AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 533
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....as reopened under section 147 of the Act after taking prior approval of higher authorities by Ld. AO. 2.3 Following notices had been e-served to the assessee requesting to furnish/submit requisite documents: S No. Notices u/s Date of notice Compliance date 1. 148 of the Income Tax Act, 1961 31/03/2021 30 Days 2. 142(1) of the Income Tax Act, 1961 22/11/2022 07/12/2021 3. 142(1) of the Income Tax Act, 1961 14/12/2021 20/12/2021 4. 142(1) of the Income Tax Act, 1961 08/02/2022 11/02/2021 5. 142(1) of the Income Tax Act, 1961 10/03/2022 14/03/2021 2.4 That In response to the notice u/s 148, assessee filed a return of income on 27/04/2021 declaring total income of Rs. 19,23,970/ -. Subsequently a notice u/s 143(2) was issued to the assessee .In response to the notice u/s 142(1), the assessee furnished reply of the questionnaire, through e-compliance vide e-response dated 04/12/2021, 20/12/2021,11/02/2021,14/03/2022 and 21/03/2022 and submitted/furnished relevant documents, which were checked and verified. After considering the return of income, computation and other submissions/documents filed by the assessee....
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....06/01/2025 the ground No. 3 is not pressed by Ld. AR. 3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 06/01/2025 when Ld. AR for and on behalf of the Assessee appeared and Ld. DR for an on behalf of the Revenue appeared. Both the parties were heard patiently and at length on their respective submissions and arguments. Equal and fair opportunity was afforded to both the parties. 3.2 The Ld. AR has contended as follows: 1. The assessee is an individual and she is regularly filing her ITR and copy of return filed by her for the year under consideration are forming part of paper book at Pg 1-2 of the Paper Book. 2. The assessee had purchased shares of Indusind bank on 06.04.2009 and then sold such shares on 17.03.2015 i.e. in the year under consideration for 29,88,945 resulting in capital gain of Rs. 28,75,041/ which is exempt u/s 10(38) of the Act. 3. Further, the assessee had also purchased two immovable properties during the year under consideration amounting to Rs. 36,55,000/- and Rs. 2,24, 17,500/-respectively. 4.The case of the assessee was reopened u/s 147 of the Act on the reasons to believe....
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....but AO fails to verify the source of purchase consideration paid by the assessee amounting to Rs. 2,50,05,000/ -. The copy of the SCN's is forming part of paper book at Pg18-20 & 28-29 of the Paper Book. 9. In response to these SCNs, replies dated 08.02.2024 (Pg 21-27 of Paper Book) and 01.03.2024 (Pg 30-34 of Paper Book) were filed wherein it was explained to the worthy PCIT that the assessee has not entered into any bogus transaction and a genuine transaction of sale of shares of Indusind bank has taken place during the year under consideration and following documents were filed to substantiate the claim of the assessee: * Copy of contract note of purchase of shares of Indusind Bank in FY 2009-10 (Pg 35 of Paper Book) * Copy of ITR of AY 2009-10 & 2010-11 depicting source of cash in hands of the assessee for purchase of shares of Indusind Bank (Pg 36-37 of Paper Book) * Copy of notarized affidavit filed by Teena Garg with respect to purchase of shares of Indusind bank (Pg 38-39 of Paper Book) * Copy of contract note of sale of shares of Indusind Bank in FY 2014-15 (Pg 40 of Paper Book) * Copy of net obligation bil....
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....d assessment for AY 2015-16. (Copy of reasons placed at Page 2A-2B of PB)" 3.5 That in view of aforesaid at the outset, the reasons, recorded for the reopening of the case were incorrect as the amount of LTCG (Rs. 60,65,7241/- ) mentioned in the reasons was incorrect as against the actual capital gain of Rs. 28,75,041 (Sale proceeds of Rs. 29,88,945 LESS cost of acquisition of Rs. 1,13,904) and the genuineness of the said capital gain was proved by the assessee vide various documents listed in Para 3.2 (9)above. Therefore, after going through the detailed replies filed by the assessee and after due application of mind by the Ld. AO, the issue was accepted by the Ld. AO. 3.6 It was then contended by the Ld. AR that there was full and complete application of mind by the Ld. AO in order in assessment dt .. 20/03/2022 which has been presented to us by following tabular chart: Date of Notice Query raised by the AO Reply filed by the assessee Relevant Page of Paper Book 14.12.2021 Assessee claimed a bogus long term capital gain of Rs. 60,65,724/- by issuing forged contract notes during the FY 2014- 15 and the same is not disclosed in the ITR for AY 2015-16. Theref....
