9911796707
TMI Blog2024 (11) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open. AO has conducted an inquiry and was satisfied with the supporting evidences produced by the assessee in response to notice u/s 142(1) then it is not necessary for he AO to give an elaborate finding on the issue. CIT while passing revision order cannot remand the matter back to the AO for fresh adjudication simply because he himself was not sure about correctness of the claim of the assessee. Assessee appeal allowed. Accordingly in the facts and circumstances of the case when the order passed by the AO is not erroneous for want of inquiry then it is incumbent upon the Pr. CIT to give conclusive finding that the impugned order passed by the AO is not sustainable in law. Appeal of the assessee is allowed. - Shri Vijay Pal Rao, Judicial Member And Shri B.M. Biyani, Accountant Member For the Assessee : Shri S.N. Agrawal Pankaj Mogra, ARs For the Revenue : Shri Ram Kumar Yadav, CIT-DR ORDER PER VIJAY PAL RAO, JM: This appeal by the Assessee is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings u/s 263 while issuing show cause notice dated 22.02.2024. The Pr. CIT then passed the impugned order whereby the order passed by the AO u/s 147 r.w. section 144B dated 28.03.2022 was set aside with the direction to make de-novo assessment and passed an order as per law after making necessary verification, inquiry and investigation. Aggrieved by the impugned order the assessee has filed the present appeal. 3. Before the Tribunal Ld. AR of the assessee has submitted that during the scrutiny assessment the assessee filed a rectified return of income before the AO wherein it was clarified that the short terms capital loss was wrongly declared instead of business loss from F O/derivative transactions. Accordingly the assessee declared business loss of Rs. 3,56,04,837/- arising from derivative transactions. He has referred to the notice issued by the AO u/s 142(1) dated 19.06.2018 and questionnaire annexed to the said notice and submitted that the AO has specifically raised query about short term capital loss claimed by the assessee in the return of income which was replied by the assessee vide reply dated 17.07.2018. The assessee also filed rectified return and computat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO cannot be held as erroneous for want of inquiry. The AO has passed the order u/s 147 r.w. section 144B of the Act with due application of mind on the issue reply filed by the assessee and supporting evidences therefore, the Pr. CIT was not justified in passing the impugned order holding order of the AO as erroneous as well as prejudicial to the interest of revenue for want of proper inquiry. Ld. AR has contended that there must be material available on record or called for by the Pr. CIT to satisfy himself that the order passed by the AO is erroneous being not in accordance with law or the same has been passed without making any inquiry. Ld. AR has submitted that every loss of revenue as consequence of the order of the AO cannot be treated as prejudicial to the interest of the revenue if the AO adopts one of the courses permissible in law and it has resulted in loss of revenue. Further where two views are possible and the AO has taken one view which the Commissioner does not agree it cannot be treated as erroneous or prejudicial to the interest of the revenue unless view taken by the AO is unsustainable in law. 3.1 Ld. AR has further contended that the revisionary authority cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has not complied with the show cause notice issued by the Pr. CIT. The Pr. CIT has specifically pointed out that prior to the sale of lands resulting long term capital gain of Rs. 3,57,33,333/- there was no transaction by the assessee resulting loss which shows that the alleged transactions of derivative or fictitious entries of loss are to avoid the tax on the long term capital earned by the assessee from the transactions of sale of long term capital/lands. He has relied upon the impugned order of the Pr. CIT. 5. We have considered the rival submissions as well as relevant material on record. The assessee filed his return of income on 25th September 2016 declaring total income of Rs. 5,35,510/-. The case was selected for limited scrutiny through CASS and the AO issued show cause notice u/s 142(1) dated 19th June 2018 placed at page no.5 6 of the paper book as under: Notice under Sub Section (1) of Section 142 of the Income Tax Act, 1961 Sir/Madam/ M/s, In connection with the assessment for the assessment year 2016-17 you are required to: a) Fumish or cause to be furnished on or before 22/06/2018 at 11:30 AM the accounts and documents specified overleaf. b) Fumish and verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of units with broker's notes in respect of purchase of these securities. Pleas also furnish evidence with regards to the transfer of these units. The assessee carrying the business of F O trading in which he suffered a business loss amounting to Rs. 3,56,04,837/- which was wrongly mentioned under short term capital loss by article clerk in return of income. The mistakes is deeply regretted. The assessee corrected this mistake by filing rectified return which is attached alongwith revised computation of income. Kindly consider the Rectified Return of Income and complete the assessment proceeding considering the revised return. Attached in E-Proceeding:- Bank Accounts Details along with Bank Statements F O Ledgers along with Broker's Notes and Rectified Return of Income and computation thereof Copy of Purchase and Sale Deed of Immovable Property. 5.3 The assessee explained that he is carrying business of F O trading in which he suffered a business of loss Rs. 3,56,04,837/- which was wrongly mentioned under short term capital loss in the return of income. The mistake was then rectified by filing rectified return along with revised computation of income. After considering the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid broker was found engaged in facilitating fictitious losses through coordinated and premeditated trading in illiquid stock options. In response to notice u/s 148 the assessee filed its return of income declaring the same income as declared in the revised return filed during the course of original scrutiny assessment. Thereafter the AO issued show cause notice u/s 142(1) dated 09.03.2022 placed at page no.14F 14G as under: Notice under sub-section (1) of Section 142 of the Income Tax Act, 1961 Dear Taxpayer, Kindly refer to ongoing assessment proceedings in your case for A.Y. 2016-17 under Faceless Assessment Scheme, 2019. 2. We appreciate the anxiety and uncertainty that is facing all of us in the times of Covid-19. This communication is to assist you in ending one uncertainty, which is pending o-Assessment in your case for the Assessment Year 2016-17. 