TaxTMI 
TaxTMI 
2020 (12) TMI 1240
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.... Pr. CIT are null in the eyes of law. 3. Brief facts of the case as discernible from the Ld. Pr. CIT's order are that the assessee HUF had filed its return of income for AY 2015-16 declaring total income of Rs. 5,99,670/- which was later selected for scrutiny through CASS and he notes that the reason for scrutiny by AO was for "suspicious transaction in shares" (penny stock tab in ITS). The Ld. Pr. CIT notes that the AO, the ITO, Ward-43(6) completed the assessment u/s. 143(3) of the Act on 29.12.2017 accepting the return filed by the assessee to the tune of Rs. 5,99,670/-. This order of the AO, according to Ld. Pr. CIT, was performed not in the right spirit and he completed the assessment without application of mind and without appreciation of the facts and circumstances of the case because according to him, during the year under consideration the assessee had shown long term capital gain (LTCG) of Rs. 27,50,981/- on sale of shares of a company viz., M/s. Kapaac Pharma Ltd. (hereinafter M/s. KPL) and availed exemption from tax u/s. 10(38) of the Act. According to Ld. Pr. CIT, the departmental information available to the effect that M/s. KPL's shares had been rigged/manipu....
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....y the Ld. Pr. CIT, the assessee submitted that the assessment order passed by the AO u/s. 143(3) of the Act cannot be held to be erroneous for the reason of lack of enquiry on the part of AO before completion of assessment and pointed out to the Ld. Pr. CIT the investigation/enquiry conducted in detail by the AO in respect of the shares of M/s. KPL by issuance of various statutory notices and the replies filed by assessee along with supporting evidence. According to the assessee, even though all the requisite facts were brought to the notice of the Ld. Pr. CIT to show that the decision of AO was based on adequate inquiry and on production of documents and confirmations called upon, by the AO, still the Ld. Pr. CIT refused to drop the 263/revisional proceeding. And not satisfied with the replies of the assessee, the Ld. Pr. CIT was of the opinion that the AO merely had relied upon the recital of the documents submitted by the assessee and failed to lift the veil of tax evasion in which the assessee participated and, therefore, the Ld. Pr. CIT concluded that the AO had not performed the job in the right spirit and completed the assessment without application of mind and without prope....
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....id questionnaire the assessee replied to the AO vide letter dated 28.11.2017 which copy of the letter is found placed at pages 27 to 34 of the paper book. Thereafter not satisfied with the reply of the assessee, the AO issued another letter in respect of the LTCG claim of the assessee, wherein question regarding price variation of Rs. 15/- to Rs. 565/- per share of M/s KPL [question number 8] and the investigation report [question number 10] was asked, a copy of which is reproduced as under: 8. Pursuant to the aforesaid notice of the AO, the assessee filed detailed reply dated 27.12.2017 which is placed at pages 35 to 44 of paper book. Then the Ld. AR drew our attention to the fact that the AO issued notice u/s. 133(6) of the Act to the registered broker M/s. Intellect Stock Broking Limited and also the seller M/s. Shalibadra Steel Pvt. Ltd. which notices are placed at pages 45 and 46 of the paper book. Thereafter, the Ld. AR of the assessee drew our attention to the page 55 to 67 of the paper book, the copies of the statement of Shri Alok Harlalka and Shri Sunil Kayan provided by the Ld. Pr. CIT-15, Kolkata along with the copy of the reply dated 06.02.2020 filed by the assessee....
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....e CASS issue which was selected for scrutiny and has clearly brought out in the notice he issued u/s. 142(1) wherein he cites the investigation report and had raised the query regarding price variation from Rs. 15 to Rs. 565/- (supra) and after going through the reply of assessee , the AO had called for confirmation from the broker and the seller by issuing notice u/s. 133(6) of the Act and thus AO has conducted in depth enquiry and after having collected all the information and having gone through the documents being satisfied with the replies and in line with various decisions of High Court and Tribunal, the AO has taken a plausible view which according to Ld. AR, cannot be interfered unless the Ld. Pr. CIT make a finding that the view of the AO in the facts and circumstances of the case is unsustainable in law and for contending so he relied on the order of the Hon'ble Supreme court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC). 11. Per contra, the Ld. CIT, DR Shri Imokaba Jamir vehemently opposed the contention of the Ld. AR and submitted that the Investigation Wing has clearly brought out that M/s. KPL's shares are manipulated and the assessee participated i....
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....w that the AO's order is erroneous as a result of any of the situations enumerated above but CIT must also further show that as a result of an erroneous order, some loss is caused to the interest of the revenue. Their Lordship in the said judgment held 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. It was further observed that when the Assessing Officer adopts one of the course 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 Ld. CIT does not agree, it cannot be treated as an order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. 13. Keeping the aforesaid law laid down by the Hon'ble Apex Court, when we examine this case, we note that main allegation of Ld. Pr. CIT to invoke the revisional jurisdiction u/s. 263 of the Act is that the AO failed to identify the purpose for which the assessee's return was selected for scrutiny and thereafter the AO has not taken into consideration the investigation report about penn....
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....n para 6 to 10 and the replies which the assessee has given (page 27 to 44 of paper book) the AO being satisfied with the claim of assessee in respect of LTCG has not taken any adverse view against the assessee cannot be said to be an exercise in AO did not conduct enquiry. In this case, the AO had conducted enquiry as discussed supra which cannot be termed as a case of 'no enquiry'. Moreover, we presume that Ld. Pr. CIT having perused the assessment folder must have seen that the AO has conducted the above said enquiries; however the Ld Pr CIT has not given any factual finding that the result of the enquiry conducted by AO was factually wrong or the assessee had misled the AO by filing forged documents. The ld. Pr. CIT has neither been able to show from the relevant extracts of the investigation report that assessee's registered broker M/s. Intellect Stock Broking Ltd nor the seller of scrip M/s. Shalibadra Steels Pvt Ltd was engaged in un-scrupulous/nefarious activities of this sort. It is true that some persons were engaged in jacking up the price of certain shares like M/s. KPL and made claim of LTCG or loss (depending on the necessity of beneficiary). However, one cannot assum....
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....r 8 of AO in the notice u/s 142(1) reproduced supra] and after going through the reply of assessee , the AO had called for confirmation from the broker and the seller by issuing notice u/s. 133(6) of the Act. And we find from queries raised by AO and replies given by the assessee on the issue of LTCG on sale of shares which we have discussed in detail at para 6-10 supra which is not being repeated for the sake of brevity and to avoid repetition, we find that AO has conducted enquiry based on investigation report and after having collected all the information and having gone through the documents and having carried out crossverification from broker and seller of scrip, the AO issued another letter dated 26.12.2017 in respect of the LTCG claim of the assessee, wherein question regarding price variation of Rs. 15/- to Rs. 565/- per share of M/s KPL [question number 8] and the investigation report [question number 10] was asked, the AO being satisfied with the replies, have taken a plausible view which is in line with the views expressed by various Hon'ble High Courts and this Tribunal. So, we find that the AO's view which was taken by him, after enquiry as discussed supra cannot ....