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TMI Blog2023 (4) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 263 only if the twin condition of the assessment order being erroneous and pre-judicial to the interest of the revenue is satisfied. 3. The learned Principal Commissioner Of Income tax ought to have seen that while invoking power under revisionary jurisdiction it is not permissible under law to substitute the view of the learned CIT by the view of the Assessing Officer. 4. The learned Pr CIT ought to have seen that the assessing officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualize a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. 5. The learned Principal Commissioner Of Income tax ought to have seen that the original assessment passed by the assessing officer under section 153A r.w.s 153C of the Income Tax Act was re-opened under the same pretext under which the assessment order is subjected to revision and that the learned AO after duly examining the documentary evidence filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y capital gain transactions declared by the assessee from sale of certain shares, and during the course of assessment proceedings, the assessee has filed all information in relation to investigation carried out by the IT Department, Kolkata and also filed necessary evidences. The AO, after considering necessary evidences has held that the assessee has never transacted with M/s. Onkar Supply Pvt Ltd and thus, accepted income declared by the assessee. 5. The PCIT, after considering relevant submissions of the assessee and also taken note of certain judicial precedence, opined that assessment order passed by the AO is erroneous in so far it is prejudicial to the interests of the revenue. In so far as the issue of bogus long term capital gains derived from sale of certain shares through certain companies, it is evident from the fact that Shri. Ashok Kumar Kayan, the broker acted as an entry operator in providing accommodation entries in long term capital gains through various companies. In his sworn statement, he has admitted the fact that, the assessee is one of the beneficiary of such bogus transactions. Therefore, rejected arguments of the assessee and set aside assessment order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er total income for the A. Y-2012-13. Assessment for the A.Y 2012-13 was completed u/s153C r.w.s 153A on 31/3/2015 determining assessed income at Rs. 7,87,460/-.On perusal of records , available, it is seen that during the FY 2011-12 the assessee had conjoined with a syndicate of shell companies / entry operators through trading in bogus penny scrips, which amounts to tune of Rs.26,43,225/- Details of the case are mentioned in the following paras: 1. During the course of survey proceedings by the department on various M/S Onkar Supply Pvt Ltd, it was found that it was involved in providing accommodation entry in the form of bogus long term capital gains in connivance with entry operators. M/S Onkar Supply Pvt Ltd is a Kolkata based company, had opened a current account with Dhanlaxmi bank, Howrah branch on 05/01/2011. After total credit transaction of more than RS. 25.54 crores, the company closed its account on 19/10/2012. On verification it was observed that the current account of the company was credited by transfer of funds through cash as well as non cash components from various entities and was immediately debited to the accounts of the other entities. Financial date of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry in connivance with entry operators. (b) M/s Onkar Supply Pvt. Ltd. is one of the shell companies controlled and managed by Shri Beni Prasad Lahoti, entry operator. (c) Shri Ashok Kumar Kayan, a broker acted as an entry operator in providing accommodation entries for long term capital. gains through trading in bogus penny scrips. (d) As per sworn statement of the broker Shri Ashok Kumar Kayan the assessee is one of the beneficiaries of such bogus transaction. (e) The assessee has introduced unaccounted cash into the books by way of accommodation entries provided by the broker. (f) Assessee had entered in the trading of M/s. Onkar Supply Pvt. Ltd. and traded shares of the said scrip of M/s Onkar Süpply Pvt. Ltd. and traded shares to the tune of Rs.26,43,225/- and the assessee had not brought the amount of Rs.26,43,225/- to tax in its books of account. 14. Thus, it could be seen very early that the AO was in possession of information and evidence that the assessee had benefitted from bogus long term capital gains transaction from the accommodation entry provided by the broker Shri Ashok Kumar Kayan, who is a known bogus entry operator. The said Ashok Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. Commissioner of Income-tax [2000] 243 TTR 83 (SC)2000] 109 Taxman 66 (SC) that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The Gawhati High Court Full bench in the case of CIT v Jawahar Bhattacharjee 341 ITR 434 (Gau) (FB) held that, Jurisdiction under section 263 can be exercised whenever it is found that the order of assessment was erroneous and prejudicial to the interests of the Revenue. Cases of assessment order passed on wrong assumption of facts, or incorrect application of law, without due application of mind or without following the principles of natural justice are not beyond the scope of section 263 of the Act." Further, it is relevant to refer to the decision of the Honourable Calcutta High Court. in the case of CIT Vs Maithan International 56 taxmann.com 283 (Calcutta) where in it " When the requisite enquiry was not made, the order is bound to be If the relevant enquiry was obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e share transfer transaction with the broker Mr. Ashok Kumar Kayan. The AO was very much having the sworn deposition of the share broker Mr. Ashok Kumar Kayan that he had only provided accommodation entries and that the assessee was one among the beneficiaries of long term capital gain. But without inquiry and without application of mind, the AO had accepted the transaction and failed to make addition, though prima facie evidence on record showed that the transaction was bogus. Thus, the order passed by the AO without making any inquiry and verification, without considering the evidence available with him; on wrong assumption of certain facts and nonapplication of mind over the information and evidence with him makes the assessment order erroneous and prejudicial to the interests of revenue. 