9911796707
TMI Blog2024 (1) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to have considered the submissions made by the appellant and ought not to have invoked the proceedings u/s. 263 of the Act. 4. The learned Commissioner failed to appreciate the fact that AO has considered the issue in depth during the Original Assessment proceedings and specific queries had been raised on the transactions (which were under revision under section 263 of the Act) and in response to the same the Appellant had provided all the details as called for. 5. The Ld. CIT failed to consider that inadequate enquiry would not give an occasion to exercise jurisdiction under Section 263 of the Act. 6. The learned Commissioner ought to have appreciated the fact that the appellant had furnished all the details as required by the Assessing Officer in the course of assessment proceedings u/s. 143(3) of the Act and thereby the AO was satisfied with the claim of the appellant and therefore the revision initiated under section 263 of the act was uncalled for. 7. The Ld. Commissioner erred in holding that the order now passed was made without making proper enquiries or verification which should have been made and hence the assessment order passed was not only erroneous but al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue commodity exchange transactions." Accordingly, questionnaires were issued by the AO to the assessee which were replied. The AO accepted the returned income and completed the assessment. 5. Later on, the ld. Pr.CIT noticed that the order passed by the AO is erroneous and prejudicial to the interests of the revenue and issued show cause notice to the assessee on 19.02.2019 u/s. 263 of the Act, which is as under:- ""The assessment records of your firm, M/s Ambica Sales Corporation, for the assessment year 2014-15 were called for and examined by this office. In this case, an Order u/s 143(3) of the Income-tax Act, 1961 has been passed by the ACIT, Circle 5(2)(1), Bengaluru on 20.12.2016. On examination of the assessment order and the documents available in the assessment folder, it is seen that the Order passed u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue on account of the following facts - i) The return of income for the AY 2014-15 in your case was selected for scrutiny under the heading "Limited Scrutiny". One of the reasons for selection of scrutiny was "Large value commodity exchange transaction". In this regard, following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on capital was paid at Rs. 14,68,343/- on the credit balance of Rs. 1,57,12,659/- and thus exceeding the permissible limit of 9% resulting in excess deduction of Rs. 54,204/-. Similarly, in the case of partner, Shri Manoj M Kotari, no interest has been charged on the debit balance of Rs. 1,30,936/-. The Assessing Officer has not made any enquiry into these discrepancies. 2. Thus, in my consideration, the Assessing Officer has failed to make enquiries or verification which should have been made and has also provided relief without enquiring into the claim properly. Under such circumstances, I consider the assessment order to be erroneous in so far as it is prejudicial to the interest of revenue. Hence, you are requested to show cause as to why the assessment order should not be cancelled and a fresh assessment is directed to be done." 6. In response to the show cause notice, the assessee replied as under:- ""1. I am a bullion dealer how deal in gold and silver bars. My normal course is buying from recognized big dealers. In normal course of business, we buy in bulk quantity from banks and sell to customer in small quantities. So we require to hedge our commodity in MCX and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other issues. Aggrieved by the order of the Pr.CIT, the assessee is in appeal before the ITAT. 8. The ld. AR submitted that the AO has issued notice on the issue of loss incurred by the assessee and it was replied by the assessee which has been incorporated in the show cause notice issued by the Pr.CIT. After examining the assessee's submissions in detail, the AO had allowed the loss claimed by the assessee in the assessment order. Therefore, it cannot be said that the AO did not examine this issue. He further submitted that assessee is in the business of gold and silver bullion and traded through MCX for hedging its stock for reducing the loss. Therefore the loss arising through MCX transaction is not a speculative transaction as per clause (a) of section 43(5). Therefore, assessee is eligible to set off loss against other income. He further submitted that the Pr.CIT has to give finding on the issue raised by him and merely directing the AO for de novo assessment is not sufficient. He also submitted that no findings were given by the Pr.CIT on the other issues. The ld AR further submitted that the case was selected for limited scrutiny which was examined by the AO during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessee under section 43(5)(d) which deals with derivatives transactions. Therefore, the AO should have examined the issue under the provisions of section 43(5)(a) and the Board Circular dated 12.09.1960. Therefore the ld. Pr.CIT set aside the assessment order as erroneous and prejudicial to the interests of revenue and directed the AO for fresh assessment accordingly. 11. We note that the assessee had responded to the questionnaire issued by the AO regarding MCX transaction and after considering the submissions of the assessee as observed by the ld. Pr.CIT the AO accepted that it was not a speculative loss and allowed loss claimed by the assessee from hedging its stock through MCX transactions. We note from the show cause notice of the ld. Pr.CIT, during the course of assessment proceedings the assessee had filed the documents i.e., MCX Client Leder, MCX Settlement Ledger, Ledger account in the books of M/s. Multi Commodity Exchange India Ltd. and separate ledger for profits and loss from MCX and the AO allowed the loss of Rs. 3,10,97,497.94. During the revision proceedings before the ld. Pr.CIT, the assessee submitted that the transactions were done through MCX for he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sri Vasavai Gold & Bullion (P) Ltd. [2018] 92 taxmann.com 290 (Mad) supports the case of the assessee. 13. On the other issues of loss from rate deference and interest on partners capital also, the ld. Pr.CIT has directed the AO to examine these issues without giving any finding and merely directing the AO for examination of these issues is not sufficient. We note that the assessee had submitted reply to the ld. Pr.CIT, However, the ld. Pr.CIT instead of examining that it is prejudicial to the interest of revenue or not, he has merely giving direction to the AO. As per our considered opinion, the ld. Pr.CIT should have determined that the assessee's submission is not correct. Therefore merely giving direction to the AO is not sustainable. 14. We further note from the arguments of the ld. AR of the assessee that the case was selected for limited scrutiny, therefore the ld. PCIT cannot travel beyond the reason for selection of limited. Scrutiny. On carefully going through section 263 of the Act, the ld. Pr.CIT may call for and examine the record of any proceeding under the Act and consider any order passed therein by the AO as erroneous and prejudicial to the interests of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
