TaxTMI 
TaxTMI 
2024 (5) TMI 1028
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.... much as the same had been passed by the assessing officer without making due and proper enquiry and without verification of the aspect of bogus claim of exemption of Long Term Capital Gain by sale of shares of penny stock ? ii) Whether on the facts and circumstances of the case and in law the Learned Tribunal was justified to ignore the fact that the Assessing Officer did not conduct proper enquiry in light of the report of the Investigation Wing of Department with regard to modus operandi followed by share brokers and assessee to enter into sham transaction to generate LTCG and hence revision of the order under Section 263 of the Income Tax Act, 1961 was justified ? iii) Whether on the facts and circumstances of the case and in law, the Learned Tribunal was justified to quash the order under Section 263 of the Income Tax Act, 1961 by overlooking the fact that the entire transactions were stage-managed with the object to facilitate the assessee to plough back her unaccounted income in the form of fictitious Long Term Capital Gains of Rs. 5,52,865/- and claim bogus exemption ? iv) Whether on the facts and circumstances of the case and in law, the order of the Learned Tribu....
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.... be useful to refer two paragraphs of the judgment which are as follows : "98. In a few appeals, the order of the Tribunal has been passed in appeals filed by the assessees against the orders passed by the Commissioner invoking the power under section 263 of the Act. The Learned Senior Counsel for the assessee submitted that the assumption of jurisdiction by the Commissioner under section 263 is thoroughly flawed that there has been violation of principles of natural justice in as much as the Commissioner has pre-decided the issue even at the stage of issuance of show cause notice. 99. While proposing to invoke the power under section 263 of the Act, the question as to whether the Commissioner was justified in invoking the power under section 263 has to be decided based on facts of each case. The assessee cannot be allowed to contend that the language employed in the orders passed by the Commissioner under section 263 does not mention about how the assessments order was erroneous in so far as it is prejudicial to the interest of revenue. These words or phrases are contained in section 263 of the Act. Merely because the Commissioner has not used these words or phrases occurring....
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....ssing officer merely went by the submission that the stock broker is a public sector company. Unfortunately this is not the manner in which the enquiry should have been conducted. The entire case before the department was the genuinity of the claim for LTCG/STCL and the basis was unhealthy and steep rise of the price of the shares of mostly the paper companies though listed before the stock exchanges their shares were very rarely traded and in the background of these facts the enquiry should have been conducted by the assessing officer. Therefore we are of the clear view that the assumption of jurisdiction under section 263 of the Act by the respective Commissioners was fully justified and are shown to be proper exercise of power. The tribunal while interfering with the orders of the Commissioner once again posed a wrong question to itself and failed to approach the matter in the proper perspective considering the backgrounds in which the power was invoked. The tribunal brushed aside the surrounding circumstances which have led to such assessments or orders under section 263. The manipulative practice adopted by the stock brokers and entry operators was not even adverted to by the ....
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....e so at their own peril have to face the consequences. Thus, the conduct of the assessees before us probabilities the stand taken by the revenue, rightly the mind of the assessee as an investor was taken note to deny the claim for exemption. It is in this background that the human probabilities would assume significance. As observed earlier the doctrine of preponderance of probabilities could very well be applied in cases like the present one. We say human probabilities to be the relevant factor as ne account of the fact that the assessees are of individuals or Hindu Undivided Families and the trading has been done in the name of the individual assessee or by the Karta of the HUF. None of the assessee before us have been shown to big time investor. This is evident from the income details of the assessee which has been culled out by the respective assessing officers. Assuming that the assessee is a regular investor as was submitted to us by the learned advocates for the assessees that in any manner cannot improve the situation as the claim for LTCG has been only restricted to the shares which were purchased and sold by the assessees in penny stocks companies. Therefore mere....