9911796707
TMI Blog2023 (12) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the provisions of section 263 both the conditions that the order must be erroneous and prejudicial to the interest of revenue, needs to be satisfied. Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of the assessee, copies of contract notes, DEMAT account and order sheet entries reveal the correct state of affairs in respect of the issue raised in the impugned revisionary proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment, assessee appeared and furnished copy of tax audit report in Form No. 3CB and 3CD, bank statement, computation of total income, Form 26AS as well as books of account including cash book and ledger with supporting bills, memos, vouchers which were test checked. Ld. AO in the impugned assessment order noted that assessee had explained the mis-match of turnover in service tax return and ITR. He also noted that assessee had explained cash deposits and sale transactions in shares. After considering the submissions and explanations furnished by the assessee, Ld. AO completed the assessment at an assessed income of Rs. 35,50,070/-. 3.2. Subsequently, Ld. Pr. CIT on examination of the assessment records noticed that AO had not properly examined the issue of suspicious sale transaction in shares and exempt LTCG claimed by the assessee. He noted that assessee had claimed LTCG of Rs. 97,21,494/- and exemption sought which has been allowed by the Ld. AO without required verification which ought to have been carried out by him. Accordingly, a show cause notice u/s. 263 of the Act dated 12.03.2020 was issued on the assessee. 3.3. In the said notice in para 4, Ld. Pr. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of LTCG in the return and computation of income placed on record. He referred to the paper book containing 35 pages placed on record to corroborate the submissions made by him. Copy of order sheet of the assessment proceedings forms part of the paper book placed at pages 10 and 11. He referred to the order sheet entry dated 23.06.2017 wherein Ld. AO has asked the assessee to furnish details of sale of shares. On the next entry in the order sheet dated 11.07.2017, Ld. AO has noted that assessee has furnished the details of shares which are examined and discussed with the assessee. Ld. Counsel also referred to office note forming part of the assessment order placed at page 12 wherein at point no. 4, ld. AO has categorically stated that transaction in shares i.e. sale of shares have been examined with reference to STT payments. STT has been paid at the time of sale of shares. LTCG calculated on sale of shares is Rs. 97,21,494/- which is exempted . 4.1. Reference was made by the ld. Counsel to the written submission made by the assessee in the course of assessment proceedings vide submission dated 11.07.2017 wherein it is stated that detailed statement of share transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary order passed by Ld. Pr. CIT, there is no reference as to scrip of Lifeline Drugs Pharma Ltd. which has been tainted as paper/shell/bogus company so as to doubt the gains earned by the assessee. According to him, it is a genuine transaction executed on the regulated Stock Exchange and corroborated by all the relevant documentary evidence. 5. Per contra, Ld. CIT, DR placed reliance on the decision of Hon ble High Court of Calcutta in the case of PCIT Vs. Swati Bajaj (2020) 139 taxmann.com 352 (Cal) to submit that similar issue was dealt therein relating to penny stock transactions which was held against the assessee. To this effect, a specific query was raised by the Bench to understand if there is any such decision by the Hon ble jurisdictional High court of Guwahati since present case before the Tribunal is at its Guwahati Bench. Ld. CIT, DR could not cite any such decision on the query. 5.1. He placed reliance on the order of Ld. Pr. CIT and submitted that no prejudice is caused to the assessee since Ld. Pr. CIT has directed the Ld. AO to examine the issue afresh and pass the assessment order accordingly. 6. We have heard the rival contentions and perused the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermed as erroneous order. Looking at the second limb as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue, one has to understand what is prejudicial to the interest of the revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. 8. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
