TaxTMI 
TaxTMI 
2022 (1) TMI 347
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....when the assessment order was passed after carrying out proper 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 ....
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....Moryo Industries Ltd for a consideration of Rs. 1,10,53,808/-. Information is available in view of the finding 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. Cop....
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....cordance with any order, direction or instruction issued by the board under section 119".However in the present case no such direction or instruction 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 thr....
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....see. The same was provided by the assessee. Only because the Commissioner thought that other view is a better view, would not enable CIT to exercise power u/s. 263 of the Act. In the light of 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 he....
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.... revision proceedings u/s. 263 of the Act". (B) Submission dated 06/02/2020: "1. It is contended by your good office on the issue of the trading in alleged penny stocks that although as submitted by the assesse in the 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 att....
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.... would like to bring to your kind notice in this regard that: a. The said investigation report as stated earlier along with evidence was already on record of the Ld.AO at the time of original assessment and the same was taken into account while completing the original assessment. 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 st....
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....ttern of rigging of share price is visible. 2.2 During the assessment proceedings, the AO did not enquire into the modus operandi of stock price manipulation and accommodation entry transactions in these penny stocks. Instead of treating the entire transaction as a non genuine transaction and thereby bringing to tax the entire '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 ....
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....ee urged the dropping of proceedings under section 263 of the Act, since in its opinion, the assessment made was not "erroneous under any stretch of imagination". It was claimed that the Assessing Officer having applied its mind and accepted the same, there was no question of it being 'prejudicial' to the interest of revenue. The submissions have been examined and found untenable as elaborated hereinafter." 7. After referring to 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, wheth....
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....udicial to the interest of Revenue. 10. In this case/Assessing Officer has also failed to make further enquiry into the source and the amount of 'charges' paid to the entry operator for providing this accommodation entry. The assessment order is erroneous and prejudicial to interest of revenue even on this account. Under the circumstances delineated above, the action of the Assessing Officer with regard to taxation under section 68 and identification of the 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 ....
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.... reads as under :- "Sir, The assessee has received your notice u/s 142(1) dated 06.07.2017 seeking certain information, in this connection, we are submitting as follows: 1) Nature of Business Activity: Dealing in shares and securities - Derivatives. 2) Email id for correspondence is: [email protected] 3) Copies of: * Income Tax Return - Annexure A * Tax Audit Report - Annexure B * Balance Sheet and Profit & Loss Account - Annexure C * Computation of income - Annexure D 4) Details of bank accounts held 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 Sta....
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.... 2017. In the said circular he referred to para No. 4 which reads as under : "4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016- 17." 14. Referring to the above learned counsel submitted that learned CIT's reference to section 115BBE is not applicable for the assessment year and observations in this regard are also not correct, hence, he 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 e....
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...., which is totally unsustainable in law. The case laws referred above duly support this proposition. 18. Moreover, it is noted that the alternate submission of the assessee that even if the AO reassess the income pursuant to direction under section 263 and as the amount involved is assessed under section 68, only effect will be that the income offered under business income would now be assessed under section 68 as income from other sources. It has been submitted that after set off of other losses the assessed income of the assessee would be the same as in the original assessment order. Hence, it is plea that when there is no change in income assessed the order of AO cannot be said to be prejudicial to the interest of revenue. The Ld.CIT has tried to respond to the submission by observing that as per section 115BBE income tax shall be collected at that of 60%, when the total income of the assessee includes such as the one here i.e under section 68 et cetera and that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee in computing as income referred here. Now, the assessment year under consideration is assessment year 2015-16....