TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 347
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....er inquiries including examination of books of account and supporting bills and vouchers. 6 For assessment proceedings-initiated u/s. 263 on the basis of information received from the investigation wing that the search was conducted by the department at M/s Maa Jagadamba Trade Links Ltd. and M/s Moryo Industries Ltd & during the relevant year assessee has sold the shares of M/s Maa Jagadamba Trade Links Ltd. and M/s Moryo Industries Ltd which were found dubious & sham transaction as these brokers were involved in providing bogus accommodation entries. The report of the investigation wing w.r.t alleged penny stocks were very well available with AO and the original assessment order was passed with the knowledge of such information and after proper inquiry thereto. Therefore, such order could not be held to be prejudicial to the interest of the revenue. Copy of AIR information is already on record before Ld. Pr. CIT as well as the Ld. AO. 7 For that the Ld. Pr. CIT should not have invoked the provisions of sec. 263 without himself examining the details and evidences but no such examination was made and no lack of enquiry was found in the order of the Ld. AO. 8 For that on the....
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....ng for search and seizure operations conducted by the department through search/survey, statements of brokers, operators and entry providers that the nature of transaction were dubious and sham transactions as these brokers were involved in providing bogus LTCG entries. In view of the same, the transactions entered by you is to be treated as sham transaction and sale consideration has to be brought to tax u/s, 68 of the Act by treating the same as unexplained cash credits." 3. As pointed out by your good office in the said show cause notice, admittedly the assessee has sold shares of M/s MaaJagadambe Trade Links and M/s Moryo Industries Ltd for a consideration of Rs. 1,10,53,808/~. Pursuant to a specific inquiry by the Ld.AO under section 143(2) of the Act vide his letter dated 09.08.2017, the assessee vide his letter dated 27.09.2017 through order sheet submitted all the details including details for purchase of shares of M/s MaaJagadambe Trade Links and M/s Moryo Industries Ltd for an aggregate cost of Rs. 42,80, OOO/- respectively on 26.12.2012 and 12.05.2012. Copies of the said correspondence is enclosed herewith for your perusal. The said shares were forming part of the open....
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....has been issued by the board u/s 119. d. Clause 'd' to explanation 2 refer to case wherein "the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person". However in the present case no such reference of decision of jurisdictional High Court or Supreme Court has been made w.r.t point of concern. 6. Moreover, attention of your honor is drawn to the fact that the gross profit arising from sale of the 2 scripts viz: M/s MaaJagadambe Trade Links and M/s Moryo Industries Ltd for a consideration of Rs. 1,10,53,808/- after deduction of cost of acquisition of Rs. 42,80, OOO/- has been offered to tax as business income and the assessee has not claimed same to be exempted 10(38) of the Act by way of LTCG as being point of concern in the show cause. 7. It may further be submitted that ail the documentary evidences w.r.t. the sale proceeds of Rs. 1,10,53.808/-being through registered share broker with SEBI on the floor of recognized stock exchange and through banking transactions has been/can be provided for to establish the identity of....
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....the above the appeal was dismissed", c. In case of Commissioner of Income-tax, Shimla Vs. Greenwortd Corporation [2009] 181 Taxmann 111 (SC)/[2009J 314 ITR 81 (SC)/[2009 224 CTR 113 (SC) "Section 263, read with section 148, of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 2000-01 - Whether an order of assessment passed by /TO can be interfered with only because another view is possible -Held, no As regards submission [C] above, learned counsel submitted that this Court gave the finding that the order of the Assessing Officer, Solan was bad but that such a question did not arise out of the appeal decided by the Income-tax Appellate Tribunal as the Tribunal had dealt with the question of jurisdiction only and hence this Court exceeded its appellate jurisdiction while holding that the order was bad on account of non-application of mind. The submission is factually incorrect. The Tribunal while accepting the appeal of the assessee held that the order had been passed by the Assessing Officer under section 263 of the Income-tax Act on the basis of the inquiry conducted by her and that the Commissioner of Income-tax could not have ....
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....e earlier submissions with evidence, the alleged transactions were specifically examined by the Ld. AO during scrutiny assessment u/s. 143(3) of the Act, additional information has been received subsequently from investigation department w.r.t. the alleged transactionsand the same was not available at the time of original assessment and hence the order is passed without proper inquiry. In this regard attention of your good office is drawn to the fact that as it is clear from the AIR information available with the Ld.AO at the time of the original assessment, the report of the investigation wing w.r.t. alleged penny stocks were very well available with him and the original assessment order was passed with the knowledge of such information and after proper inquiry thereto. Therefore such order could not be held to be prejudicial to the interest of the revenue. Copy of AIR information is enclosed herewith for your ready reference with special attention to page no 5. Without prejudice to the same a request is being made to provide us with copy of information received from investigation wing. 2. Attention of your good office is once again drawn to the fact that the income from the a....
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....sment. b. It may be observed from the investigation report that the same is general in nature referring to the scripts in which LTCG activities have been carried out and the modus operandi thereto. It also includes statement of various people who have confirmed and given name of beneficiaries/intermediaries. However nowhere in the report and/or in the statements/compilation of beneficiaries/ intermediaries, name of the assessee appears. c. Also as submitted even earlier the assessee during the relevant year although as dealt in scripts which are so called "penny stocks, has not claimed benefit of LTCG/STCG and has offered profit from such scripts as business income which is taxable at normal rate of tax. 2. As required by your good office we would like to submit: a. 'Statement of scripts traded in by the assesse during the relevant year reflecting details of opening stock, purchases, sales and closing stock along with copy of the P&L account of the assessee for trading in shares reflecting the net profit earned therefrom.' Both these statements even were submitted during the original assessment proceedings. b. As submitted attention of your good office is once again drawn....
