TaxTMI 
TaxTMI 
2025 (6) TMI 1837
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....in holding that it is a case of inadequate enquiry without even pointing out what further enquiry could have been conducted? C. Whether the revision proceedings initiated under section 263 of the Income Tax Act, 1961 on the ground of inadequate enquiry is bad in law? D. Whether the revision proceedings initiated under section 263 on the basis of the factually incorrect foundation can be maintainable? E. Whether the possibility of different view on the same material make the assessment order erroneous for the purpose of invoking the revision proceedings under section 263 of the Income Tax Act, 1961? F. Whether the order passed under section 263 directing the Assessing Officer to conduct enquiries instead of conducting the enquiries by the Commissioner himself is bad in law? G. Whether the order under section 263 passed by CIT is in breach of the principles of natural justice since the documents which were the basis of initiating revision proceedings were not provided to the Appellant?" 2. The brief facts of the case are as under: 2.1 The appellant-assessee filed the return of income for the Assessment Year 2015-16 on 31.08.2015 clai....
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....AO at the time of assessment proceedings, who, after calling for various details found the transactions in question genuine. In this regard, this is to clarify that the Assessing. Officer did not carry out a detailed investigation inasmuch as there had been a well planned web of covert transactions to channelize the unaccounted money into the books in the guise of Long Term Capital Gain ('LTCG') by way of making purchases and sales of penny scrips, the prices of which were systematically managed and artificially rigged by a syndicate having sole involvement in such purpose. Besides, it is also noted the AO had called for the details including Demat account, Bank statements etc which are insufficient and ostensible evidences to make transactions look genuine on face of it leading to a discernible belief that the purchase and sale 'transactions' were genuine. The AO without attempting to unearth, the true nature of transactions merely placed reliance on these superficial documents without appreciating that they were brought in to make the transactions look genuine, more particularly when the assessee failed to explain the reason for astronomical rise in prices of the scrips purchased....
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....tificially by a set of accommodation entry providers controlled by cartel of brokers and entry operators etc. with the sole intention to channelize the unaccounted money of the beneficiaries in their books under the garb of Long Term Capital Gains. As noted from the investment profile of the assessee, she has no other transactions in any other scrip except that of M/s Suchak Trading Ltd. which clearly indicates involvement of assessee in the modus operandi of taking bogus capital gain routed through transactions in penny scrip Since the Assessing Officer did not carry out "a detaied investigation to find and establish the device of money laundering in the present case under the garb of LTCG with the help of accommodation entry providers, the issue has been incorrectly decided by him due to lack of requisite inquiry. Since the AO has failed to conduct relevant enquiry, the order passed by him u/s 143(3) of the Act dated 22.12.2017 is found to have become erroneous insofar as prejudicial to the interest of revenue within the eaning of section 263 of the Act." 4. The Tribunal, considering the above findings recorded by the PCIT while dismissing the appeal, has observed as under: ....
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.... Learned advocate Mr.Jaimin Gandhi for the appellant-assessee in addition to oral submission as also filed written submissions and synopsis of submissions. 5.1 With regard to Question A, it was submitted that revision proceedings are initiated on proposal of Assessing Officer and not on examination of record by CIT(A) as the Assessing Officer indicated that there is under assessment and a proposal was made by letter dated 28.06.2019 on the basis of the audit memo dated 28.02.2019. It was therefore, submitted that there is no independent examination or application of mind by CIT(A) at the time of initiating the revision proceedings. 5.2 In support of his submissions, reliance was placed on the decision in case of PCIT vs. Reeta Lakhmani reported in [2022] 145 taxmann.com 590 (Calcutta) wherein, in similar facts, the Tribunal held that initiation of proceedings under section 263 based upon the proposal given by the Assessing Officer is mere an information and thereafter, the PCIT is required to apply his mind on the issue and thereafter record the reasons as to how twin conditions are satisfied. It was submitted that in facts of the present case also, the PCIT has failed to app....
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....ition. It was further submitted that the Assessing Officer also made inquiry with BSE and find out that the appellant sold shares to five buyers and summons were also issued to such five buyers and one of them appeared and provided the necessary documents. It was therefore submitted that the Assessing Officer made possible inquiries and there was no scope of any further inquiry. It was therefore, submitted that the Commissioner has failed to point out that what was the further inquiry or verification which the Assessing Officer should have conducted. 5.5 With regard to Question D, it was submitted that the foundation of initiation of revisional proceedings under section 263 was factually incorrect as the show-cause notice dated 06.03.2020 indicated the reasons for revising the assessment orders which are contrary to the facts on record as the Assessing Officer had obtained all the materials from the search team and had also issued summons to five buyers. 5.6 It was submitted that the Commissioner has recorded a wrong reasons for initiating the revisional proceedings on the basis of the balance sheet of the appellant assessee as on 31.03.2015 as the statement of the stock brok....
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....cates for the respective parties and considering the facts on record, it is not in dispute that the scrutiny assessment was initiated on the basis of the report of the Investigation Wing of Kolkatta Income Tax Department with regard to share transactions of the appellant-assessee in the scrips of M/s. Suchak Trading Limited which is alleged to be a penny stock company. It also appears from the record that the Assessing Officer has accepted the details submitted by the assessee without making any further inquiry and therefore, the Commissioner and the Tribunal were justified in coming to the conclusion on the facts of the present case that the Assessing Officer has not carried out inquiry which should have been made for ascertaining the veracity of the transactions undertaken by the assessee in the shares of M/s. Suchak Trading Limited to claim exemption of LTCG under section 10(38) of the Act. 9. With regard to the contention of the learned advocate for the appellant assessee that revisional proceedings are initiated on the proposal of AO and not on examination of record by CIT(A) is without any basis as the CIT (A) has categorically observed as extracted here-in-above that on t....