TaxTMI 
TaxTMI 
2024 (12) TMI 694
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.... issues to the AO, being; a) Addition u/s 68 of Cost of acquisition of listed shares Rs. 35,31,934/-; b) Addition u/s 69C of commission paid on sale of shares- Rs. 8,87,346/-; 3.0 The Pr. CIT, before passing the revision order u/s. 263, erred seriously in not considering the under stated vital facts, being; a) The revision order of smaller and consequential issues cannot be passed by Pr. CIT, when the larger issue is pending before the 1 Appellate Authority; b) There does not exist any contrary material of alleged unexplained commission paid of Rs. 8,87,346/- for earning long term capital gain and the revision order cannot be passed on the basis of assumption and presumption; c) The AO, on due application of mind, had not made the addition of the cost of acquisition of listed shares acquired/ paid in earlier year of Rs 35,31,934/-; d) It is not a case of lack of enquiry, since the AO upon conducting adequate enquires and investigation, had made the addition of entire long term capital gain on sale of shares of Rs. 2,60,46,279/-, which is subject matter of the appeal; e) The AO, on due application of mind and on....
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....nn.com 119 (Mad.)]. The assessee further submitted that the PCIT has issued the show-cause notice under section 263 based on audit observations without any independent enquiry and that the revision based on audit observations is not sustainable. The assessee relied on the decision of the Jurisdictional High Court in the case of CIT Vs. Ballarpur Industries Ltd. (85 taxmann.com 37 (Bom). The PCIT after considering the submissions of the assessee held that "The contention of the assessee is not correct because in the present case the Assessing Officer has not taken any view or rather forgot through oversight to take any view on the purchase price that he has allowed of a bogus transaction or that of the expenses not considered for addition in respect of the accommodation entry arranged. Thus, it is definitely not a case where any view whatever is possible, was taken. Two views can only be possible if the Assessing Officer had already taken a view and that could only be sustainable if such view was one of the two possible legal options. The Assessing Officer is not at liberty to entertain a view which is not legal or a view that tantamount to oversight or error. In the presen....
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....her tax rate. This has resulted into escapement of income of Rs. 44,19,280/- (Rs.35.31.934/- Rs. 8.87.346/-), and is required to be disallowed. The escaped amount of accommodation entry is required to be taxed as income from other sources. 9. In view of the above discussion the assessment order u/s 147 r.wis 144 read with section 144B of the Income Tax Act 1951 for the A Y 2013-14 dated 31.03.2022 is set aside to the file of JAO as per provisions of section 263 of the Act. The Assessing Officer is directed to the limited extent, to enhance and modify the assessment order with reference to commission expenses and purchase price as discussed above, after giving due opportunity of being heard to the assessee." 3. The ld. Authorized Representative (AR) submitted that during reassessment proceedings, the AO called on various details pertaining to the alleged bogus LTCG and after perusing all the details made the addition of the net capital gain claimed by the assessee as exempt under section 10(38) of the Act. Accordingly, the ld. AR submitted that the AO has applied his mind while deciding to make an addition of the net capital gain during reassessment proceeding. The ld. A....
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....ee has reaped a gain of Rs. 2,60,46,279/-. This abnormality itself shows that it is an axiomatic truth that there exists a systematic and artificial manipulation of the scrip. The Investigation Wing, Mumbai has conducted enquiries in this case as a part of the investigation carried out country wide to unearth the organized racket of generating bogus entries for claiming deduction u/s. 10(38) on LTCG and providing accommodation entries. In view of the above, it is proved that the Long Term Capital Gain shown by the assessee is not a genuine one and therefore the exemption claimed u/s. 10(38) of Rs. 2,60,46,279/- is rejected and the said amount is assessed to tax as income from other source as cash credit u/s 68 and brought to tax. This addition is liable for tax u/s 115BBE. Penalty proceedings u/s. 271(1)(c) is initiated for furnishing inaccurate particulars of income." 6. The AO did not accept the submissions made by the assessee and proceeded to treat the LTCG claimed as exempt under section 10(38) of the Act to the tune of Rs. 2,60,46,279/- as addition under section 68 of the Act. The assessee preferred appeal before the CIT(A) against the order of the AO passed under section ....
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....ld AR on the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Maharashtra Hybrid Seeds Co. Ltd. [2019] 102 taxmann.com 48 (Bom.). The relevant operative portion of the said judgement is reproduced hereunder:- "9. As rightly held by the Tribunal, this note firstly shows that all the explanations and arguments of the Assessee have been considered by the Assessing Officer and secondly that the action taken under section 263 is only on the basis of the audit party's note or report, who it would appear, ultimately did not approve of the Assessing Officer's view regarding the allowability of the deduction. Admittedly, the CIT has not referred to any audit objection but in the light of the note, the Tribunal held that it would be a fair inference that his action under section 263 was consequent upon the audit objection. Be that as it may, this office note clearly shows that the Assessing Officer had taken all explanations and arguments of the Assessee into consideration before allowing deduction. This being the case, the CIT could not have merely substituted his own views for that of the Assessing Officer by invoking Section 263 of the I. T. Act. ....
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....ad thoroughly gone on the facts of the case and in that case, independently the AO had made a proposal. In the case in hand before us even the AO made a proposal on the basis of audit report objections. Further, as we examine the notice u/s 263 available at page 84 of the paper book, it appears that the contents of the notice in a tabular form are similar to the proposal dated 27.09.2018 of the AO. The audit report is provided by Revenue at page no 1 to 9 of PB and same only seems to be the foundation of all the reasons quoted by the PCIT, for giving a finding that assessment order is erroneous. Thus, though not mentioned specifically in the order of the PCIT, that the jurisdiction is being invoked on the basis of the audit objections and the proposal thereof, the manner in which the PCIT has approached the issues by issuing show-cause notice and the discussion made upon the issue establish non-application of independent mind. It appears that based upon the audit objections and proposal only the jurisdiction u/s. 263 was invoked and exercised to hold assessment order to be erroneous so far as prejudicial to Revenue 11. Thus, the grounds raised are sustained. The impugned o....