18. It would also be relevant to refer to the decision of the the Hon'ble Madras High Court in the case of Smt. Tharakumari, TTO upheld the addition on account of bogus sale of shares under section 68 of the I.T. Act. Further, in the case of Pr.CIT v Prabha Jain dated 15th September 2021 (indiarnkanoon.org/doc/ 697648699/), the Court upheld the addition made u/s.68 in respect of claim of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was erroneous and prejudicial to the interests of the revenue. The reassessment order passed by the AO is erroneous as he had not made the relevant inquiry to verify the genuineness of the share transfer transaction, even though there was information with the AO that M/s Dhanlabh Merchandise Ltd, and M/s Bakra Prasisthan Ltd were shell companies, and sworn deposition of the broker Ashok kumar Kayan that he had only provided accommodation entries to the assessee to claim long term capital gain benefit. The typographical error in the reasons recorded, admitted by the assessee, does not affect the exercise of jurisdiction under sec. 263 when the pre-requisite conditions are satisfied. Therefore, there is no merit in these pleas and it does not in any manner affect the principles of natural justice. Nor is it arbitrary, as the jurisdictional functions are to be exercised within the confines prescribed by the statute. 22. In view of the foregoing discussion, the assessment order dated 02.12.2019 passed u/s 143(3) r.w.s 147 for the AY 2012-13 in the assessee's case is held to be erroneous and prejudicial to the interest of revenue and the same is setaside u/s 263 of the Income ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious companies. The PCIT, had also discussed the issue in light of modes of operating employed by entry providers and also linked bogus long term capital gains declared by the assessee to said operations, and thus rightly held that assessment order passed by the AO is erroneous in so far it is prejudicial to the interests of the revenue. He, further referring to the assessment order dated 02.12.2019 submitted that no doubt the assessee has submitted written submissions on the issue and enclosed certain information. But, fact remains that the AO has not carried out required enquiries he ought to have been carried out in light of explanation (2) to section 263 of the Act. Therefore, the PCIT has rightly assumed jurisdiction and set aside the assessment order and their order should be upheld. 8. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The provisions of section 263 of the Act, confers powers to PCIT to revise the assessment order, in case PCIT satisfies himself that the order passed by the AO is erroneous in so far as it is prejudicial to the interests of the revenue. In other words, in order to invoke ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department on M/s. Onkar Supply Pvt Ltd, it was found that said entity was involved in providing accommodation entries of bogus long term capital gains in connivance with entry operators. It was further noted that Shri. Ashok Kumar Kayan, in his oath u/s. 131 of the Act had admitted his role in providing accommodation entries in bogus penny stocks and amounts transacted through the current account of M/s. Onkar Supply Pvt Ltd. During the course of reassessment proceedings, the AO on the basis of said information examined the case of the assessee in light of detailed submissions filed by the assessee and after examining details filed by the assessee, the AO came to the conclusion that long term capital gains declared by the assessee from sale of certain shares is nothing to do with scripts dealt by M/s. Onkar Supply Pvt Ltd and thus, concluded assessment by accepting explanation furnished by the assessee. From the above, it is very clear that during re-assessment proceedings, the issue of long term capital gains declared by the assessee u/s. 10(38) has been thoroughly examined by the AO in light of various details filed by the assessee along with information received from Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of transactions. The relevant findings of the Delhi High Court are as under: "It is argued by the Revenue that the ITAT should have taken appropriate steps and remitted the matter, not merely confirming the CIT(A)'s opinion since the Investigation Wing's report confirmed unequivocally that the assessee was beneficiary to bogus transactions whereby the genuineness of identity of the shareholders, the genuineness and identity of the share applicants and the genuineness of transactions was suspect. This Court notices that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. It was not a case where the share applicants are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee as well as their ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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