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TMI Blog2022 (9) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 10(38) of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. We thus find no error in the order of Ld. AO so as to justify the initiation of 263 proceedings by the Ld. Pr. CIT. assessee is thus allowed. No error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned principal CIT is not sustainable and therefore, we quash the same. Hence the ground of appeal of the assessee is allowed. - ITA Nos. 75/AHD/2020 & 72/AHD/2020 - - - Dated:- 20-7-2022 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER Assessee by : Shri Chetan Agarwal, A.R Revenue by : Shri Vijay Kumar Jaiswal, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of penny stock but the AO did not consider the same. As per the report of investigation wing of Kolkata, the individuals namely Ms. Sarojini Ramesh kataria and Mr. Ramesh G Kataria were involved in price manipulation because they were connected with entities which were merged with M/s Sunrise Asian Ltd. The SEBI also suspended the trading of M/s Sunrise Asian Ltd during the period October 2012 to September 2015 on being found the instance of manipulation in the impugned shares. Therefore, all the transaction of sale and purchase in the shares of M/s Sunrise Asian Ltd were illegal. However, the AO without verifying these facts carefully, accepted the genuineness of exempted long term capital gain claimed by the assessee merely on strength of primary evidences submitted by him. Thus, the AO erred in not conducting the proper and requisite enquiry despite having the report from DDIT and SEBI available on ITD portal which is prejudicial to the interest of Revenue. The learned Pr. CIT also placed reliance on the judgment of Hon ble Supreme Court in case of Rajmandir Estate Pvt. Ltd. vs. CIT reported in 245 taxman 127 where validity of order was upheld on the fact that money laund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is Assessing Officer s prerogative to make inquiry to the extent he feels proper. The Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. There were a number of judicial precedent by various High Courts in this regard. 9.2 The Delhi High Court in the case of CIT Vs. Sunbeam Auto 332 ITR 167 (Del.), made a distinction between lack of inquiry and inadequate inquiry. The Hon ble court held that where the AO has made inquiry prior to the completion of assessment, the same cannot be set aside u/s 263 of the Act on the ground of inadequate inquiry. The relevant observation of Hon ble Delhi High Court reads as under: 12. .. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation. Therefore, it cannot be said that it is a case of lack of inquiry . 9.3 The Hon ble Bombay High Court in case of Gabriel India Ltd. [1993] 203 ITR 108 (Bom), discussed the law on this aspect in length in the following manner: The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer completed assessment by making addition of said amount to assessee's income. The Principal Commissioner passed a revised order under section 263 on ground that Assessing Officer had failed to carry out proper inquiries with respect to assessee's on money receipt. In appeal, the Tribunal took a view that Assessing Officer had carried out detailed inquiries which included assessee's on-money transactions and Tribunal, thus, set aside the revised order passed by Commissioner. The Hon ble High Court upheld Tribunal's order. The Hon ble Supreme Court while dismissing the SLP filed by the Department held as under:- We have heard learned counsel for the Revenue and perused the documents on record. In particular, the Tribunal has in the impugned judgment referred to the detailed correspondence between Assessing Officer and the assessee during the course of assessment proceedings to come to a conclusion that the Assessing Officer had carried out detailed inquiries which includes assessee's on-money transactions. It was on account of these findings that the Tribunal was prompted to reverse the order of revision. No question of law arises. Tax Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act by the AO and submission in reply of such notices. i. Notice dated 07-06-2017: Complete supporting evidences for large value sale transaction in shares and exempt long term capital gains shown in return (Penny Stock tab in ITS) ii. Notice dated 03-11-2017 In respect of long term capital gain, please furnish the copy of demat account ledger account, Profit loss account in broker book, sale/purchase bills, demat account at the time of purchase of shares or copy of physical share certificate and copy of bank statement from which the sale/purchase transaction have been done. Reply of the assessee vide letter dated 17-08-2017 Copy of Demat account for the period 01.04.2014 to 31.03.2015. Sources of investment for the funding in share transactions. Reply of the assessee vide letter dated 24-08-2017 4) Copy of demat statement is enclosed herewith. 5) Copy of bank statement reflecting the payment for purchase of shares on 21/09/2011 is enclosed herewith. We are also enclosing the copy of zerox of SS along with share application form, share certificate and other relevant papers 6) Copy of sale bills are also enclosed herew ..... X X X X Extracts X X X X X X X X Extracts X X X X
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