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.... be said to be erroneous and prejudicial to the interest of the Revenue and therefore, the impugned order passed by the Principal CIT in exercise of his revisionary jurisdiction under s. 263 is bad in law, more so as he himself has not made any minimal enquiry before holding that the AO has not made any enquiry; inadequate inquiry or insufficient inquiry cannot be a ground to order revision of assessment under s. 263. Reliance was also placed on judgment of Hon'ble Supreme Court of India in case of PCIT Vs. SPML Infra Ltd. reported in (2024) 164 taxamnn.com 505(SC) and emphasis was laid on following extract: INCOME TAX: SLP dismissed against order of High Court that where Assessing Officer computed capital gain on sale of an asset by raising queries and after considering submissions of assessee, PCIT was not justified in assuming jurisdiction under section 263 by treating assessment order as erroneous. Reliance was also placed on judgement of Hon'ble Delhi High Court Case in PCIT Vs. Clix Finance India (P) reported in (2024) 160 TAxmann.com 357 (Delhi) and emphasis was laid on following extract :- " Where Assessing Officer during assessment proceeding is....
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....f the Income-tax Act, 1961 - Unexplained investments (Unsecured loans) - Assessment year 2013- 14 - Assessee-company had received unsecured loans from two different companies - Commissioner noting that said loans were shown as investment in assessee's name in balance sheet of respective companies exercised his revisionary powers and passed an order without giving an opportunity to assessee of being heard, invoking Explanation! to section263 -High court by impugned order held that since Assessing Officer has made inquiries in details and accepted genuineness of loans received by assessee, such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial to interest of revenue - Whether SLP against said impugned order was to be dismissed - Held, yes [Para 2] 3.9 The Ld. AR has placed reliance on decision of the ITAT Chandigarh Bench in case of LOIL Continental Foods Ltd. Vs. PCIT in ITA No. 577/Chd/2017 (Chd-Trib) & in particular following extract. The Id. CIT made reference to the Explanation -! to Section 263 and also decision of Hon'ble Supreme Court in the case of CIT Vs. Amitabhachan, 384 ITR 200. It H pertinent to ....
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....vidences of sale of immovable property's of Rs. 36,55,000/-and Rs. 2,13,50,000/ -. However it was clarified to the Ld. AO that she had not sold any property and in fact two properties have been purchased by the assessee from one "Amar Deepika" and "Gupreet Kaur" respectively. The Bank account statement of assessee with PNB was available with Ld. AO and source of the purchases of immovable properties were too were examined and verified by Ld. AO and that the same were found to be correct. During the proceedings before Ld. PCIT the documentary evidence in the shape of purchase deeds (page 43-47, 48-59 of PB) were duly filed by the asssesseealongwith saving bank statement of PNB (page 60-61 of paper book) and so also loan statement (page 62-65 ) which were all filed before Ld. AO to prove the sources of purchase of property. It was contended that investments were made out of declared sources of income, out of bank account and bank loan. Details of two immovable explained and its sources are described in synopsis filed before us which are as under: " 1/2 share in property at village Buranwala, Tehsil Baddi, Distt Solan measuring 4 Bigha 2 Biswa (Registry at pg 43-47 of PB): D....
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....sted the Ld. AO to provide the material relied upon but no material was ever provided to the assessee nor request to cross the person concerned who had made such a request was entertained. The Ld. AR then contended that in the absence of any report from the Investigation Wing ofDepartment, the Ld. AO rightly accepted the contention of the assessee and accepted the ROI as filed upon making thorough examination and verification as fit and proper. It was contended that the assessee purchased shares from SEBI Registered entity "Life line Securities Limited" in good faith in cash. The assessee cannot be blamed for backend transactions of "Lifeline Securities Ltd." who as a broker purchased the shares from exchange whether in the name of the assessee or not because in so far as assessee is concerned she had paid for the shares of Indusind Bank in good faith. If the shares were not purchased from the exchange in the name of the assessee then fault is only of Life Line Securities Ltd. and not of the assessee herein. The Ld. AO sought all desired information on transaction from assessee and that the same were provided for. The Ld. AO basis evidence concluded that the Transaction had taken p....
