TaxTMI 
TaxTMI 
2023 (5) TMI 909
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.... assessee was selected for scrutiny under CASS and the assessment was framed after making addition of Rs. 6,410/- on account of undisclosed rent vide order dated 02/05/2017. 4. Subsequently, the Ld. PCIT found that the assessment framed u/s 143(3) of the Act is erroneous in so far prejudicial to the interest of revenue on account of the following: 1) The AO without conducting proper inquires has allowed exemption amounting to Rs. 18,81,848/-u/s 10(38) of the Income tax Act, in respect of income from sale of script of Lifeline Drugs & Pharma Ltd and TVS motors. 2) The AO has not verified the source of investment made by the assessee in purchase of immovable properties during the year under consideration. 3) The AO has not verified the interest income declared by the assessee. 4. The assessee has claimed interest expenses of Rs. 1,66,427 against the rental income of Rs. 1,92,000,00 only. But the AO has not verified necessary details. 4.1 Thus, the Ld. PCIT proposed the assessment order as erroneous in so far prejudicial to the interest of revenue on account of non-verification by issuing a show cause notice dated 29/08/2018, with a request to make reply by 11/07/2018. It wa....
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.... maintained order sheet for assessment file but nothing in respect of the main issue i.e. the reason for selection of case regarding to verify "suspicious sale transaction in shares and exempt long term capita! gains (penny stock)" is discussed or any inquiry in this regard has been made and placed on record. It is seen that notice u/s. 142(l) of I. T. Act was issued on 20/01/2017 calling for primary details only and further notice u/s,142{l} of I. T. Act was issued calling to furnish the copies of rent deeds. It is seen that no specific questionnaire has been issued by the AO relating to reason for selecting the case under CASS. In compliance of the above notices the assessee appear to file some documents at her own. However on which date these documents etc. were filed is also not ascertainable. The AO completed the assessment on 02.05.2017 on the basis of these documents suomoto filed by the assessee. It may be mentioned that the case was selected for scrutiny to examine the genuineness of the exempt income claim u/s. 10(38} of the I. T. Act. On verification of the submission dated 01/09/2018 made by the assessee, during proceedings u/s. 263 it is seen that the assessee had purc....
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....f interest income has been called by the AO. On. perusal of the records, it is also seen that the assessee has claimed interest expenses of Rs.1,66,427/- against the house property income of Rs.1,92,000/-, but no evidence/details has been called for by the AO during the assessment. There is nothing on the records to suggest that proper verification and inquiries ' were made to come to logical conclusion as regards to the source of investment in the purchase of the | properties and the genuineness of the expenses claimed to earn income from house property. Therefore, j vide this office show cause notice dated 28-06-2018 for action u/s. 263, the assessee was requested to explain as to why the order passed by the AO u/s. 143(3} dated 02.05.2017 should not be revised u/s. 263 of the Act. The assessee preferred to remain silent on the above issues in his all written submission dated 04.09.2018, 04/10/2018 and 07/01/2019. It is fact that the assessee has purchased two properties during the year under consideration and the materials available on records is not enough to justify the source of investment made in the purchase of the immoveable properties as above. As regard to the claim ....
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....f revisionary power. As an investigator, it is incumbent the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the 'erroneous' includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. In this case the AO has not conducted the critical enquiry and nothing is on record to show that any verification of details to establish the genuineness of the claim as made by the assessee has been carried out by the Assessing Officer. The order of the Assessing Officer is silent and the claims have been allowed without any inquiry, examination or independent verification from outside agencies. 8.6 The assessee has relied on various case laws in support of his contention that the assessee's case was not covered under the revisionary powers u/s. 263 of the I. T. Act. In this connection it is mentioned that the facts and circumstances of various case laws relied upon by the assessee are different with the facts....
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....eness of the transactions of shares with the respective stock exchanges and therefore the order passed by the assessee was erroneous in as much as prejudicial to the interest of revenue 9. Considering the above mentioned facts I hold that the assessment order dated 02/05/2017 finalized by the Assessing Officer u/s. 143(3) of the Income-tax Act, 1961 is erroneous and prejudicial to the interest of revenue within the meaning of section 263 of the Income-tax Act, 1961 and hence the order passed by the Assessing Officer u/s. 143(3) dated 02/05/2017 is hereby set aside. Accordingly, the Assessing Officer is directed to make fresh assessment after, calling for the necessary details and conducting indepth investigation in respect of the genuineness of purchase of the shares, mode of payment, source of payment, genuineness of the dematization of the shares and specific facts and Circumstances including the economic and financial factors related to these companies which justified appreciation of share price of "Lifeline Drugs & Pharma Ltd." from Rs.3.61 to Rs 267.94 and the share price of TVS Motors from Rs.30.02 to Rs.281.15 within a span of 20 months and also an indepth examination on t....