TaxTMI 
TaxTMI 
2017 (2) TMI 905
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....e four issues afresh. 3. That the Ld. Commissioner of Income-tax, Ahmedabad - III, Ahmedabad has wrongly considered that - (i) Ld. A. O. made assessment in the routine manner, (ii) did not verify specific details that were required to be verified, (iii) did not verify the nexus between earning of interest income and allowability of interest expenditure and (iv) that the transactions of purchase and sales of investments of the appellant were not as an investor but were as a trader. 4. That the Ld. Commissioner of Income-tax, Ahmedabad - III, Ahmedabad while considering that the Ld. A. 0. did not examine the details furnished by the appellant in pursuance to the specific information called for by the Ld. A.O. Ld. C1T has not come out with any evidence or mistake on the part of the Ld. A.O. in making assessment and all the observations made by him are vague, general and not supported by information or details coming from the assessment records and therefore, the order of the Ld. CIT U/s.263 of the Act is pre-determincd with a view to come over certain objections and observations of some other agency and not by independent examination of the records. 5. The appellant contends that t....
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....d, amend, alter, modify the grounds of appeal on or before the time of hearing. 2. Briefly stated facts are that assessee is an individual earning income from salary, interest, capital gain and share of profits from partnership firm. Return of income for Asst. Year 2008-09 on 31.07.2008 declaring total income of Rs. 9,70,476/-. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act dated 17.9.2009 followed by notice u/s 142(1) of the Act dated 6.7.2010 duly served on the assessee. Necessary details were called for and supplied by the assessee and returned income was accepted as assessed income. Thereafter ld. Commissioner of Income Tax -3, Ahmedabad exercised his power under section 263 of the Act and examined the assessment record and assessment order u/s 143(3) of the Act dated 13.9.2010 passed in the case of assessee and observed that following 4 issues were not taken up for examination by ld. Assessing Officer :- (i) It was noticed that the Assessee had applied for shares in IPOs/FPOs of various companies on behalf of his wife and HUF which were allotted and later on sold too. The shares on allotment were transferred to the demat accounts or delivered ....
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....he above mentioned four issues which made the whole assessment order erroneous and prejudicial to the interest of revenue and accordingly ordered ld. Assessing Officer to examine the above four issues afresh and set aside the order u/s 143(3) of the Act dated 13.9.10 and to pass fresh assessment order by observing as under :- 7.2 Going through the submissions made available by the Assessee, it is observed that the Assessee has submitted enough evidences to prove that the shares allotted to him were transferred to the accounts of his wife Abha Goyal and his HUF. However, the Assessee's claim that the profit had been incurred in their respective incomes and they had paid taxes as short term capital gain and were shown in their Return of Income is not supported by evidences. Though, the Assessee has claimed that the Assessing Officer had looked into the matter before finalizing the assessment, the evidences as regards documents .supporting the claim are not placed on the record of the Assessee, As such, the assessment was done in a routine manner and the Assessing officer had not verified the specific details that were required to be verified while passing the assessment order. T....
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....the issue & the explanation furnished by the Assessee was not offered before the Assessing Officer. The assessment order was therefore erroneous & prejudicial to the interest of the Revenue. 10. The fourth issue was regarding short term capital gain en shares held and sold by the Assessee. The Assessing Officer had not examined as to whether the transactions of purchase GBP sales made by the Assessee was as an investor or as a trader. 10.1 The Assessee had furnished the details of short term capital gain on shares held and sold by him. These shares were purchased / allotted and were received in demat account of the Assessee and were subsequently sold from demat account. The Assessee is an investor and a retired person, making investment of his funds in fixed deposit, bonds, debentures, Govt. securities, shares and other instruments. He was deriving income from these investments. The Assessee had not carried on business in share dealings. Further, the Assessee has stated that there have been decisions on facts which have held such transactions to be short term capital gain. Hon'ble IT AT, Ahmedabad has also held in several decisions that these transactions were short term ca....
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....008 declaring total income of Rs. 8,71,810/- and after submitting voluminous data, information, details and on proper verification of all details relating to each income under each head, the Ld. ITO, Ward 7(2), Ahmedabad after considering explanations and inquiries made by him, he determined income of Rs. 9,70,476/-. The submissions made on different dates are as under:- S.No. Date of submission Page Nos. 1. 09/06/2010 1-112 2. July, 2010 113-150 3. 28/08/20 0 2 There is no income which can be said to have escaped which is prejudicial to the revenue requiring an action U/s.263 of the I T Act. [a] As regards first issue ld. AR submitted that the assessee made applications in his own name to different companies in IPOs. There is no illegality or is questionable to make an application to company for shares. This was clearly under contractual obligation and understanding between the parties i.e. his wife and his HUF, that whatever shares are allotted to him, the same will be handed over to them at cost and they will decide whether to sell or hold shares and when they sell shares, profit or loss arising on sale, would be their profit or loss. The assessee will be pa....
