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2023 (4) TMI 359 - AT - Income TaxRevision u/s 263 - assessment order erroneous and prejudicial to the interests of the Revenue - Peney stoch transactions - As per CIT there was no query from the AO as to the genuineness of the claim for exemption u/s 10(38) under the head long term capital gains - As argued by assessee case was selected for limited scrutiny, therefore, the question of examination of issue of genuineness of claim for exemption u/s 10(38) does not arise - HELD THAT - On mere perusal of the said notice, it would be clear that there was no query from the Assessing Officer as to the genuineness of the claim for exemption u/s 10(38) under the head long term capital gains . The appellant cannot be blow hot and cold one hand say that the case was selected for limited scrutiny and on the other hand the issue was examined by the Ao. Thus, the contentions made in this behalf by the appellant are devoid of any merit. It can be safely concluded that the AO had failed to examine the genuineness of claim for exemption u/s 10(38) of the Act. As no reasonable opportunity was given by the ld. PCIT during the course of proceedings before him - As the appellant could not demonstrate before us that the notice was received after expiry of the date of hearing of the proceedings u/s 263 - As established the fact that the shares of M/s. NCL Research Financial Services Ltd. were reported as penny stock by the Investigation Wing of the Income Tax Department, Kolkata, the transactions of purchase and sale of shares in M/s. NCL Research Financial Services Ltd. are part of the fraud played by the operators involved in the penny stock. PCIT was not clear in his finding, therefore, the order should be declared null and void - It cannot be accepted for the reason that the ld. PCIT has only set-aside the assessment to re-do the assessment after giving an opportunity of hearing to the appellant, since this issue was not examined by the AO during the course of assessment proceedings. We also make it clear that even the information received after the completion of assessment constitutes a part of the record for initiation of proceedings u/s 263 of the Act In the case of PCIT vs. Swati Bajaj 2022 (6) TMI 670 - CALCUTTA HIGH COURT is squarely applicable, wherein, it has held that failure of the AO taking into the report of the Investigation Wing of the Income Tax Department and accepted the claim for exemptions on account of long term capital gains and the exemption arisen from transaction with penny stock, renders the assessment erroneous and prejudicial to the interests of the Revenue - Appeal filed by the assessee stands dismissed.
Issues:
- Delay in filing the appeal - Validity of assumption of jurisdiction u/s 263 by the ld. PCIT - Examination of genuineness of claim for exemption u/s 10(38) - Opportunity of hearing granted by ld. PCIT - Clarity of findings in the ld. PCIT's order Issue 1: Delay in filing the appeal: The appellant filed an appeal with a delay of 972 days citing reasons related to the COVID-19 situation. The Hon'ble Supreme Court's judgment allowed for the exclusion of certain days due to the pandemic. The Tribunal condoned the delay and admitted the appeal for adjudication. Issue 2: Validity of assumption of jurisdiction u/s 263 by the ld. PCIT: The ld. PCIT set aside the assessment order due to the Assessing Officer's failure to examine the genuineness of a claim for long-term capital gains. The appellant contested that the ld. PCIT did not grant a reasonable opportunity of hearing and that the assessment was selected for limited scrutiny. The Tribunal held that the ld. PCIT was justified in setting aside the assessment order as the failure to consider the Investigation Wing's report rendered the assessment erroneous and prejudicial to revenue interests. Issue 3: Examination of genuineness of claim for exemption u/s 10(38): The Tribunal found that the Assessing Officer failed to examine the genuineness of the claim for exemption u/s 10(38) despite the appellant's contentions regarding limited scrutiny. The Tribunal concluded that the ld. PCIT's decision to set aside the assessment was valid based on the failure to verify the claim for exemption. Issue 4: Opportunity of hearing granted by ld. PCIT: The appellant argued that no reasonable opportunity of hearing was provided by the ld. PCIT. However, the Tribunal found that the ld. PCIT's actions were justified, especially considering the information from the Investigation Wing regarding penny stock transactions. Issue 5: Clarity of findings in the ld. PCIT's order: The Tribunal rejected the appellant's argument that the ld. PCIT's order should be declared null and void due to lack of clarity. The Tribunal clarified that the ld. PCIT's decision to set aside the assessment for re-examination was appropriate, especially in light of the information received post-assessment. In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the ld. PCIT's decision to set aside the assessment order for re-examination. The judgment emphasizes the importance of examining claims for exemptions thoroughly and providing reasonable opportunities for hearings in such cases.
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