TaxTMI 
TaxTMI 
2021 (6) TMI 752
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....eclared total income of Rs. 6,56,120/- for AY 2014-15 and the case was selected for scrutiny through CASS (Computer Aided Scrutiny Selection) inter alia for the loss in shares also. According to Ld. A.R., the AO after issuing notice u/s 143(2) dated 03.09.2015 and notice u/s 142(1) dated 14.07.2016/25.11.2016 wherein the AO had asked for the details in respect of short term capital loss and asked in respect of it specific details enumerated by queries numbered from (i) to (xiii) and thereafter taking note of the detailed reply of the assessee along with supporting documents filed during the assessment proceedings, the AO being satisfied did not to draw any adverse inference/view against the claim made by the assessee on this issue (short term capital loss) and passed an assessment order dated 21.12.2016 making an addition of Rs. 30,200/- u/s 14A of the Act read with Rule 8D of the Rules. Thereafter, the Ld. PCIT-4, Kolkata proposed to interfere with the assessment order by exercising his revisional power u/s 263 of the Act on the issue of short term capital loss on the three Scrips viz., M/s LUMINITECH, M/s SHRSHATEX & M/s UNOINDL (hereinafter the 'Scrips'). According to Ld. PCIT,....
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.... the fresh assessment order. 4. Aggrieved by the aforesaid action of Ld. PCIT, the assessee is before us. 5. We have heard both the parties and perused the records. We note that assessment order passed by the AO dated 21.12.2016 for AY 2014-15 has been interdicted by the Ld. PCIT by exercising his revisional jurisdiction u/s 263 of the Act by holding the AO's order to be erroneous as well as prejudicial to the revenue on the issue of short term capital loss from three scrips (supra). According to Ld. PCIT, the AO has not enquired into this issue making the order passed by the AO erroneous as well as prejudicial to the revenue. However according to the assessee, the AO had duly carried out enquiry into the issue of short term capital loss on the scrips which are alleged by the Ld. PCIT not to have been enquired by issuing notice u/s 142(1) of the Act on 25.11.2016 and pursuant to which the assessee had replied on 01.12.2016 along with supporting documents. So, according to assessee, the AO after having gone through the reply of the assessee to the specific queries raised by the AO on this issue and after perusal of documents filed on the issue, after being satisfied the AO had ac....
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....vestigated the issue before him;[ because AO has to discharge dual role of an investigator as well as that of an adjudicator ]then in aforesaid any event the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the....
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....lso requested to furnish the evidence of Mode of such payment alongwith the details of cheque numbers and the copy of bank statement (F.Y, 2013-14) highlighting the relevant entries therein showing the transaction 9. 'There is mismatch in the sales turnover as reported in Annual Audited Report in comparison of Income Tax Return for the year under consideration In this context, and this is to inform you that, your case for the A.Y. 2014-15 has been fixed for hearing on 01/12/2016 at 03:30 P.M. You are therefore directed to appear before the undersigned on the said date either in person or through an authorized representative and furnish the particulars/documents as enumerated above." 8. From a perusal of the question no.4 (supra), we note that the AO has asked for the details of investment in equity shares and asked the specific details regarding it are asked from clause (i) to (viii). And a perusal of question no. 8 it would reveal that the AO had asked the assessee to furnish the details in respect of short term capital loss and also asked for specific details pertaining to it which are enumerated from queries raised from clause (i) to (xiii) and further the AO also has d....
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....ns in order to elicit answers for it along with supporting material/documents to substantiate the claim of loss on scrips and also we take the aid of Section 114(e) of Indian Evidence Act, 1872 wherein the Court/Tribunal may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct in their relation to the facts of the particular case. And the illustration (e) to Section 114 of the Indian Evidence Act empowers discretion to the Court/Tribunal to presume the existence of fact that official/quasi judicial/judicial acts have regularly been performed. However, before we draw such a presumption we also should have regard to such fact as to whether the official act, the regularity which was in question was performed under exceptional circumstances. When we consider this aspect also we note that no exceptional circumstances in respect of the action of AO while enquiring into the issue of short term capital loss were cited by the Ld. PCIT in his impugned order or the Ld. DR. So, we presume the fact that AO was aware of the contents of the circular of CBDT regarding penny stock and thereafter had issued....