TaxTMI 
TaxTMI 
2025 (7) TMI 1495
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....see submitted reply from time to time on ITBA Portal. Details were filed by the assessee and placed on record. On completion of assessment proceedings, Ld. AO vide order dated 31.12.2018 made additions of Rs. 1,35,000/- and Rs. 88,000/-. 3. After examination of record, show-cause-notice under Section 263 of the Act dated 22.03.2021, requiring assessee to explain why order dated 31.12.2018 by the DCIT, Noida should not be considered as erroneous so far as it is prejudicial to the interest of the Revenue. In response to notice, reply dated 23.03.2021 was received from assessee on email. On completion of proceedings, Ld. PCIT passed order dated 26.03.2021 setting aside order dated 31.12.2018 and directed the Ld. AO to pass fresh order after conducting proper inquiry including third party inquiries and investigations etc. into the claim of the assessee. 4. Being aggrieved, appellant/assessee preferred present appeal with the following grounds of appeal: "1. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961 and has erred in holding the assessment order dated 31-12- 201....
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....al gain of Rs. 1,53,58,259/- claimed by assessee as an exempt income u/s 10(38). These facts along with all relevant documentary evidences were comprehensively enquired and examined by Ld. AO during the course of assessment proceedings and thereafter, a view was taken him. Therefore, the assessment order cannot be said to be erroneous and prejudicial to the interest of revenue. These facts are evident from the following evidences: PB 1-3 is the copy of acknowledgment of return of assessee along with computation of income showing the exemption claimed by assessee u/s 10(38) on account LTCG on sale of shares of Rs. 1,53,58,259/- PB 3A-3B is the copy of questionnaire dated 09.10.2018 issued by Ld. AO wherein specific questions were raised in respect of the exemption claimed by assessee during the year. PB 4-81 is the copy of reply filed by assessee before Ld. AO dated 07.12.2018 duly explaining that exemption claimed by assessee u/s 10(38) was on account of sale of equity share of a listed company held by assessee for more than 12 months and on sale of such shares STT was duly paid and therefore, assessee was eligible to claim the said deduction. Further, th....
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.... PB 101-102 is the copy of DMAT account of assessee for AY 2014-15 showing that the 70,000 share purchased by assessee from M/s Blossom Dealcom Pvt. Ltd. were credited/dematerialized to the DMAT account of assessee on 31.03.2014. It also shows the ISIN, security type of the scrip i.e., M/s CCL International Ltd, DP ID and Client ID of assessee and complete address, contact details of the broker, M/s Destimoney Securities Pvt. Ltd. PB 84-97 is the copy of decision in the case of Mukta Gupta, ITA No. 2766/del/2018 dated 26.11.2018 filed by assessee before Ld. AO wherein the same scrip i.e., M/s CCL International was involved and Hon'ble tribunal held the same to be genuine and allowed the claim u/s 10(38). 5.1 Above evidences, before Ld. AO were duly verified before assessment. Thus, the order passed u/s 263 is without any basis, material or evidences and deserves to be quashed. 5.2 The notice under Section 263 has been issued by Ld. PCIT on the basis of audit objection which is evident from the letter of Ld. AO dated 08.03.2021, the same observed as under: PB 168-172 is the copy of audit objections raised by Ld. ACIT/JCIT(Audit) raising objection i....
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....d by assessee before Ld. PCIT to show that order passed by Ld. AO was neither erroneous nor prejudicial to the interest of revenue and therefore, jurisdiction under Section 263 could not have been assumed. In this regard, following submissions were made: PB 133-137 is the copy of notice u/s 263 dated 22.03.2021 issued by Ld. PCIT on the same grounds which were raised in the audit objections. PB 138-167 is the copy of reply filed by assessee before Ld. PCIT that each and every evidence relevant to the claim of exemption u/s 10(38) was filed before Ld. AO and after due verification of the same and claim of the assessee was accepted. Further reliance was also placed on the decision of Hon'ble ITAT Delhi bench in the case of Reeshu Goyal, ITA No. 1691/Del/2019 dated 07.10.2019 and also in the case of Mukta Gupta, ITA No. 2766/del/2018 dated 26.11.2018 wherein the same scrip i.e., M/s CCL International was involved and Hon'ble tribunal held the same to be genuine transaction. Therefore, view taken by Ld. AO was a plausible view and thus, the order of Ld. AO cannot be said to be erroneous or prejudicial to the interest of revenue. 5.4 Reliance is also placed ....
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..... AO while framing the impugned assessment. Ld. PCIT has neither brought anything on record to show whether the said report was actually available with Ld. AO at the time of assessment nor it was specified as to whether there was anything against the assessee in the said report according to be which order of Ld. AO could be held to be erroneous and prejudicial to the interest of revenue. Therefore, the action under Section 263 of the Act is taken only on the basis of surmises and conjectures which is not permissible in law. Said report, at best can be a basis of suspicion and it was held by Hon'ble ITAT Chandigarh Bench in the case of Sh. Trivikram Singh Toor (supra) that the jurisdiction u/s 263 cannot be assumed on the basis of suspicion and thus, nothing adverse can be read from this observation of Ld. PCIT. 5.9 Ld. PCIT in para 7.2 at page 10-11 of the revisionary order has mentioned that assessee claimed to have purchased 70,000 shares of M/s CCL International Ltd. @ Rs. 31 per share amounting to Rs. 21,70,000/-, however, payment of only Rs. 20,00,000/- has been shown to be made by assessee through banking channel and I.d. AO has not verified whether balance payment of ....
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....el/2018 titled as "Anju Rastogi Vs. ITO, Ward 1(1), Meerut and Rahal Gupta Vs. ACIT of ITAT, Raipur in ITA Nos.190 to 193(RPR) of 2018. 7. From examination of record in light of aforesaid rival contentions, it is crystal clear that Ld. PCIT assumed jurisdiction under Section 263 of the Act by alleging that order dated 31.12.2018 under Section 143(3) of the Act was erroneous in so far as it is prejudicial to the interest of the Revenue on the ground that Ld. AO failed to examine assumed claim by assessee under Section 10(38) of Rs. 1,53,58,259/- on account Long Term Capital Gain (LTCG) earned by assessee on sale of shares of M/s. CCL International Ltd. The transaction of purchase and sale of CCL Ltd. giving rise to LTCG claim to be exempted under Section 10(38) of the Act is fully elaborated by documentary evidence as pointed out by the Ld. Counsel for the assessee. The shares have been credited in the Demat account both purchase and sale transactions have been carried out through the banking channel and by transferring of shares. The prima facie bona fide existence of transaction cannot be doubted. 8. Hon'ble High Court of Delhi in ITA No.173/2021 titled as "PCIT-12 Vs. Ms. R....
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....s have been credited in the demat account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bona fides of existence of transaction executed cannot thus be doubted. It is not the case of the revenue that the capital gain arising to Assessee in not in the nature of LTCG. The case of revenue is that such transactions is an accommodation entry and thus sham. The abnormal increase in prices of share has led to suspicion on bonafides of transaction and was treated as accommodation entry of sham nature. 8.1 The Hon'ble Delhi High Court in the case of Karuna Garg as well as Krishna Devi has held that an astronomical increase in the share price of a company in itself is not a justifiable ground for holding the LTCG to be an accommodation entry. 8.2 As pointed out on behalf of the assessee large number of decisions pronounced by Co-ordinate benches holds the field in favour of the assessee in respect of same scrip of 'CCL International Ltd.'. 8.3 Significantly, the Assessing Officer in another case namely 'Parth Yadav' has framed the reasse....