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TMI Blog2016 (10) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... for revision u/s 263 to was to hold that the loss has been wrongly allowed by the AO and view taken by the AO was not at all a plausible view in the eyes of law. Unless such a finding is recorded by Ld. PCIT, especially where exhaustive exercise has been done by the AO, the order of the AO in allowing the impugned loss could not have been held to be erroneous. Same is missing here, Thus, we find that the order passed by the Ld. PCIT is without application of proper mind and beyond the parameters of law and we find the same to be nullity in the eyes of law and the same is, therefore, hereby quashed. - Decided in favour of assessee - I.T.A. No. 2284/Mum/2015 - - - Dated:- 21-9-2016 - Shri C.N. Prasad (Judicial Member) And Shri Ashwani Taneja (Accountant Member) Appellant by : Shri Satish R Mody Respondent by : Shri Sanjay Singh, CIT-DR ORDER Per Ashwani Taneja, AM This appeal has been filed by the assessee against the order passed u/s 263 by the Principal Commissioner of Income-tax-9, Mumbai [hereinafter called Ld. PCIT] dt 20-03-2015 for A.Y. 2011-12 on the following grounds: YOUR APPELLANT CRAVES LEAVE TO RAISE FOLLOWING GROUNDS OF APPEAL WITHOUT PREJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation regarding interest expenses but held the assessment order as erroneous on the first issue raised in the show cause notice. It was submitted that in the show cause notice various allegations have been made which are factually incorrect and prima facie contrary to the documentary evidence held on record. It was submitted that at many places it has been mentioned in the show cause notice that no enquiry was made by the Assessing Officer and no details were called for whereas the fact is that detailed enquiries were made, replies were submitted and details and documentary evidences were submitted which were duly examined by the Assessing Officer before passing the impugned assessment order. Our attention has been drawn on the exhaustive paper book filed by the assessee containing various documentary evidences submitted before the AO during the course of assessment proceedings which were indeed omitted to be examined by the Ld. PCIT while passing the order u/s 263. It was lastly submitted that in any case, before passing the order u/s 263 and holding the assessment order as erroneous, Ld. PCIT has nowhere given a finding that the impugned operational loss of Rsa.8.79 crores wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- taken from the profit and loss account for the relevant accounting year. Further, on perusal of the profit and loss account for the relevant assessment year to arrive at the said loss of ₹ 11,21,87,728 you have shown operational expenses of ₹ 8,79,80,969/- (sch.6) and further perusal of the said schedule the same is found to be as under: 1) Depository charges ₹ 534 2) Other operational losses ₹ 8,79,80,162 Total ₹ 8,79,80,696 This figure of ₹ 8,79,80,162/- shown under other operating losses seems to be a trading loss incurred by the company out of its business of financial and capital market activities as reported by the Tax Auditors in Col. No.8 of form 3 CD, being its main business activity. However, on perusal of the assessment records it is noticed that neither any details nor any explanation to arrive at the said loss of ₹ 8,79,80,162/- is either filed by the assessee or called for by the Assessing Officer. No examination of the books of account, transaction accounts of the share tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any verification or application of mind with respect to the aforesaid issue. On the other hand, the Ld. Counsel demonstrated before us that aforesaid allegation is prima facie incorrect on facts. Our attention was drawn on various details and evidences enclosed in the paper book which was furnished to the Assessing Officer. Our attention was also drawn upon reply submitted to the Assessing Officer dt 11-11-2013 and item No.9 of the said reply which reads as follows: 9. Point No.18 Purchases and sales of shares and stock of shares, Refer Annexure- D . For expenses, operative expenses [It is loss on sale of shares] and administration expenses, monthly ledger copies are enclosed herewith PAN No. where applicable will be given shortly. Refer Annexure E . 7. Similarly, at page 66 of the paper book, the assessee has enclosed quantitative stock position for the period 01-04-2010 to 31-03-2011 of all the shares showing scrip-wise opening balance, purchases, sale, Profit / loss and closing balance providing quantitative as well as value. The said table clearly depicts the amount of loss arrived at ₹ 8.79 crores. The paper book also contains item-wise details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs India Ltd (depository participant of Central Depository Services India Ltd) showing excessive details and break up of all the transactions. Further, assessee vide its letter dated 15-3-2014 to the Assessing Officer submitted scrip-wise stock of shares. Further, assessee submitted a letter dated 31-1-2014 to the Addl Commissioner of Income-tax, i.e. supervising authority of the Assessing Officer with a copy to the Assessing Officer wherein the assessee brought on record, in summarized manner, various details and documentary evidences that has been submitted to remove / surpass all the doubts of the Assessing Officer. We find it relevant to reproduce the same below, the relevant part of the letter:- The above assessment proceedings are undertaken by the ITO-1(1)(2). The facts of the case are as under: We have last submitted details before your goodself on 24-1-2014 and request your goodself to grant us time for two weeks in order prepare the details required by your goodself as per your Questionnaire dt.27-12-2013. For your information we have submitted details of purchase and sales on our personal appearance on 20-1- 2014 and 24-1-2014 with detail explaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciated in the eyes of law. The assumption of jurisdiction u/s 263 is based upon a valid show cause notice issued u/s 263. The entire premise of the Ld. Principal CIT in issuing show cause notice u/s 263 for holding the impugned assessment order as erroneous and prejudicial to the interest of the revenue is built upon incorrect facts. Further, no proper allegation could be made against the assessee by the Ld. PCIT while framing order u/s 263. Inspite of exhaustive exercise done in the 263 proceedings, the ld. PCIT could not find anything to hold that the impugned loss was not allowable at all by any stretch of imagination under the law. When exhaustive details and documentary evidences were submitted by the assessee before the AO and the assessment order was framed after examining the exhaustive details and evidences, the recourse available for the Ld. PCIT for revision u/s 263 to was to hold that the loss has been wrongly allowed by the AO and view taken by the AO was not at all a plausible view in the eyes of law. Unless such a finding is recorded by Ld. PCIT, especially where exhaustive exercise has been done by the AO, the order of the AO in allowing the impugned loss could n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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