3. You are requested and required to kindly furnish or cause to be fumished on or before 16/03/2022 by 12:04 PM, the accounts and documents specified in the Annexure to this notice. 4. The accounts or documents, as mentioned above, are required to be submitted online electronically in E- proceedings' facility through your acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se furnish the computation of the capital loss along with documentary evidences. The assessee carrying the business of F O trading in which he suffered a business loss amounting to Rs. 3,56,04,837/- which was wrongly mentioned under the head short term capital loss by article clerk in return of income. The mistake was inadvertently repeated while filing the Return in response to the Notice. We enclose herewith the Revised return and Computation for your kind perusal and we request you to kindly proceed on the Revised Return u/s 148. 4. With respect to the reasons for re-opening communicated to you viz. notice ws 143(2) of the Act, it is established that you have booked loss amounting to Rs. 3.27,45,549/- pertaining to an entity named 'XPRO SECURITIES PVT LTD. You are requested to shoto cause as to why the amount of Rs. 3,27,45,549/- should not be added to your returned income. The Assessee has entered into Derivatives Transactions through Broker M/s Xpro Securities and incurred losses. The Assessee has incurred losses of Rs. 3,27,45,549/- for which the Assessee submits herewith the documentary proofs and supporting by way of Contract Notes and Ledger Copies and Bank Statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out by the assessee company. The Futures and Options Trading System provides a fully automated trading environment for screen-based, floor-less trading on a nationwide basis and an online monitoring and surveillance mechanism. The system supports an order driven market and provides complete transparency of trading operations. Every day in the stock exchange crores of transactions is being done and each second hundreds of orders are placed for each stock. It may please be noted that any investor who enters into any transaction in the stock exchange does not know the details of a counter party to the transaction. In the screen-based transaction, the assessee enters his order which gets accepted by the stock exchange. The trading system of NSE and BSE ensures that neither the identity of counterparty nor the volume of transaction is known to anyone. We hope this will do the needful The assessee is willing and ready to furnish further information/explanation as may be required. 5.6 Thus, the assessee produced all the details of the transactions resulting loss along with contract notes, ledger account, bank account showing payments through banking channels. The AO then passed reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACT, 1961-Assessment Year 2016-17. In this regard, a hearing in the matter is fixed on 29/02/2024 at 01:13 PM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link incometaxindiaefiling.gov.in Please refer to the above. 2. On perusal of the records, it has been observed that the assessee had filed his Income Tax Return (hereinafter referred as ITR ) for AY 2016-17 at income of Rs. 5,35,510/-. The assessment order u/s 143(3) was passed on 09/12/2018 accepting the returned income. Further, the case was reopened u/s 147 on the basis of information that the assessee had booked fictitious losses through the concern M/s Xpro Securities during the FY 2015-16 relevant to AY 2016-17. Subsequently. assessment order u/s 147 r.w.s. 144B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest of revenue. 6. You are hereby given an opportunity of being heard to explain as to why the proposed revision should not be carried out. For this purpose, your reply should be received on or before 29/02/2024. On the scheduled date, you may either appear in person or get yourself represented by a representative duly authorized by you as per section 288 of the Act. You may also make your written submissions in lieu of personal appearance. If such written submissions are received on or before the scheduled date, the same shall be duly considered for the purpose of the proceedings u/s 263 of the Act. 7. Please note that you may also file your reply through mail [email protected] along with all relevant records and documents. It is not necessary to attend the office for this purpose. In case of non compliance, the matter will be decided on merits of the case and information available on record. 5.8 The Commissioner has initiated the proceedings u/s 263 on the very issue of claim of loss from the derivative transactions carried out through M/s Xpro Securities. In para 5 of the show cause notice the Commissioner has stated that the AO has not at all verified these is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be a case that once the assessee received the funds on account of transfer of properties he has carried out these derivative transactions. Therefore, in absence of any fact or material brought on record to show that the view taken by the AO is either contrary to the facts or to the law the initiation of proceedings u/s 263 is not warranted. It is pertinent to note that when the issue was already taken up for scrutiny twice by the AO during the scrutiny assessment u/s 143(3) and then in the reassessment proceedings u/s 147 r.w. section 144B of the Act then the Pr. CIT cannot again ask the AO to re-examine the issue which would be nothing but unnecessary harassment to the assessee to face an unending proceedings on the same issue. It is not a case of complete lack of inquiry on the part of the AO as manifest from the record that show cause notices were issued by the AO raising specific quarries on the this point which were replied by the assessee along with supporting evidences. Therefore, once the AO has conducted the inquiry on this issue and was satisfied with the reply and explanation filed by the assessee along with supporting evidences then the order of the AO cannot be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter according due opportunities of being heard to the assessee. 5.10 This find of the Pr. CIT clearly shows that he has set aside the matters of the record of the AO for re-examination of the issue and to make denovo assessment which means that the commissioner was also not certain about correctness of the claim of the assessee. This course of action on the part of the commissioner is not permissible when the AO has conducted inquiry twice and has taken view based on the material on record and therefore, the only course available with the Pr. CIT u/s 263 was to give a conclusive finding that the view taken by the AO is not sustainable under the law. The Hon ble Delhi High Court in case of CIT vs. Sunbeam Auto Ltd. (supra ) while dealing an issue of lack of inquiry and inadequate inquiry has held in para 12 as under: 12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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