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2017 (8) TMI 362 - AT - Income TaxRevision u/s 263 - sufficient ground for cancelling the assessment - set off of the loss on the sale of ZEEL shares against the profit of sale of Cebbco shares - trustee was holding the shares in the name of the trust - an order erroneous and prejudicial to the interests of the Revenue - Held that - Where the Assessing Officer do not agree with the assessee he should discuss the same in the assessment order so that the assessee should know the reasons thereon and file the appeal. In this case the Assessing Officer after examining the issue on the points as has been referred by the Commissioner of Income-tax preferred not to make the addition. Therefore, in our opinion there is no error in the order of the Assessing Officer if he has not discussed the issue relating to each and every issue in the assessment order. On this basis, it cannot be concluded that the Assessing Officer has not made any enquiry. It is only the query raised by the Assessing Officer and the submission made by the assessee will speak of where the Assessing Officer has applied his mind or not A perusal of the order passed by the Commissioner of Income-tax indicated that the assessment order passed by the Assessing Officer was cancelled on the ground that the Assessing Officer has not made proper enquiry and verification in respect of the issue as discussed above. This, in our considered opinion, cannot be sufficient ground for cancelling the assessment. While making the assessment order, it is the satisfaction of the Assessing Officer who made the enquiry and it should be touchstone of assessment order passed by him. No cogent material or evidence was brought to our knowledge by the learned Departmental representative which may prove that view taken by the Assessing Officer in the case of the assessee was unsustainable in law. Therefore, we are of the view that the order passed by the Commissioner of Income-tax is illegal and without jurisdiction. If the order passed by the Commissioner of Income-tax is sustained then this will permit the illegality to continue and the subsequent action is carried out on the illegal order is also illegal per se. - Decided in favour of assessee.
Issues Involved:
1. Legality of the order passed under section 263 of the Income-tax Act, 1961. 2. Whether the assessment order dated February 25, 2014, is erroneous and prejudicial to the interests of the Revenue. 3. Examination of the purchase and sale of Zee shares and the set-off of losses against the profits of Cebbco shares. 4. Examination of professional and consultancy expenses amounting to ?73,03,812. 5. Verification of short-term capital gain of ?41,40,175. Issue-wise Detailed Analysis: 1. Legality of the order passed under section 263 of the Income-tax Act, 1961: The appeal was filed by the assessee against the order of the Principal Commissioner of Income-tax (PCIT) passed under section 263 of the Income-tax Act, 1961. The PCIT considered the assessment order to be erroneous and prejudicial to the interests of the Revenue. The tribunal examined whether the conditions for invoking section 263 were satisfied, which requires the order to be both erroneous and prejudicial to the interests of the Revenue. 2. Whether the assessment order dated February 25, 2014, is erroneous and prejudicial to the interests of the Revenue: The tribunal noted that for invoking section 263, both conditions must be satisfied. An order can be considered erroneous if there is an incorrect assumption of facts or incorrect application of law. The tribunal emphasized that if the Assessing Officer (AO) has taken one of the possible views after making inquiries, the order cannot be deemed erroneous unless the view is unsustainable in law. 3. Examination of the purchase and sale of Zee shares and the set-off of losses against the profits of Cebbco shares: The PCIT observed that the AO did not verify or apply his mind to the purchase and sale of 17,00,000 Zee shares, which resulted in a loss of ?26,54,79,866. The PCIT alleged that the shares were held in the name of the trustee, Smt. Asha Gopal Gupta, and not in the name of the trust, contrary to the trust deed. The tribunal found that the AO had made inquiries and verified documents such as the loan agreement, contract notes, and bank statements. The tribunal held that the AO had taken a possible view and allowed the set-off of the loss against the short-term capital gain from the sale of Cebbco shares. 4. Examination of professional and consultancy expenses amounting to ?73,03,812: The PCIT alleged that the AO allowed these expenses without examination. The tribunal noted that the AO had called for bills and vouchers and verified the expenses incurred for the sale of Cebbco shares. The tribunal held that the AO had made the necessary inquiries and allowed the expenses as per the provisions of section 48 of the Income-tax Act. 5. Verification of short-term capital gain of ?41,40,175: The PCIT alleged that the AO did not examine the details of the assets sold and the expenditure incurred. The tribunal found that the AO had asked for and verified the original documents regarding the capital gain. The tribunal held that the AO had made the necessary inquiries and verified the details submitted by the assessee. Conclusion: The tribunal concluded that the AO had made the necessary inquiries and verifications regarding the issues raised by the PCIT. The tribunal held that the order passed by the AO was not erroneous or prejudicial to the interests of the Revenue. The tribunal quashed the order passed under section 263 and allowed the appeal of the assessee.
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