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.... income to interest expenditure has been verified not only with the bank statement but also with the return of income. In the return of income, the amounts stated by you in your notice for income and claim for deduction of interest paid both have been shown under and details regarding this, has been furnished separately to the Ld. A.O. which has been verified by him. Copy of the statement is annexed herewith for your ready reference. The nexus of interest income to expenditure was also established, allowability of expenditure was also examined and after due verification of the details, the assessment was finalized. There is no reason now to question the action of the Ld. A.O. and come to a conclusion that assessment was erroneous and prejudicial to the interest of the revenue. [c] Further the Income Tax Consultation Fee of Rs. 7,235/- is business expenditure and was considered as allowable from business income. This is not personal expenditure of the assessee and therefore, it cannot be said that action of the Ld. A.O. allowing this expenditure from business income was erroneous. [d] Further as regards short term capital gain on shares the assessee had furnished the details of sh....
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.... (1985) 152 ITR 0683 7. Jhulelal Land Development Corpn. Vs. DCIT (1995) 56 ITD 0345 8. CTT Vs. R. K. Construction Co [2009] 313 ITR 65 (Guj) Special leave Petition to Hon'ble SC Dismissed 313 ITR 83 (SC) 9. CIT Vs. Hindustan Coco Cola. Beverages P Ltd. [2011] 331 ITR 192 (Delhi) 10. CIT Vs Sunbean Auto Ltd. [2011] 332 ITR 167 (Delhi) 11. CIT Vs. Anilkumar Sharraa [2011] 335 ITR 83 (Delhi) 12. CIT Vs. Mahendra Kumar Bansal [2008] 297 ITR 99 (All) 13. CITVs. Gabriel India Ltd. [1993] 203 ITR 108 (Bom) "... : 14. CIT Vs, Arvind Jewellers [2003] 259 ITR 502 (Guj) 15. CIT Vs. Deepak Mittal [ 2010] 324 ITR 411 ( P & H ) 6. On the other hand, ld. Departmental Representative (DR) supported the order of ld. CIT and further added that with regard to the first issue about applying the shares in IPOs/FPOs of various companies on behalf of the assessee's wife and HUF which were allotted and later on sold it is not understood that why the application was made by assessee even when assessee's wife and HUF were already having demat accounts and the application in IPOs/FPOs could have been easily made in their names. 7. We have heard the rival contentions and perused the material pl....
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....he interest of the revenue.'' 8. From perusal of the paper book at page 17 we find that notice u/s 142(1) of the Act dated 31.05.2010 was issued by DCIT requiring 13 information which inter alia included details of bank accounts, investments in shares with copy of demat account, working of long term/short term capital gain, details of interest income earned and source of investments made for acquiring shares. In all the above referred four queries (referred in para 7 above) were raised in the notice dated 31.5.2010. Assessee vide his reply dated 9.6.2010 to DCIT furnished complete details of capital gains, IPO/FPO application on behalf of assessee, assessee's wife and D.P.Goyal HUF, details of interest income earned and interest paid. These details are placed on record from pages 14 to 22 of the paper book. 9. Further vide letter dt.6/7/10 ld. Assessing Officer called for certain more information from points (a) to (i) of notice placed at page 23 of the paper book which was duly replied by the assessee on 19.7.10 and the remaining information on 28.8.10. In the notice dated 6.7.10 ld. Assessing Officer had asked to furnish break up of party-wise interest income, evidence....
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.... the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue- recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous," 12. We further observe that in the case of Commissioner of Income Tax vs. Amit Corporation (2012) 81 CCH 0069 GujHC has held that "during the course of framing of assessment, Assessing Officer had access to all records of assessee, after pursuing such record ....
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....ts and circumstances, the appeal of the assessee was allowed and the order passed by the Commissioner u/s 263 was quashed.. 13. We also observe that in the case of Cadila Healthcare Ltd. vs. CIT in ITA No. 1096/Ahd/2013 & 910/Ahd/2014 (2015) 67 SOT 0188 (Ahmedabad) has held that "when Assessing Officer makes full enquiries by raising queries with respect to issues under consideration and same are also replied by assessee then order passed by Assessing Officer cannot be said as erroneous and prejudicial to the interest of Revenue." 14. Similarly the Co-ordinate Bench, Bombay in the case Jhulelal Land Development Corporation vs. DCIT in ITA No.149/Bom/1992 (1996) 56 ITD 0345 adjudicated the issue challenging the order u/s 263 of the Act has held as under :- It is well established by now that before invoking such jurisdiction, two conditions must be fulfilled viz, (i) that the order of the AO is erroneous and (ii) such order should be prejudicial to the interest of the Revenue, So, the CIT must have some material before him in order to hold the order of the AO is erroneous. He also must show such material in his order since he is a quasi judicial authority and his order is subjec....