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....cting a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section. Explanation 2 .- For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, 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 Chief Commissioner or Chief Commissioner or 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 Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 4.3 We notice basis provision of Sectio....
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....y of statement on basis of which the Department has formed the opinion that long term capital gain of Rs. 6065724/- which is otherwise not liable to tax under section 10(38) are bogus and no material is provided to the assessee to contradict the same. (page 5 & 6 of PB) 4.4 Thereafter there is issuance of another notice dated 08/02/2022 under section 142(1) of the Act whereby attention of the assessee was invited to the fact that here earlier submission u/s 142(1) is part submission and that complete reply be furnished. Attention was also invited that it is time barring assessment copy of reason was provided for which fact was recorded (page 7 & 8 of PB). The assesse in response to this notice dated 08/02/2022 stated that in continuation of assessee earlier reply dated 14/12/2021 it is stated that the assessee has sold only 3360 shares of Indusind Bank for a consideration of Rs. 29,88,945.04. These shares were acquired on 06/04/2009 for a consideration of Rs. 113904/- and the resultant Long Term Capital Gain amounted to Rs. 28,75,041/- which has been duly credited on 17/03/2015 in the assessee's SB A/c No. 3887000100031296 in PNB Ambala Cantt. Necessary evidence in suppor....
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....e sale of immovable property at Rs 21350000/- to Gurrpeet Kaur on 02.01.2015 as mentioned in 26-AS, first of all figure of Rs 213500000/- has been misprinted against real figure 21350000/-, more so, this information has also been misread and correct version is that GurpreetKaur had sold immovable property to assessee and assessee has deducted TDS while making payment and as such Gurpreet Kaur is seller/deductee and as such there is no question of anycapital gain out of said transactions. 4.6 Thereafter we observe and note that there was issuance of yet another show cause notice dt. 15/03/2022 calling upon the assessee to show cause as to why the proposed variation should not be made. It was stated therein that in your reply dt. 14/03/2022 above (Para 4.5) the assessee had earned long term capital gain of Rs. 28,75,041/- and that it is exempt under section 10 and not liable to tax but on perusal of return column D-19, it is blank where assessee is required to show 'exempt income'. Accordingly the assessee was called explain as to why entire receipt for Rs. 29,38,945/- should not be treated as unexplained money u/s 69A of the Act. Thus an opportunity was given to assessee ....
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.... and sale contract notes already available on the file, more so the source of information has not been provided to assessee despite repeated requests so that assessee could file detailed objections nor person who has given statement on the basis of which case has been reopened, his statement was never supplied to assessee nor any notice u/s 133(6) was ever issued so that assessee could file objections and made request for cross-examine the person who has made a self serving statement to save himself from purview of income tax. The assessee shall feel obliged if copy of statement on the basis of which assessment has been reopened could be confronted to assessee so that assessee could examine the same and file its detailed objections failing to which assessee re-iterate that entire reassessment proceedings has been carried out hurriedly and PCIT has also accorded his approval without application of mind. No complete proposal u/s 151 has been provided to assessee. 4.7 We also observe that after aforesaid reply on 21/03/2022 (page 16 & 17 of Paper Book) the impugned assessment order dated 23/03/2022 came to be passed u/s 147 r.w.s 144B of the Act, accepting the return of in....
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....of immovable property has remained unverified. Accordingly, the Ld. PCIT proposed to hold that assessment order dt. 23/03/2022 to be erroneous in so far as it is prejudicial to the interest of Revenue, in terms of Section 263 especially clauses (a) and (b) of the explanation 2 to Section 263 of the Act. Be it noted ROI in response to Notice under section 148 dt. 31/03/2021 was filed on 27/04/2021 declaring income of R.s 19,23,970/ -. 4.9 Reply to the Show Cause Notice The assessee in response to the above show cause notice dt. 10/01/2024 stated as under: • selected: Original return of income in this case was filed on 30.09.2015 vide AR no. 841681900300915 declaring an income of Rs 1923970/ -. The return was processed u/s 143(1) of the IT act on income returned. The assessment was reopened u/s 148 vide notice u/s 148 dated 30.03.2021 and in response to said notice, the assessee has filed return on 27.04.2021 vide AR no. 345377510270421 declaring the same income. After filing return u/s 148, the assessee requested for supply of copy of reasons recorded which was provided to assessee and assessee written a letter to AO on 20.12.2021 which is reproduced as....
