per CIT, while passing the assessment order u/s 143(3) of the I.T. Act, Assessing Officer did not consider the sales of shares of Sunrise Asian Ltd., as a penny stock. A show case notice dated 01.01.2018 was issued to the assessee asking him to show cause as to why the assessment order dated 29.11.2016 should not be revised u/s 263 of the I.T. Act, 1961. The notice was given. The reply was also filed and after the reply, the assessment order dated 29.11.2016 u/s 143(3) of the Act was held to be erroneous and prejudicial to the interest of the revenue, therefore, the said assessment was cancelled and the AO was asked to pass order afresh after examining the issues after giving an opportunity of being heard to the assessee. Feeling aggrieved, the assessee filed the present appeal before us. 4. All the issues are in connection with the challenging the validity of the order dated 16.03.2018 passed u/s 263 of the I.T. Act, 1961. Before going further, we deemed it necessary to advert the contents of the show-cause notice on record: - For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id circumstances also the Commissioner has no ground to invoke the provision u/s 263 of the Act in accordance with law in so far as all the relevant documents were very much in the folder of AO and in the note sheet of assessment file and same have been properly considered by AO while reaching to his conclusion. In support of these contentions, the Ld. Representative of the assessee has placed reliance upon the law settled in (i) Malabar Industrial Co. Ltd. Vs. CIT, 243 ITR 83 (SC), (ii) CIT Vs. Max India Ltd., 295 ITR 282 (SC), CIT Vs. Gabrial India Ltd, 203 ITR 108 (Bom) (1993), CIT Vs. Reliance Communication Ltd. 296 ITR 217 (Bom) (2017), CIT Vs. Reliance Communication Ltd., 76 taxmann.com 226 (SC)(2016) Moil Limited Vs. CIT, 396 ITR 244 (Bom)(2017). It is also argued that the Commissioner has nowhere held that the order so passed by AO was erroneous and only invoked the power by reason that the enquiry was inadequate, therefore, in the said circumstances, the Commissioner has no power to invoke the provision u/s 263 of the Act in view of the law settled in (i) CIT Vs. Nirav Modi, 390 ITR 292 (Bom) (2017), CIT Vs. Nirav Modi, 77 taxmann.com 15 (SC) (2017), CIT Vs. Sunbeam Auto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange and security transaction tax is paid on the same. 4. Copy of ledger account of Meena Securities Pvt. Ltd. duly signed is enclosed herewith and no interest paid during the year. 5. There were no investments made in during the year. Thanking you, Yours faithfully, For Jayes Sheth Co Chartered Accountant Jayes Sheth (Proprietor) Enclosed: as above 9. The assessee has also furnished the evidences in support of the claim which is hereby reproduced below: - Sr. No. Nature of Document 1 Notice u/s 142(1) dt. 13.10.2016 with annexure including ITS/AIR statement 1 Which lies at page no 1 to 7 of the paper book 2 Letter to ITO dt. 15.11.2016 2 Which lies at page no. 8 of the paper book 3 Letter to ITO dt. 21.11.2016 3 Which lies at page no. 9 of the paper book 4 Letter to ITO dt. 29.11.2016 4 Which lies at page no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents recording scheme of amalgamation of M/s. Conart Traders Ltd. 48 to 111 with M/s. Sunrise Asian Ltd. (iv) Printout of depositor)' participant HDFC Bank Ltd. reflecting demat of 125000 of M/s. Conart Traders Ltd. (v) Transaction statement of depositor) participant - HDFC Bank Ltd. 113 to 115 dt. 31.03.2014 reflecting dematerialization of shares of M/s. Conart Traders Ltd. and thereafter on amalgamation the share of M/s. Sunrise Asian Ltd. (vi) Ledger account of M/s. Atlanta Share Shopee Ltd. alongwith contract 116 to 140 notes for sale of shares. (vii) Statement showing receipt of sale consideration from the broker 141 to 153 M/s. Atlanta Share Shopee Ltd. with photocopies of cheques. 11. The Pr. CIT has no reason or evidence to doubt the transaction of purchase and sale of shares of M/s. Sunrise Asian Ltd.. except for stating that the shares are listed in penny stock list of shares. Needless to say, the Pr. CIT 16, Mumbai has himself not caused any enquiries to be carried out to arrive at the conclusion that the transaction of sale of shares is not genuine. 12. The order u/s 263, setting aside the assessment originally completed u/s 143(3) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,80,480/- to be on account of STT, Service Tax and .other charges. The assessee vide the said letter also explained the transaction of long term capital gain as well as submitted further evidences about change of name of company as sought by the AO. The AO examined the exhaustive record with regards to the transaction of purchase of sale of shares and finding the same to be in order, accepted the claim of the assessee that the long term capital gains arising on sale of 125000 equity shares of M/s. Sunrise Asian Ltd. was not liable to tax as per the provisions of section 10(38) of the I.T.Act 1961. Once it is found that the AO had made proper inquiry of issue under consideration. Moreover, on appraisal of the notice, we noticed that the commissioner has taken cognizance on account of this fact that the Sunrise Asian Ltd. has been marked in the list of penny stock company but nowhere has proved or discussed that the transaction with the penny stock company is against law and facts. The law relied upon the Ld. representative of the DR speaks about the submissions of evidence which were not sufficient to meet out the query raise by AO but in the instant case sufficient evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X
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