TaxTMI 
TaxTMI 
2022 (5) TMI 39
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...., therefore, erroneous in as much as it is prejudicial to the interest of Revenue. Hence, in exercise of power conferred in me u/s. 263 of the Act, I set aside the assessment order passed u/s. 153A r.w.s. 143(3) of the IT. Act, 1961 on 30.12.2018 for the A.Y. 2014-15. The Assessing Officer is directed to verify/examine the claim of exemption u/s. 10(38) of the Act in respect of long term capital gain from the sale of shares of "Look Health Care Service Ltd" on the line suggested in foregoing paragraph and pass the assessment order after giving a reasonable opportunity to the assessee of being heard". 2. The Ld. PCIT has erred in law and on facts in not properly considering the submission filed by the appellant vide letter dated 26.03.2021 along with relevant supporting evidences as well as various judicial pronouncements relied upon by the appellant. 3. The appellant has to humbly submit that the Ld. AO during the course of assessment proceedings u/s. 153A vide Notice u/s. 142(1) dated 11.12.2018 specifically asked with respect to the claim of LTCG on sale of shares M/s. Looks Health Care Service Ltd and the appellant submitted detailed reply along with relevant d....
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....ch action u/s. 132 of the I.T. Act was conducted on JP Iscon Group on 25.02.2016 and the residence of assessee was also covered under that search. Consequently, notice u/s 153A dated 07.02.2017 was issued to the assessee. In response to that the assessee filed ITR on 05.04.2017 showing total income of Rs. 6,34,920/-. Order u/s. 153A r.w.s. 143(3) of the I.T. Act for A.Y.2014-15 was passed on 30.12.2018 accepting the return of income at Rs. 6,34,920/-. 4. On perusal of the case records, Pr. CIT (Central) Ahmedabad (Pr. CIT) noticed that the assessee and other members of JP Iscon Group had traded in scrip named "Looks Health Care Services Ltd'. It was also ascertained in the post search proceedings that the assessee had sold 66,000 shares of 'Looks Health Care Services Ltd for an amount of Rs. 2,75,53,600/- in the A.Y. 2014-15 which was claimed as exempt. Further, from the verification of the case records, it appears that the AO has not examined the genuineness of long term capital gain claimed exempt u/s 10(38) of the Act from the sale of shares of 'Looks Health Care Services Ltd.' and no action was taken and no addition was made on account of the same. In the ass....
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....ount of the same. Further, in the assessment order no mention made regarding acceptance of reply. Hence, on this issue the order of the Assessing Officer is erroneous and prejudicial to the interest of revenue. 9. The assessee has relied on various judgments in support of its claim. The facts of this case are different from the decision relied on by them. Therefore, the decision relied on by them are not applicable in this case. The other arguments stated in its reply are in general nature. 9.1 The Hon'ble Apex Court has upheld the validity of action u/s.263 in case no proper enquiry has been made by the A.O. [Malabar Industries Co. Ltd. Vs. CIT, 243 ITR 83 (S,C.)]. In this connection, it is also pertinent to mention here that an Explanation 2(a) has been inserted below section 263(1) which states as under: "[Explanation 2. - For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, - 1. The order is passed without making inquiries or verif....
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....s and only an entry. Further, there is plethora of judgements in the favour of revenue on this issue. 10. In the light of facts and circumstances narrated above and in law, I hold that the Assessing Officer has erred in making a proper assessment in this case. The assessment order is, therefore, erroneous in as much as it is prejudicial to the interest of Revenue. Hence, in exercise of power conferred in me u/s.263 of the Act, set aside the assessment order passed u/s. 153A r.w.s 143(3) of the I.T. Act, 1961 on 30.12.2018 for the A.Y.2014-15. The Assessing Officer is directed to verify/examine the claim of exemption u/s 10(38) of the Act in respect of long term capital gain from the sale of shares of "Looks Health Care Services Ltd" on the lines suggested in foregoing paragraph and pass the assessment order after giving a reasonable opportunity to the assessee of being heard." 7. Before us, the Ld. Counsel for the assessee submitted that proceedings u/s. 153A were carried on in respect of the assessee and order u/s 143(3) of the I.T. Act for A.Y.2014-15 was passed on 30.12.2018 accepting the return of income at Rs. 6,34,920/- after due application of mind. The Counsel d....
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.... is a summary order and if the AO made any enquiries, they are not visible from the records of the assessment order. He relied on observations made by Pr. CIT in the 263 order and submitted that the order passed is erroneous and prejudicial to the interests of the Revenue. 9. We have heard the rival contentions and perused the materials available on record. The issue for consideration before us is the scope of enquiry under Explanation 2(a) to section 263 and whether in the instant facts can it be said that the order is passed by Ld. AO is without making inquiries or verification which should have been made, and hence erroneous and thus requiring revision by Pr. CIT u/s 263 of the Act. 9.1 An inquiry made by the Assessing Officer, considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. In our view, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. As far as adequacy of inquiry is considered, there is no law which provides the extent of inquiries to be made by the Assessing Officer. It is Assessing Officer's prerogative to make inquiry to the extent he feels pr....
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....come at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 15. Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry'." 9.3. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discus....
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....tion conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 9.5 Before deciding the issue, it would be useful to refer to some Supreme Court decisions on this subject which would throw useful light on the scope of enquiry under Explanation (a) to section 263 of the Act. 9.6 Recently the Supreme Court of India in the case of Principal Commissioner of Income-tax, Surat-2 v. Shreeji Prints (P.) Ltd.[2021] 130 taxmann.com 294 (SC) dismissed SLP filed by the assessee against order passed by High Court holding that where assessee-company had received unsecured loans from two different companies and Assessing Officer had made inquires in detail and accepted genuineness of same, such view of Assessing Officer being a plausible view could not be considered erroneous or prejudicial to interest of revenue. The facts of this case were that respondent assessee has filed its return of income showing total income of Rs. 62,55,900/- which was ass....
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....ies with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's onmoney transactions and Tribunal thus set aside revisional order passed by Commissioner. The High Court upheld Tribunal's order. The Supreme Court while dismissing the SLP filed by the Department held as under: "We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal is dismissed" 9.8 The Supreme Court in the recent case of Principal Commissioner of Income-tax-2, Meerut v. Canara Bank Securities Ltd[2020] 114 taxmann.com 545 (SC), dismissed the Revenue's SLP holding that 263 proceedings are invalid when AO had m....
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...., the Tribunal noted the observations of the Assessing Officer in the order of remand to the effect that Jain munis do not advocate spread of religion through use of computers, source of electronic media is usually shunned, very small section of the community uses computer technology for religious purposes as plenty of printed literature is available in the market. All these factors led to the market value of the CDs declining dramatically. It was on account of these reasons, that the assessee had incurred substantial loss arising out of reduction in the value of stock lying at the end of the year. The Tribunal, therefore noted that the Assessing Officer had carried out detailed enquiries and taken a plausible view." 9.10 Now in the facts before us the case of the assessee, order was passed u/s 153A of the Act r.w.s. 143(3) of the Act. We note that during the course of assessment proceedings, the Ld. AO made detailed enquiries on this issue of LTCG on sale of shares of M/s Looks Health Care services Ltd. vide notice dated 11-12-2018 and assessee filed detailed response vide reply dated 12-12-2018. The Ld. AO in the assessment order made specific mention of the aforesaid notice d....