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....or a consideration of Rs 2988945/- which has yielded Long term capital gain as per details below :- Sale Proceeds on 17.03.2015 2988945.04 Less: Purchase on 06.04.2009 113904.00 Long Term Capital Gain 2875041.00 This was rightly been claimed as exempt u/s 10 being not liable to capital gain as the shares sold after 31.01.2018 are liable to tax by applying face value as on 31.01.2018. As has already been clarified that assessee did not enter into any other such transactions and as such your information regarding long term capital gain of Rs 6065724/- as detailed in reasons was totally incorrect and against the facts of the case, however the assessee though made specific request to supply the complete details and source of information along with complete proposal u/s 151, the same had not been supplied so far and as such assessee was to file necessary objections. The assessee has only earned long term capital gain of Rs2875041/- not liable to tax, necessary evidence in support of same has already been filed along with reply dated 11.02.2022. As regards the sale of immovable property at Rs 3655000/- to Amar Deepika on 30.07.2014 as mention in 26-AS,....
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....sessee does not accept proposed variation of Long term capital gain of Rs 2875041/- to be added in income tax return u/s 69A of IT Act. From the above, it is clear that on the basis of material available on record, the AO has not made any addition after considering material available on record, evidences submitted by the assessee, contract notes, Demat A/c and thus AO has duly applied his mind before passing assessment order. The presumption that the Assessing officer has duly applied his mind cannot be easily discarded. The revisionary powers cannot be exercised without setting out the error in the order and prejudice caused to the revenue. • Reliance is placed on judgement of Hon'ble ITAT in case of Parminder Singh Vs. ACIT 81 DTR 321 Amritsar & judgement of Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd. Vs. CIT reported in 243 ITR 83- emphasis on applicability of Twin condition under section 263 was made. • It was stated that an amount of Rs. 29,88,945.04 was credited in PNB A/c No. 3887000100031296. • Regarding transactions with Dayanand Singh amounting to Rs. 30,24,000/- it was stated that "AO could....
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....o his SB A/c No. 3887000100031296 in PNB, Ambala Cantt as per details given below: Date Amount Source 11.12.2014 35,00,000.00 By cheque no 129649 29.12.2014 5,75,000.00 By A/c Payee Ch. No. 862962 29.12.2014 5,00,000.00 By A/c Payee Ch. No. 862963 30.12.2014 15,75,000.00 By A/c Payee Ch. No. 862964 30.12.2014 15,75,000.00 By A/c Payee Ch. No. 862965 30.12.2014 29,36,500.00 By A/c Payee Ch. No. 862967 30.12.2014 31,50,000.00 By A/c Payee Ch. No. 862969 Total 1,38,11,500.00 Bank Loan 81,25,000.00 Out of cash Rental income and personal savings 4,81,000.00 Total 2,24,17,500.00 It is further averred in reply to the show cause notice that revisionary jurisdiction cannot be invoked. Necessary evidence in support of investment made towards properties are enclosed which clearly explains the source of investment. Further this was not the reasons for reopening of assessment under section 147/148. The assessee has placed reliance on pages 43 to 65 of paper book where necessary evidence is place on record of this Tribunal with regard to purchase of immovable....
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.... F.Y. 2014-15 relevant to A.Y. 2015-16. As per the information received, a search was conducted u/s 132 of the Income Tax Act, 1961, in the case of Tradenext Securities Limited (Erstwhile Lifeline Securities Limited) along with Kundu Group of Rohtak on 25.02.2021. Statement of the director and authorised signatory of Lifeline Securities Limited was recorded in which he stated that the Contract notes issued by the company Lifeline Securities Limited were bogus and fabricated and were not signed by any of the directors of the company. No transactions as mentioned in the Contract notes were done on the Exchange. Shares were purchased from exchange through conduit accounts just before the sale of shares by the final beneficiaries and transferred through off market transfer to the account of Lifeline Securities Limited. The same shares were transferred through off market transfer to the account of ultimate beneficiaries. The modus operandi was to purchase shares in the name of dummy persons and credit them off market to the final beneficiaries. Bogus contract notes were issued to the final beneficiaries to backdate the purchases by them to claim false exempt LTCG whereas the real nat....