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....9;sale proceeds', the AO accepted the returned income of the assessee. It was apparent that a common pattern and an established modus operandi was discernible indicating stock price manipulation and accommodation entry transactions in these penny stocks. For the sake of clarity, the same is mentioned as under: (i) Purchase of stock at rock bottom price (ii) No financial credibility of the company, whose shares were purchased by the assessee. (iii) "Bell Pattern" in share price movement, i.e. once price target is achieved the price falls back to minimum. (iv) No rhyme or reason for sudden spurt of share price, defying the share Index or similar share price movements. (v) Promoters of shares are also not from any established groups, in fact they are of people of no means. (vi) Price escalation through synchronised trading within limited parties, mostly entities controlled by the entry operators. (vii) Statement recorded during search or survey operations conducted by the Investigation Wing indicates that price of the shares were manipulated with the sole aim of providing bogus accommodation entries." 6. Thereafter, learned PCIT referred to certain case laws in th....
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.... certain case laws in this regard and distinguishing the case laws referred by assessee, learned PCIT concluded as under :- "7. That the assessee had converted its unaccounted income being well established, it ought to have triggered a well-deserved enquiry on the nature and source of these credits appearing in the books of account. This was not done during the course of scrutiny assessment proceedings. Even assuming the correctness of strenuous assertion of the assessee that relevant material was then made available to the Assessing Officer, circumstances show the credits ought to have been examined vis-a-vis their genuineness in light of the well-established ambit of enquiry contemplated in section 68 of the Act. 8. Thus, whether the documents were or were not filed before the Assessing Officer is not germane to the revision proceedings. A perusal of assessment proceedings show that while making the assessment, the Assessing Officer has failed to examine the issues properly and has not applied his mind to facts and circumstances of the case for the purpose of determining the genuineness of the claims. The Assessing Officer was duty-bound to conduct a complete enquiry and cons....
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.... component of 'Entry Operator charges' and its taxation, without conducting the requisite enquiries, has to be regarded as erroneous in so far as it is prejudicial to the interests of the revenue, within the meaning of section 263 of the Act. Accordingly, the assessment order dated 28/09/2017 passed by the AO under section 143(3) of the Act is set aside as per provisions of Explanation 2 to section 263(1) of the Act to the Assessing Officer. He is directed to conduct the requisite enquiries to arrive at the correct conclusion as per law and frame the order of assessment de novo, keeping in mind the observations made in the foregoing paragraphs. Needless to add, adequate opportunity of being heard will be afforded to the assessee to file details and furnish his explanation." 8. Against this order assessee is in appeal before us. 9. We have heard both the parties and perused the record. Learned counsel of the assessee submitted that the AO has made due inquiry. Ld. Counsel submitted that all the information with relationship to the assessee transactions were available with the AO. The assessee has submitted all necessary details and after examining the same the AO has passe....
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....by the assessee during the year: Sr. No. Name of Bank Branch Type of Account Account Number 1 HDFC Bank MUMBAI -BORIVALI (WEST) Savings 01451000169331 2 ICICI Bank MUMBAI - BORIVALI Savings 001801014045 3 Kotak Mahindra Bank MUMBAI -BORIVALI Savings 06650010001358 4 Uco Bank MUMBAI -BORIVALI Savings 11700100001267 Copies of bank statement is being attached as Annexure - E 5) Notice u/s 148 has been received for the AY: 2014-15, for which the assessment is in process. 6) Reconciliation Statement of 26AS is being attached as Annexure - F 7) Reconciliation of Individual Transaction Statement is being attached as Annexure - G" 12. Learned counsel referred to further enquire where copy of Demat accounts were required and furnished. Further it was submitted that on 27.9.2017 vide order-sheet entry the AO was given various other details relating to purchase of shares, proof of payment, detail of persons involved in Dmat statement. Referring to the details, learned counsel submitted that thorough inquiry has been done by the Assessing Officer. He submitted that following case laws are duly applicable :- "Order cannot be said to be err....
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....e submitted that the order passed by learned CIT is not sustainable. 15. Per contra, learned Departmental Representative relied upon the orders of the authorities below. 16. Upon careful consideration, we find that the initial observation of Ld.CIT in this case that the assessee is engaged in the sale of shares of companies, which as per the enquiry of the department were found to be dubious and sham transaction. He noted that AO has not made proper enquiries and verification, which would have been made to ascertain the relevant facts for the purpose of deciding the issue at hand. 17. The Ld.CIT has noted the response to this notice by the assessee. Assessee has made elaborate submission that various details were sought by the AO and all the details were supplied. It was also pointed out that the investigation department finding were also available before the AO. After noting the elaborate submission of the assessee that the matter was duly enquired by the AO. Ld.CIT observed that it is not the issue whether the documents were filed or not. He held that AO has not applied his mind to the facts of the case and examined the provisions of section 68. As already submitted before the....