9911796707
TMI Blog2020 (12) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO issued another letter dated 26.12.2017 in respect of the LTCG claim of the assessee, wherein question regarding price variation of 15/- to 565/- per share of M/s KPL [question number 8] and the investigation report [question number 10] was asked, the AO being satisfied with the replies, have taken a plausible view which is in line with the views expressed by various Hon ble High Courts and this Tribunal. AO s view which was taken by him, after enquiry as discussed supra cannot be termed as unsustainable view in the eyes of law and since AO s view is plausible view it could not have been interfered by Ld. Pr. CIT as held by Hon ble Supreme Court in Malabar Industries Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] - since the Ld. Pr. CIT failed to show/demonstrate that the order of the AO was erroneous in respect of accepting the claim of LTCG, we find that the condition precedent necessary to invoke the revisional jurisdiction to u/s 263 of the Act is absent and, therefore, we are inclined to allow the appeal of the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudicial to the interest of the revenue within the meaning of section 263 of the Act. Therefore, he issued notice (SCN reproduced by Ld. Pr. CIT) and thereafter gave opportunity of hearing to the assessee. 4. In the show cause notice (SCN), the Ld. Pr. CIT notes that he has examined the records and found that the AO has failed to conduct adequate and proper enquiries in respect of assessee's claim of exemption of LTCG. Then he alleged that the AO failed to utilize the information from the Directorate of Income-tax, Investigation which unearthed large economic scam of tax evasion in July, 2013 by conducting search and seizure operations on two companies dealing with share transactions ;and thereafter, he refers to the surveys in March 14 and August, 2014 which according to him, confirmed the earlier findings regarding the manipulation of market price of shares to provide entries of bogus LTCG and he refers to 84 BSE listed penny stock which had been used for generating bogus LTCG. According to him, the Investigation Wing also identified large number of beneficiaries such as the assessee who had participated in this operation of generating bogus LTCG and according to him, the DIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and law in respect of invoking revisional jurisdiction u/s. 263 of the Act is absent since the AO had taken note in the assessment order itself that the return of the assessee was selected for scrutiny through CASS in respect of suspicious sales transaction in shares as per the inputs of Investigating Wing. The Ld. AR drew our attention to para 1 of the assessment order wherein the AO has clearly noted that the reason for scrutiny in the case of assessee was due to suspicious sale transaction in shares (inputs from Investigation Wing ) and therefore, he issued 143(2) notice and sent the questionnaire by notice u/s. 142(1) on 13.11.2017. Thus, according to Ld. AR, the Ld. Pr. CIT's allegations that AO has not taken seriously the Investigation Wing's report itself is wrong. According to Ld. AR, pursuant to the notice of AO issued u/s. 143(2) of the Act, the assessee had furnished its financial statement for the FY 2014-15 relevant to AY 2015-16 and the computation of income for the relevant assessment year. According to the Ld. AR, the AO after examining the details of the LTCG claim as exempt u/s. 10(38) of the Act, issued notice along with the list of questionnaire u/s. 142(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had filed the following documents before the AO as well as the Ld. Pr. CIT to authenticate the transaction which resulted in their claim of LTCG: i) Profit & Loss Account and Balance Sheet for the FY 2014-15. ii) Bank statement for the FY 2014-15, iii) Purchase invoices of the shares of M/s. Kappa Pharma Ltd. along with the relevant receipt issued by the seller and its ledger. iv) Share certificates of Kappac Pharma Limited evidencing that the shares stood transferred in the assessee's name and that the name o the assessee appeared in the register of members of Kappac Pharma Limited. v) Contract Notes dated 22.04.2014 and 25.04.2014 evidencing sale of shares through registered stock broker, M/s. Intellect Stock Broking Limited along with dematerialization request form. 10. Thereafter the Ld. AR drew our attention to the order sheet of the AO which is kept in pages 47 to 49 of paper book from which the Ld. AR drew our attention to the fact that the cases were fixed from 01.05.2017 and there was several rounds of assessment proceedings on various dates and he also drew our attention to page 48 (order sheet) wherein assessment proceedings that was recorded on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional jurisdiction vested with him. Since the assessee has raised the legal validity of invocation of jurisdiction u/s. 263 of the Act, we may refresh ourselves with respect to this issue by referring to the Hon'ble supreme Court's decision in Malabar Industries Ltd. (supra) wherein their Lordship have held that twin conditions should be satisfied before jurisdiction u/s 263 of the Act is exercised by the ld. Pr. CIT. The twin conditions which need to be satisfied are that (i) the order of the Assessing Officer must be erroneous and (ii) as a consequence of passing an erroneous order, prejudice is caused to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous i.e. (i) if the Assessing Officer's order was passed on assumption of incorrect facts; or assumption of incorrect law; (ii) Assessing Officer's order is in violation of the principles of natural justice; (iii) if the AO's order is passed without application of mind; or (iv) if the AO has not investigated the issue before him. In the circumstances enumerated above only the order passed by the Assessing Officer can be termed as erroneous for the purpose of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through CASS and reason for scrutiny "suspicious sale transaction in shares (inputs from Investigation Wing)'' and thereafter, we note that the AO issued statutory notices to verify the claim. We note that the AO had issued notice u/s. 142(1) dated 13.11.2017 which is found placed at pages 24 of the paper book and we also note that the assessee had replied to the statutory notice vide letter dated 28.11.2017 and 27.12.2017 which are found placed at page 27 to 44 of the paper book. We note that the AO had issued another letter [reproduced supra] wherein he asked searching questions in respect of the LTCG claim of the assessee, wherein question regarding price variation of ₹ 15/- to Rs 565/- per share of M/s KPL [refer question number 8] and he confronts the assessee as to why he should not treat the claim of assessee as to evade tax on the strength of the investigation report of the wing prepared and disseminated in july 2015 [refer question number 10]. We also note that the AO had issued notices u/s. 133(6) of the Act to the registered broker M/s. Intellects Stock Broking Ltd. and the seller of the scrip M/s. Shalibhadra Steel Private Limited which are found placed at pages 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and seller are not known to each other and it happens on the click of a mouse and through de-mat accounts. If the Pr. CIT's allegation is correct then the transaction was fixed between the assessee's registered broker and the buyer's broker, then naturally if there was a foul play in assessee's case then naturally the investigation report of the department could have black listed the registered brokers involved in the purchase and sale of M/s KPL, which is not the case of Ld Pr CIT. Moreover, it is not the case of the SEBI that each and every transaction which happened in respect of 84 suspected companies shares (including M/s. KPL) are eye wash or non-genuine. May be there might be some unscrupulous persons involved in participating in the scam. That does not mean that everyone who had purchased and sold shares of M/s KPL can be branded as active participants in the scam for claiming bogus LTCG, unless there is some material to point a finger at assessee for participation in the scam. We note that in this case AO has called for confirmation from the assessee's broker and seller regarding the claim of LTCG and it is neither the case of Revenue that the assessee's registered broke ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
