9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 1928 - AT - Income TaxRevision u/s 263 - AO failed to enquire into the details long term capital gains arising on sale of equity shares - HELD THAT - Undoubtedly, the AO raised the specific query which was replied specifically alongwith relevant documents by the assessee. AO being satisfied with the query so raised and the documents so filed in support of various contentions did not make any adverse observation in the assessment order. Merely non discussion of the issue in the order nowhere make the assessment order as erroneous and prejudicial to the interest of the revenue. In response to the enquiry during asst. proceedings, the assessee submitted the details of working of long term capital gains alongwith relevant supporting documents and explained that the sale of equity shares was through recognized stock exchange and STT was also paid on the said sale. The AO thereafter raised a query with regards to difference in sale consideration, as reported in ITS statement and as per the brokers ledger account submitted by the assessee. Once it is found that the AO had made proper inquiry of issue under consideration. Moreover, on appraisal of the notice, we noticed that the commissioner has taken cognizance on account of this fact that the Sunrise Asian Ltd. has been marked in the list of penny stock company but nowhere has proved or discussed that the transaction with the penny stock company is against law and facts. There is nothing on record in which circumstances, the order passed by AO can be branded as erroneous and prejudicial to the interest of the revenue. It is mandatory on the part of the commissioner to arrive at this conclusion that the order as passed by AO is erroneous, which he did not hold. Asit is apparent on record that the AO has asked the query which was properly replied by assessee along with necessary documents, therefore, after his satisfaction, the AO nowhere made an adverse remark in the order but a legally tenable view has been taken so the commissioner has no power to invoke the provision u/s 263 of the Act in view of the law settled in Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT , MAX INDIA LTD. 2007 (11) TMI 12 - SUPREME COURT and GABRIEL INDIA LIMITED 1993 (4) TMI 55 - BOMBAY HIGH COURT - Appeal of assessee allowed.
Issues Involved:
1. Validity of the order passed under section 263 of the I.T. Act, 1961. 2. Whether the assessment order dated 29.11.2016 was erroneous and prejudicial to the interest of the revenue. 3. Adequacy of the inquiry conducted by the Assessing Officer (AO) regarding the long-term capital gains on the sale of shares of Sunrise Asian Ltd. Issue-wise Detailed Analysis: 1. Validity of the Order Passed Under Section 263 of the I.T. Act, 1961: The assessee challenged the validity of the order dated 16.03.2018 passed by the Commissioner of Income Tax (CIT) under section 263 of the I.T. Act, 1961. The CIT had held the assessment order dated 29.11.2016 to be erroneous and prejudicial to the interest of the revenue. The assessee argued that the CIT's assumption of jurisdiction under section 263 was not valid and justified. The Tribunal found that the CIT had not established that the assessment order was erroneous. Furthermore, it was noted that the CIT invoked section 263 merely on the basis that the inquiry conducted by the AO was inadequate, which is not permissible under the law. The Tribunal cited several judicial pronouncements, including CIT vs. Nirav Modi, CIT vs. Sunbeam Auto Ltd., and Malabar Industrial Co. Ltd. vs. CIT, to support its conclusion that the CIT's order was invalid. 2. Whether the Assessment Order Dated 29.11.2016 Was Erroneous and Prejudicial to the Interest of the Revenue: The CIT had set aside the assessment order on the grounds that the AO did not properly inquire into the details of the long-term capital gains amounting to Rs. 5,74,25,508/- from the sale of shares of Sunrise Asian Ltd., which was listed as a penny stock company. The Tribunal examined whether the assessment order was indeed erroneous and prejudicial to the interest of the revenue. It was found that the AO had raised specific queries regarding the transaction, and the assessee had provided detailed replies along with supporting documents. The AO had accepted the transaction after due inquiry and verification. The Tribunal concluded that the assessment order was not erroneous or prejudicial to the interest of the revenue, as the AO had taken one of the possible legally tenable views. 3. Adequacy of the Inquiry Conducted by the AO Regarding the Long-Term Capital Gains on the Sale of Shares of Sunrise Asian Ltd.: The Tribunal reviewed the inquiries made by the AO during the assessment proceedings. It was noted that the AO had issued a notice under section 142(1) and raised specific queries about the transaction. The assessee had responded with detailed submissions and supporting documents, including share application forms, bank statements, demat account statements, and contract notes for the sale of shares. The AO was satisfied with the explanations and did not make any adverse observations in the assessment order. The Tribunal held that the AO had conducted a proper inquiry and that the CIT's assertion of inadequate inquiry was not justified. The Tribunal emphasized that merely because the AO did not discuss the issue in detail in the assessment order does not make the order erroneous and prejudicial to the interest of the revenue. Conclusion: The Tribunal concluded that the order passed by the CIT under section 263 was invalid and not sustainable in law. The assessment order dated 29.11.2016 was neither erroneous nor prejudicial to the interest of the revenue, as the AO had conducted a proper inquiry and taken a legally tenable view. The appeal filed by the assessee was allowed, and the CIT's order was set aside. The Tribunal's decision was pronounced in the open court on 28.11.2018.
|
