TMI Blog2023 (5) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... ] . No infirmity in the order framed u/s 263 - Decided against assessee. - ITA No. 81/Rjt/2019 - - - Dated:- 19-5-2023 - Shri Waseem Ahmed, Accountant Member And Shri T.R Senthil Kumar, Judicial Member For the Assessee : Shri Sagar Shah, A.R For the Revenue : Shri Shramdeep Sinha, CIT. D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the assessee against the order of the Learned Principle Commissioner of Income Tax, Jamnagar, dated 18/02/2019 arising in the matter of assessment order passed under s. 263 of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2015-16. 2. The only issue raised by the assessee is that the Ld. PCIT erred in holding the assessment order framed u/s 143(3) of the Act, as erroneous in so far prejudicial to the interest of revenue under the provision of section 263 of the Act. 3. The facts in brief are that the assessee in the present case is an individual and filed its return of income declaring income at Rs. 6,02,680/- only. Thereafter, the case of the assessee was selected for scrutiny under CASS and the assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primary question calling to furnish the copy of Return of Income, copy of statement of income. Audit report, list of bank accounts held and copy of bank statements held by the assessee. In compliance of such notice, the assessee herself has filed some details in the form of contract note, copies of lease deed and purchase deed etc. It may be mentioned that the case of the assessee was selected for complete scrutiny with the reason to verify suspicious sale transaction in shares and exempt long term capital gains (penny stock). During the year under review the assessee had shown long term capital gain of Rs.18,81,843/- on sale of 'Lifeline Drugs Pharma Ltd and TVS Motors equity shares and which was claimed excempt u/s.10(38) of the Act in the return of income. It is found that the AO has not is found that the AO has not issued any specific queries on the issue on which the case was selected for the scrutiny. The AO has not conducted any inquiries from independent sources in respect of genuineness of purchase on the shares and sale of the shares and the resultant claim of exempt income of Rs.18,81,848/-. The AO has maintained order sheet for assessment file but nothing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I. T. Act, the assessee has not explained the source of such payment. Even it is not known whether the purchase amount was paid in cash or through cheque. This will indicate that the AO while completing the assessment neither examined the genuineness of the purchase of the shares nor genuineness of the sale of the shares. The AO also did not examine the basic reasons which may have justified huge increase in the share price within a span of 20 months. Therefore prima facie it is a case where the AO has not conducted any genuine inquiries. 8.2. Further, on verification of ITS data, it is observed that during the year under review, the assessee had purchased two immovable properties, one for Rs.6 lakhs and second for Rs.9 lakhs, but purchase deed in respect of property worth of Rs. 9 lakhs was found on records and prima facie it appears that the ,' AO has neither called for the complete details of purchase of property nor the source of investment of \ above purchase has not been examined. In addition to the above, it is also observed that the assessee has ' shown interest income of Rs.3,07,515/- but no details of interest income has been called by the AO. On. perusa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had the Assessing Officer examined all the above issues, he should have made some noting either in the order sheet or any kind of reference would have been made in the submissions made by the assessee. Therefore, it is not a case of inadequate inquiry but a clear cut case of of inquiry. lack of inquiry or verification at the relevant time by the AO would constitute prejudice to the interest of revenue and would involve error of fact and law which are vital to the issue on which the case was selected for scrutiny. 8.4 The assessee has also contended that after completion of the scrutiny assessment the AO has appended an office note, certifying that all necessary inquiries were completed on the issue on which the case was selected for the scrutiny. However such findings of the AO is absolutely false and incorrect and without any basis not evidenced from the assessment records. 8.5. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner In exercise of revisionary power. As an investigator, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the interest of the revenue, it in the opinion of the Principal Commissioner of Commissioner: (a)The order is passed without making inquiries or verification which should have been made. (b) The order is passed allowing any relief without inquiring into the claim; (c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119, or (d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdiction of High Court or Supreme Court in the case of the assessee or any other person. 8.8. As per the Explanation 2, the order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue if the order is passed without making inquiries or verification which should have been made by the AO. As discussed above, in this case the AO has not made any inquiries at all, even questionnaire has not been issued nor has order sheet been maintained. The AO failed to call for the necessary details regarding purchase and sale of shares, sources, etc. and verification of the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the claim of the interest expenses against the rental income. The Ld. DR vehemently supported the order of the Ld. PCIT. 8. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the case was selected under scrutiny on account of exemption claimed on the purchase and sale of the scripts under section 10(38) of the Act. But the AO has not verified the exempt income from sale of script of Lifeline Drugs Pharma Ltd and TVS motors to the tune of Rs 18,81,848/- under section 10(38) of the Act. Furthermore, the case of the assessee was selected under complete scrutiny, but the AO has not verified the source of investment in immovable property and interest income/ interest expense. Accordingly, we hold that the verification has not been done by the AO during the assessment proceedings with respect to exempt income on sale of script of Lifeline Drugs Pharma Ltd and TVS motors to the tune of Rs 18,81,848/- under section 10(38) of the Act, purchase of immovable property, and interest income/expense. It is a settled position of law that non-verification of the AO renders the assessment order as erroneous in so far prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X
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