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TMI Blog2024 (12) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... , causing prejudice to the Revenue for a valid exercise of jurisdiction under section 263 of the Act. Thus, we hold that the impugned order passed by the ld.Pr.CIT u/s 263 of the Act is without any finding of error in the order of the AO and is therefore not sustainable in law. As in the present case brought out in the order of the PCIT do not demonstrate the concrete steps which the AO as per him failed to take considering the report of investigation before him. An order has to be a speaking and well-reasoned order bringing out clearly the basis for arriving at any findings. This is a basic rule/ principle of natural justice. There is no scope of any assumptions/ presumptions/reading between the lines, which can be left for the discretion of the appellate authorities. In the present case, as noted above by us, the Ld.PCIT except for stating that the AO has not conducted full inquiry on the issue, has not pointed out what remained to be considered and inquired into by him considering the information on the insight portal and considering the investigation and inquiry on the issue conducted during reassessment proceedings. PCIT seems to have left it for the appellate authorities to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the order of the ld.Pr.CIT, as also documents and case laws referred to before us during the course of hearing. 4. As transpires from the order of the ld.Pr.CIT, the revisionary power was exercised by him on an order passed under section 147 of the Act. The reopening under section 147 of the Act was resorted to for the reason that the AO was in possession of information that the Long Term Capital Gain earned by the assessee during the impugned year and claimed as exempt u/s 10(38) of the Act was in relation to a scrip which was found to be a penny stock and bogus. The alleged scrip, treated as penny stock by the department, is the scrip of Looks Health Services Ltd. ( LHSL for short), which the assessee had sold during the year and earned capital gains thereon to the tune of Rs. 1,02,18,980/-, having sold the same for a value of Rs. 1,07,90,400/-.No addition however was made on account of the same in the order passed under section 147 of the Act. The ld.Pr.CIT found the order passed to be erroneous so as to cause prejudice to the Revenue on the same issue and accordingly passed order u/s 263 of the Act. 5. Having gone through the order of the ld.Pr.CIT, we have failed to fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much and nothing more comes out from reading the contents of the insight portal in six pages of the ld.Pr.CIT s order. 9. After having reproduced the contents of the information contained in the insight portal, the ld.Pr.CIT finds the assessment order passed by the AO under section 147 of the Act, to be erroneous for the following reasons: i) The AO has not mentioned any justification for accepting the returned income in the assessment (page no.7 of the ld.Pr.CIT s order) ii) The AO did not go into the issue with respect to the whole amount (page no.8 of the order); iii) Finally in the conclusion at para-7 of his order, page no.17, ld.Pr.CIT holds that the order passed under section 147 of the Act is erroneous for the reason that the AO has not verified and confined to the information available in the insight portal and the specific reason of re-opening. 10. His finding in this regard at para 7 are reproduced hereunder: 7. In the light of facts and circumstances narrated above, I hold that the Assessing Officer has erred in not making addition u/s 68 rws 115BBE of the Act on account of bogus LTCG claimed exempt u/s 10(38) of the Act from a penny stock scrip of Looks Health Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices issued, and due reply was filed of the same. He pointed out that in the various replies filed, the assessee had pointed out that - these shares of LSHL were purchased by him in A.Y 12-13, much prior to sale in the impugned year i.e A.Y 14-15. That the shares were acquired in Private Placement allotment under Promoters quota having one of the terms of allotment that the shares will remain in lock in period of 1 year from the date of allotment. Payment for purchase of shares was made through banking channels and the shares were held in DEMAT form. That out of 25,000 shares purchased only 24800 were sold. That the shares had been purchased @ face value of Rs. 10/- and after 3 months the company had come with an IPO @ Rs. 40 per share. That the assessee because of SEBI regulations was unable to sell shares in the lock in period and did so therefore after 1 year that too on different dates. That there was no question of rigging of price of shares as alleged by the department since they were sold as per Standard Operating Procedure (SOP) and Rules framed by SEBI wherein shares were required to be sold online on live terminal by paying STT and the information of the buyer is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch merits consideration in the light of the findings that emerged from the DDIT Investigation report, the order passed by the AO was erroneous so as to cause prejudice to the Revenue. 18. There is no dispute with the above proposition. But the facts in the present case brought out in the order of the PCIT do not demonstrate the concrete steps which the AO as per him failed to take considering the report of investigation before him. An order has to be a speaking and well-reasoned order bringing out clearly the basis for arriving at any findings. This is a basic rule/ principle of natural justice. There is no scope of any assumptions/ presumptions/reading between the lines, which can be left for the discretion of the appellate authorities. 19. In the present case, as noted above by us, the Ld.PCIT except for stating that the AO has not conducted full inquiry on the issue, has not pointed out what remained to be considered and inquired into by him considering the information on the insight portal and considering the investigation and inquiry on the issue conducted during reassessment proceedings. The Ld.PCIT seems to have left it for the appellate authorities to derive the same. Such ..... 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