TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 365
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....s invalid being issued on wrong recording of reasons. However, to remain on safe side, the assessee requested to consider her original return as filed in response to notice u/s 148 of the Act. The original return was filed along with profit and loss account, balance sheet, capital account, details of shares sold by the assessee and computation of income with detailed annexure of disclosure about long term capital gains. In sums and substance, assessee claims to have filed all the relevant details in return as well as before the AO in reassessment proceedings. The AO framed the assessment order u/s 148 of the Act on 15-03-2014 and the claim of LTCG along with particulars of returned income of the assessee were accepted by following observations. "On 03-09-2013, notice u/s 143(2) was issued. In response Shri N.K. Baid, Advocate and A/R attended from time to time and furnished the requisite documents. To verify the source of the amount invested in the Bonds of NABARD, letters u/s 133(6) was also issued to the companies whose shares were transferred by the assessee for a consideration of Rs. 67,99,500/-. The reply verifying the transaction was received on 11-02-2014 and nothing adver....
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....tain whether the assets sold were short term or long term capital assets and whether assessee was eligible for deduction u/s 54EC of the Act. AO should have also enquired about the genuineness of sale price shown by the assessee after examining the financial position and profits of companies whose shares were sold by the assessee. He should have also enquired about the creditworthiness of Shri N.K. Gupta, the purchaser of shares for Rs. 67,99,500/- since the transaction was of unlisted equity shares and was off market transaction. It is a settled position of law that failure to make proper enquiries by AO, will make the assessment order erroneous as well as prejudicial to the interest of Revenue which can be revised u/s 263 of the Act. It is held by the Courts in various decisions that unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but is also an investigator. He can not remain passive on the face of a return which is apparently in order but calls for further enquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are....
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...., enquiries including issuance of statutory letters u/s 133(6) along with confirmation of details with a clear finding of ld. AO that no adverse material was found in this behalf. (iv) The gains were long term in nature which is clearly evident from the dates of acquisition manifest from the record itself i.e. from computation of income, statement of capital gain and past record of the assessee. (v) Ld. CIT may hold a particular view about the manner in which the enquiries should have been conducted by AO however such view cannot make AOs inquiries as improper since clear mention of inquiries and finding thereon is crisply mentioned in the order. (vi) The revision power may be recourse in case of lack of inquiry but not for change of perception about the manner of enquiry. If the AO's order and record reflects that reasonable inquiries were conducted , the order cannot be held as erroneous and prejudicial to the interest of Revenue merely because ld. CIT holds another plausible view about the manner of inquiry. Reliance is placed as under:- (1) Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) (2) CIT vs. Max. India Ltd., 295 ITR 282 (SC) The Hon'ble Rajasthan High....
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.... Taxman 57 held that if the ld. CIT is of the view that sufficient enquiries were not considered assessee produces further documents before ld. CIT to meet his desire for further inquiries, in such case ld. CIT has duty to verify those documents and come to conclusion. It is pleaded that assessee submitted copious documents before ld. CIT(A) on each and every suspicion raised. 2.8 The ld. AR of the assessee also placed decision of ITAT Jaipur Bench in the case of M/s. Motisons Jewellers vs. CIT (ITA No. 280/JP/2014 for the assessment year 2009-10 dated 19-02-2015) giving reference of para 2.17 of its order as under:- "2.17 Apropos the inflated profits and expenditure, the ld. Counsel for the assessee has contended that separate books of account for SEZ Unit are maintained along with profit and loss account, expenses vouchers etc. The books of account of the assessee have been upheld by the AO, ld. CIT has not considered upholding of the accounts by AO to be an error. This leads to a very vague situation when the books of account of the assessee are upheld and not challenged at the same time allegations are raised about contents thereof. The ld. CIT while passing the order u/s 26....
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....at various documents filed by the assessee before the ld. CIT were not filed before the AO, the assessment order does not demonstrate that adequate inquiries were made by AO. Thus substantial relief has been given without proper verification, in these circumstances ld. CIT in exercise of his statutory power was justified in setting aside the reassessment. 2.10 Ld. Counsel for the assessee in his rejoinder contends that original records were furnished before the AO and the enquiries conducted by the AO were sufficient to demonstrate proper disclosure of the facts along with return of income during assessment proceedings. The crisps recitals in the assessment order demonstrate that the AO has undertaken proper enquiries, verification and applied her mind before passing the order. Besides the ld. CIT cannot shy away from verifying the documents furnished by the assessee on his queries. This amounts to abdication from statutory obligation as held by Hon'ble Delhi High Court in Vikas Polymers (supra) 2.11 We have heard the rival contentions and perused the materials available on record. We find from the record that the assessee had already filed the return of income despite that s....