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2021 (4) TMI 1022 - AT - Income TaxRevision u/s 263 - Bogus LTCG - exemption claimed u/s 10(38) denied - HELD THAT - In our considered view, the Assessing Officer has called for and verified all the details and documents in connection to the purchase and sale of the shares in question and after examining the same, has taken a possible view that the transactions are genuine. This is not a case of non verification or no application of mind. This is not an order passed without making enquiries or verification, which should have been made. In fact, a number of decisions of the Tribunal support the view taken by the Assessing Officer on the very same issue on the very same evidences. Hence the Assessing Officer has taken a possible view. Applying the proposition of law laid down in the cases as extracted above to the facts of the case on hand and considering the proposition of law laid down in the case of Manish Kumar Baid 2017 (10) TMI 522 - ITAT KOLKATA and Navneet Agarwal 2018 (8) TMI 509 - ITAT KOLKATA wherein the genuineness of these transaction were upheld on the facts and circumstances of the case we hold that the revision of the assessment order u/s 263 of the Act, by the ld. Pr. CIT is bad in law. Hence we quash the order passed by the ld. Pr. CIT u/s. 263 of the Act on 20/03/2020 and allow these grounds of the assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Legitimacy of the assessee's suspicious sale transactions in shares. 3. Invocation of Section 263 by the Principal Commissioner of Income Tax (Pr. CIT). 4. Adequacy of the Assessing Officer's (AO) inquiry and verification during the assessment proceedings. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 223 days. After reviewing the petition for condonation, the tribunal was convinced that the delay was justified due to sufficient cause. Consequently, the delay was condoned, and the appeal was admitted. 2. Legitimacy of the Assessee's Suspicious Sale Transactions in Shares: The assessee disclosed a total income of ?20,40,470/- for the Assessment Year 2015-16 and claimed a loss of ?73,22,956/- from the sale of shares in penny stocks (Cressanda Solutions Ltd., Kailash Auto Finance Ltd., and Rajlaxmi Industries Ltd.). The Pr. CIT identified these transactions as suspicious based on reports from the Directorate of Investigation, Kolkata, which indicated that these shares were used for generating bogus Long Term Capital Gains (LTCG) and Short Term Capital Loss (STCL). The Pr. CIT argued that the AO failed to conduct necessary verification or investigation into these transactions. 3. Invocation of Section 263 by the Principal Commissioner of Income Tax (Pr. CIT): The Pr. CIT issued a show-cause notice proposing to revise the assessment order under Section 263 of the Income Tax Act, 1961, stating that the AO's assessment was erroneous and prejudicial to the interests of revenue. The Pr. CIT directed the AO to reassess the income of the assessee for AY 2015-16 after verifying the issues related to the suspicious sale transactions in penny stocks. 4. Adequacy of the Assessing Officer's (AO) Inquiry and Verification During the Assessment Proceedings: The AO had issued a notice under Section 142(1) and a detailed questionnaire, requiring the assessee to furnish documents and evidence of the sale transactions. The assessee provided contract notes, bills, and other documentary evidence supporting the transactions. The AO, after considering these documents, concluded that the transactions were genuine. The tribunal noted that the AO had conducted a thorough inquiry and verification, and the conclusion reached was a possible view supported by judicial precedents. Tribunal's Conclusion: The tribunal held that the AO had conducted a proper inquiry and verification of the transactions. The AO's order was not erroneous or prejudicial to the interests of revenue. The tribunal quashed the Pr. CIT's order under Section 263, stating that the AO had taken a possible view after due verification, and the Pr. CIT's revision was not justified. The appeal of the assessee was allowed.
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