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TMI Blog2025 (1) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... acts by treating the order u/s. 147 r.w.s. 144B of the Act dated 28.03.2022 as erroneous and prejudicial to interest of revenue without appreciating the fact that there was no failure on the part of Ld. Assessing Officer for properly examining the issue and the order was passed after making requisite enquiries and verification on all issues. (c) The Ld. PCIT erred in law and facts in setting aside the assessment order u/s. 147 r.w.s. 144B of the Act and restoring the file to the Ld. Assessing Officer for passing a fresh assessment order without making any inquiry or causing to be made any inquiry." 3. The solitary grievance of the assessee is against the invocation of revisionary proceedings under section 263 of the Act. 4. The brief facts of the case are that the assessee is an individual and for the year under consideration filed its return of income on 15.10.2017 declaring a total income of Rs. 20,17,690/-. Subsequently, on the basis of the information received from the Investigation Wing that the assessee is one of the beneficiaries of penny scrip "Ojas Asset Reconstruction Company Ltd." traded through M/s. Durable Vinimay Pvt. Ltd., proceedings under section 147 were initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are premium/bogus unsecured loans. It is further seen from the case history notings that the AO has not called for any details with regard to the above facts and allowed the LTCG claimed by you as exempt u/s. 10(38) of the I.T. Act, which is not in order. 4. Therefore, it is considered that the order passed by the Assessing Officer for A.Y. 2016-17 is erroneous in so far as it is prejudicial to the interest of revenue within the meaning of section 263 of the I.T. Act, 1961. 5. You are therefore, allowed an opportunity of being heard and show-cause as to why an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment within the meaning of section 263 of the I.T. Act, may not be passed in your case. 6. In this connection, you are required to furnish your explanation on or before 16.11.2023 through e-proceeding in e-filing portal/e-mail alongwith complete details and documentary evidences. In case of non-compliance to this notice, it will be presumed that you have no objection to the proposed revision of the assessment order passed by the Assessing officer as discussed above." 6. Thus, vide notice issued under section 263 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share capital etc. as this is sham transaction entered with a similar purpose and intent. Thus, it was held that the AO has failed to understand the nature of transactions in the scrip of "Ojas Asset Reconstruction Company Ltd." and inquiry made by him is erroneous in the assessment proceedings, despite the fact that the reason for reopening the case was a transaction made in penny scrips of "Ojas Asset Reconstruction Company Ltd.". The learned PCIT held that the AO has failed to properly examine the issue, which has rendered the assessment order erroneous insofar as it is prejudicial to the interest of Revenue. Accordingly, the learned PCIT set aside the assessment order passed under section 147 r.w.s. 144B of the Act and directed the AO to pass a fresh assessment order considering the issues raised in the notice issued under section 263 of the Act in accordance with the law. Being aggrieved, the assessee is in appeal before us. 9. During the hearing, the learned Authorized Representative ("learned AR") submitted that both re-assessment proceedings initiated under section 147 and revisionary proceedings initiated under section 263 of the Act are based on the fact that the scrip o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 1,14,25,904/- in shares of a penny scrip viz. "OJAASSET traded through M/s Durable Vinimay Pvt. Ltd. during the F.Y. 2015-16 relevant to A.Y. 2016-17 but you have failed to disclose/explain in ITR for A.Y. 2016-17. The case has been selected for scrutiny u/s. 147 of I.T. Act. 1961. Accordingly, a notice u/s 148 of the I.T. Act. 1961 was issued to you on 28.03.2021 requesting to file ITR for the above referred A.Y. In connection with the above and completion of assessment proceedings under faceless scheme, you are requested to furnish point wise submission along following details/information produce supporting records for verification/examination:- 1. Please furnish details of all the demat/trading accounts held/closed by you during the year. 2. Please furnish copy of transaction statement of all demat/trading accounts showing net gain/loss for the year. 3. Please furnish the following details of investment held by you during the year: 1. Name of equity shares/bonds/debentures. 2. Date of purchase, Number of units purchased, purchase price per unit and total purchase consideration. 3. Date of sale, number of units sold, sale price per unit and total sale consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd share allotment/share certificate. After considering the various details as filed by the assessee in response to the notice issued during the re-assessment proceedings, the AO assessed the total income of the assessee at returned income and allowed the exemption claimed under section 10(38) vide order passed under section 147 r.w.s. 144B of the Act. 14. It is evident from the record that again on similar information as received from the Investigation Wing, the learned PCIT vide notice issued under section 263 of the Act alleged that the transaction of Rs. 1,14,25,904/- made by the assessee in the scrip of "Ojas Asset Reconstruction Company Ltd." traded through M/s Durable Vinimay Pvt Ltd. was for the purpose of claiming bogus Long-Term Capital Gains. From the perusal of the aforesaid notice, as noted in the foregoing paragraphs, it is evident that in order to make the aforesaid allegation the learned PCIT referred to the statement on oath of Directors of M/s Durable Vinimay Pvt Ltd., Sunshine Vintrade Pvt. Ltd., Shallot Vincom Pvt. Ltd. and M/s. Nextel Vinimay Pvt. Ltd., wherein they admitted that these companies are paper/shell companies having no actual business activities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grave;-vis the details filed by the assessee during the re-assessment proceedings and also produced before the learned PCIT. It is pertinent to note that it is also not the claim of the learned PCIT that the details filed before the AO during the re-assessment proceedings were not sufficient to decide the issue of whether the Long-Term Capital Gains earned by the assessee are genuine. Thus, neither in the revisionary proceedings under section 263 of the Act nor during the hearing before us it has been pointed out as to what inquiry was not conducted by the AO with regard to the issue of bogus Long- Term Capital Gains, which can lead to the conclusion that the assessment order is erroneous insofar it is prejudicial to the interest of the Revenue. Therefore, we do not find any merits in the submission of the Revenue that the provisions of Explanation - 2 to Section 263 of the Act are applicable to the facts of the present case. Thus, the revision order passed by the learned PCIT under section 263 is set aside. As a result, the grounds raised by the assessee are allowed.
17. In the result, the appeal by the assessee is allowed.
Order pronounced in the open Court on 28/01/2025 X X X X Extracts X X X X X X X X Extracts X X X X
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