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.... asked to discharge its primary onus to establish the genuineness of her claim that the shares of INDUSIND Bank were purchased by her in FY 2009-10. No requisite enquiry was made by the AO as was called for in view of the Verification Report uploaded by the investigation wing after making detailed inquiries during search and post search investigation. During proceedings u/s 263 of the Act, the assessee was asked to furnish proof of payment made for purchase of shares in FY 2009-10 along with bank account statement and Demat account statement. In reply dated 01.03.2024, the assessee submitted that shares were purchased in cash during FY 2009-10 and that she did not have any Demat account prior to 01.04.2014.The purchase of shares is offline and there is no proof of payment of the shares in FY 2009-10. The assessee failed to produce any documentary evidence of payment made for purchase of shares and submitted an affidavit that shares had been purchased by her in FY 2009-10 in cash. The affidavit is only a self-serving documents. In the absence of any proof of purchase of shares in FY 2009-10 produced by the assessee and further the positive facts found as a result of search act....
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....has submitted these documents basis which LTCG is claimed as exempted it is incumbent upon the Ld. AO to have examined and verified these documents. But it appears strongly from the assessment order these documents were checked and verified. While it is true that how these documents were checked and verified is not stated expressly in so many words yet fact remains that Ld. AO had checked and verified those documents. In so far as assessee is concerned he / she has no control how such documents must be checked and verified. The assessee has no control over theverification and investigation skills of Ld. AO. We hold that while carrying out checking and verification of documents immediate superior officer of Department have administrative control over Ld. AO and in what manner AO exercises his power. The assessee thus has no role. The role of the assessee comes to an end upon submission of documents which in the instant case was done (supra). Further it is wrong finding by Ld. PCIT to have held that there was already an information available with the Ld. AO about fraudulent practices resorted to by Life Line Securities Ltd. and about modus operandi adopted by them in giving accomm....
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....perties purchased by has observed that another issue on which SCN u/s 263 was issued is that the AO failed to make requisite inquiry regarding the source of investment of Rs. 2,50,05,000/- made in purchase of immovable property by the assessee during the year under reference. This information was available on record in 26AS. During assessment proceedings, the AO issued a questionnaire on 10.03.2022. In which the assessee was wrongly asked to explain/give details of sale of immovable properties. In response to it, the assessee filed reply dated 14.03.2022 stating that the AO had misread 26AS. No immovable property was sold by the assessee during the year and that the assessee had actually purchased two immovable properties during the year under assessment. That Tax was duly deducted by her at the time of payment to the seller hence, there was no question of capital gain. However, no source of investment was furnished by the assessee. The AO also failed to make any inquiry with regard to source of investment of Rs.2,50,05,000/- from the assessee and left the verification incomplete. It is not a case of inadequate enquiry but of NO enquiry on this issue. The assessment order is ....
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....n of the assessee in reply (page 26 of paper book) that Ld. AO did not investigate the matter further probably when it reached the conclusion that if no addition on account of reasons recorded is being made then no addition on any other count could be made. Reliance was rightly placed by the assessee on the judgement of Gujarat High Court in case of CIT Vs. Mohmed Juned Dadlani (2013) 355 ITR 172 with which we too conquer. Further we have perused the reasons for reopening u/s 147/148 of the Act at page 2 B of paper book where no reasons have been given to reopen the assessment on this score of purchase of immovable properties. We further hold that merely because ROI for A.Y 2015-16 is filed for Rs. 19,23,970/-is no ground to order fresh assessment proceedings basis order u/s 263. Assessee in any case has given plausible explanation in reply and Ld. PCIT ought to have considered the same and ought to have made some bare minimum enquiry before ordering fresh assessment no such step was taken under section 263 despite express provision in this regard u/s 263 therefore the impugned order is bad in law, not proper and illegal within the meaning of Section 263 of the Act and accordingly ....