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TMI Blog2016 (11) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... by : S/Shri S.N. Soparkar, P. M. Mehta Parin Shah, ARs Revenue by : Shri R.N. Parbat, CIT-DR ORDER Per N. K. Billaiya, Accountant Member With this appeal the assessee has challenged the correctness of the order of the Principal Commissioner of Income-Tax (Central), Ahmedabad dated 30.03.2015 pertaining to AY 2010-11. 2. The assessee has strongly challenged the order of the Principal CIT, stating that the Principal CIT erred in assuming his jurisdiction u/s 263 of the Act which is bad in law. 3. Rival contentions have been heard at length and with the assistance of the ld. Sr. Counsels, we have carefully perused the documentary evidences brought on record in the light of Rule 18(6) of the Income-Tax (Appellate Tribunal) Rules. 4. The assessment was made vide order dated 26.03.2013 u/s 143(3) of the Act, by which the returned income of ₹ 1.99 crores has been accepted as the assessed income. 5. Drawing support from the provisions of Section 263 of the Act, the Principal CIT issued a show-cause notice dated 19.02.2015. The relevant parts of the notice read as under:- 3. It is observed that you have admitted by your own that the transaction in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are insignificant. Investment in share shown as investment in assessee's balance sheet is assessee's prerogative. It is also pertinent to mention here that despite having number of bank accounts in Ahmedabad, the assessee opened a new bank account with Bhuj Mercantile Co-op. Bank, Ahmedabad on 23/06/2009 and on the same date, bank account was also opened by Sheetal Bio Agrotech Ltd. in the same bank and same branch. Thereafter, on 30/06/2009, cash was deposited in the Bank account of M/s. Sheetal Bio Agrotech Ltd. and on the same day, funds were transferred to Shri Shital P. Shah and further transferred to Radhe Developers India Ltd., which clearly indicate that funds deposited in cash and transferred to the account of assessee is unexplained cash credit and source of same should have been be verified by the Assessing Officer by issuing notice u/s. 133(6) /131(1) of the Act. In view of the financial status of the assessee, his capacity for making investment in shares is doubtful. The nature of borrowings are also suspicious, because Shri Pratik R. Shah, the Director of the company M/s. Sheetal Bio Agrotech Ltd. stated that he was providing accommodation entries only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to again complete the assessment after making appropriate enquiry regarding the source of unsecured loan of ₹ 3.4 crores, as mentioned above. The Assessing Officer is directed to verify complete trail of funds and make suitable addition in the case of the beneficiaries of the transaction. Regarding profit made on transaction in shares, the Assessing Officer is directed to examine the claim of the assessee regarding the same being capital gain or business income. While doing so, the principle of natural justice should be followed by him. 9. A perusal of these factual matrix shows that in the year 2006 the assessee was holding 11,000 shares of Radhe Developers India Ltd. The shares were of ₹ 10/- each. On 24.10.2007, the assessee applied for 21 lacs convertible warrants at ₹ 18/- each and on 04.01.2008, the assessee was allotted the warrants. On 21.08.2009, the warrants were converted into shares of ₹ 10/- each against one warrant and accordingly, the assessee got 2.10 crores shares at ₹ 1/- each. Between 02.02.2010 and 31.03.2010, the assessee sold 1.02 crores shares at profit. 10. The aforementioned transactions were questioned by the AD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details sought by the DCIT, Circle-11, Ahmedabad. At this stage, it would be pertinent to refer to the submissions of the DR who stated that though the first notice was issued by the DCIT, Circle-11, Ahmedabad, but thereafter the records were transmitted to DCIT, Central Circle-1(3). Therefore, the present Assessing Officer had no opportunity to examine the details/documents. This contention of the ld. DR does not hold any water, because on 23.03.2013 the assessee had filed affidavit explaining the nature, source, identity and genuineness of the entire transactions of allotment of share warrant and conversion of the same to shares and subsequently selling them at profit. This affidavit alongwith the necessary details were filed with the present Assessing Officer. 12. The Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., reported in (1993) 203 ITR 108 (Bom), has held that the decision of the Income-tax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard........... . This is further fortified by the observation of the Assessing Officer in his order which reads as under:- In respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order under section 263 which is not disputed by the assessee before ITAT. And the Hon ble High Court, after considering the facts, held as under:- 6. It can thus be seen that though final order of assessment was silent on this aspect, the Assessing Officer had carried out inquiries about the nature of sale of land and about the validity of the assessee's claim of deduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could not be exercised, called for no interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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