TaxTMI 
TaxTMI 
2023 (4) TMI 25
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.... that the learned CIT can assume jurisdiction under section 263 only if the twin condition of the assessment order being erroneous and pre-judicial to the interest of the revenue is satisfied. 3. The learned Principal Commissioner Of Income tax ought to have seen that while invoking power under revisionary jurisdiction it is not permissible under law to substitute the view of the learned CIT by the view of the Assessing Officer. 4. The learned Pr CIT ought to have seen that the assessing officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualize a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. 5. The learned Principal Commissioner Of Income tax ought to have seen that the original assessment passed by the assessing officer under section 153A r.w.s 153C of the Income Tax Act was re-opened under the same pretext under which the assessment order is subjected to revision and that the lear....
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....o the interests of the revenue, because the purpose of reassessment proceedings was to verify capital gain transactions declared by the assessee from sale of certain shares, and during the course of assessment proceedings, the assessee has filed all information in relation to investigation carried out by the IT Department, Kolkata and also filed necessary evidences. The AO, after considering necessary evidences has held that the assessee has never transacted with M/s. Onkar Supply Pvt Ltd and thus, accepted income declared by the assessee. 5. The PCIT, after considering relevant submissions of the assessee and also taken note of certain judicial precedence, opined that assessment order passed by the AO is erroneous in so far it is prejudicial to the interests of the revenue. In so far as the issue of bogus long term capital gains derived from sale of certain shares through certain companies, it is evident from the fact that Shri. Ashok Kumar Kayan, the broker acted as an entry operator in providing accommodation entries in long term capital gains through various companies. In his sworn statement, he has admitted the fact that, the assessee is one of the beneficiary of such bogus....
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....or Beny Prasad Lakhoti that M/s Dhanlabh Merchandise Ltd and M/s Bakra Prathistan Ltd were few of the many shell companies managed and controlled by him for providing accommodation entries; and of Ashok Kumar Kayan that he had provided bogus Long term capital gain entry to the assesse and that the share transfer transaction was bogus. Despite having specific information that M/s. Dhanlabh Merchandise Ltd. is a shell company and the deposition of Ashok Kumar Kayan that the assessee was a beneficiary of the accommodation entries provided by him through bogus entries, and that the assessee had shown long term capital gain from sale of share of M/s. Dhanlabh Merchandise Ltd. which merged with M/s. Bakra Prathisthan Ltd., the AO did not attempt to make any inquiry or verification over the information and evidence with him. The AO had not even attempted to cross check the information with the reasons recorded and the submissions made before him. There is no discussion in the assessment order on the various matters recorded in the reasons to believe and his inferences on them. It could be seen that the in the reasons recorded that here are various information and evidence. The AO without ....
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....dicial too and therefore revisable Investigation should always be faithful and fruitful. Unless all truthful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted." In Rajmandir Estates Pvt Ltd v Pr CIT, the Calcutta High Court held that where the AO did not apply his mind to certain pieces of evidence which should have provoked him to make further investigation but not made would be a justifiable reason to invoke jurisdiction under sec. 263 of the IT Act. 14. In this regard, it is relevant to refer to the Explanation 2 to sec. 263 which reads 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- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Boar....
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....curities and Exchange Board of India for initiating necessary action. 19. Now coming to the pleas raised, it is totally incorrect to contend that the sole basis for invoking sec. 263 was the error in stating the reasons recorded. The proceedings under sec. 263 was initiated as the assessment order was erroneous as the AO did not make any inquiry to verify the genuineness of the alleged share facie material information to show transfer transaction, even though there was primate that the alleged share transfer transaction was bogus. Besides, various incriminating information and evidence formed the basis for the reopening of the assessment. Mere error in one piece of information recorded by the AO do not affect its validity, as all the other information and evidence directly prove prima facie the non-genuineness of the transaction. The failure of the AO to make any inquiry in respect of any of this information made the assessment erroneous and prejudicial to the interests of Revenue. The assessee's nexus is very evident from the sworn deposition of Ashok Kumar Kayan that he had provided accommodation entries to the assesse for claiming benefit of exemption of long term capit....
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....aring to the assessee." 6. The ld. Counsel for the assessee, submitted that the Ld. PCIT erred in setting aside the assessment order in exercise of his powers conferred u/s. 263 of the Act, without appreciating fact that while invoking power under revisionary jurisdiction, the PCIT must satisfy himself about erroneous order passed by the AO which caused prejudice to the interests of the revenue. In this case, the sole purpose for re-opening of assessment is to verify information received from Income-tax Department, Kolkata and during the re-assessment proceedings the assessee has filed all possible evidence and explained to the Assessing Officer that long term capital gains declared for the relevant assessment year is nothing to do with transactions with M/s. Onkar Supply Pvt Ltd, a Kolkata based company operated by Shri. Ashok Kumar Kayan. The AO, after considering relevant facts has rightly concluded the assessment without there being any addition towards capital gains and thus, it cannot be said that assessment order passed by the AO is erroneous and prejudicial to the interests of the revenue. In this regard, he relied upon the decision of Hon'ble Delhi High Court in the cas....
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....artment, Kolkata and more particularly statement recorded from One Mr. Ashok Kumar Kayan, claimed to be entry provider for various companies. As per said sworn statement of Shri Ashok Kumar Kayan, it was noticed that the assessee is one of the beneficiary of bogus long term capital gains of accommodation entries by the entry operator. Therefore, the PCIT came to the conclusion that although the assessment has been re-opened for specific purpose of examination on information received from Income-tax Department, Kolkata, but the AO simply completed reassessment by accepting explanation furnished by the assessee without carrying out required enquiries he ought to have been carried out in terms of explanation (2) to section 263 of the Act, which rendered the assessment order as erroneous and prejudicial to the interests of the revenue. 9. We have carefully considered the reasons given by the PCIT to set aside the assessment order passed by the AO u/s. 143(3) r.w.s. 147 of the Act dated 02.12.2019, in light of facts brought on record by the Assessing Officer and arguments advanced by the ld. Counsel for the assessee and we ourselves do not subscribe to the reasons given by the PCIT, ....
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....n providing accommodation entries of long term capital gains. Since, the issue is a subject matter of re-assessment proceedings from the Assessing Officer, it can be safely concluded that the AO has verified the issue in light of relevant facts under right perspective of law and concluded that long term capital gains declared by the assessee is genuine and thus, we are of the considered view that there is no scope for the PCIT to set aside the assessment order u/s. 263 of the Act. No doubt in case where there is complete lack of enquiries, the PCIT is having powers to set aside the assessment order. However, in a case where there is an enquiry, even if said enquiry is inadequate there is scope for the PCIT to step into revise the assessment order. In this case, on perusal of facts available on record, at best it can be said that it is not a case of lack of enquiry, but may be case of inadequate enquiry. Therefore, the powers exercised by the PCIT u/s. 263 of the Act is not in accordance with law. 10. At this stage, it is relevant to refer to the decisions relied upon by the Ld. Counsel for the assessee in the case of PCIT vs Laxman Industrial Resources Ltd (supra), where the Hon....