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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 ..... d 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 u/s 263 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. Thus revision order passed by the learned PCIT under section 263 is set aside - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... h information/details. After considering the submission of the assessee, the Assessing Officer ("AO") vide order dated 28.03.2022 passed under section 147 r.w.s. 144B allowed the exemption claimed by the assessee under section 10(38) of the Act in respect of gains arising from the sale of shares and accepted the return of income filed by the assessee. 5. Subsequently, the learned PCIT issued a notice dated 03.11.2023 under section 263 of the Act observing as follows: - "On perusal of records, it is seen that you have filed your original return of income for A.Y. 2016-17 on 15.10.2017 declaring a total income at Rs. 20,17,690/-. Subsequently, your case was re-opened by issuance of notice u/s. 148 of the I.T. Act for filing your return of income within 30 days from the date of service of notice u/s. 148 of the Act. However, you have failed to comply to the said notice. 2. As per information available, you had made transaction of Rs. 1,14,25,904/- in penny scrips of "OJAASSET traded through M/s. Durable Vinimay Pvt. Ltd. during the year under consideration. However, it was noticed by the AO that you had failed to disclose the relevant to A.Y. 2016-17, you had a net gain of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of section 263 of the Act. 7. In response to the notice issued under section 263 of the Act, the assessee submitted that he had purchased the shares from M/s. Kamalakshi Finance Corporation Ltd. and he had not entered into any transaction with M/s. Durable Vinimay Pvt Ltd. during the year under consideration. The assessee also submitted that the AO has conducted all the necessary inquiries and verification to verify the genuineness of the Long-Term Capital Gains earned by the assessee on sale of shares of "Ojas Asset Reconstruction Company Ltd." and thus the contention that the AO had not called for any details with regard to the aforesaid sale transaction and the assessment order is erroneous and prejudicial to the interest of the Revenue lacks merit. 8. The learned PCIT, vide impugned order, disagreed with the submissions of the assessee and held that the Investigation Directorate, Delhi, conducted an in-depth analysis of dealing in the shares of "Ojas Asset Reconstruction Company Ltd." vis-à-vis trade patterns due to high volatility in the price of the aforesaid company and found that it is a penny scrip. The learned PCIT further held that the shares of "Ojas Asset R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2 to section 263 of the Act submitted that the assessment order is erroneous insofar as it is prejudicial to the interest of the Revenue as the same has been based without making inquiries or verification which should have been made. The learned DR further submitted that the assessment order was passed simply accepting the submissions of the assessee without making any further inquiry and thus the AO has not done the proper inquiry into the facts highlighted by the learned PCIT in its order passed under section 263 of the Act. 11. We have considered the submissions of both sides and perused the material available on record. In the present case, it is evident from the record that the initial proceedings initiated under section 147 and subsequent proceedings initiated under section 263 of the Act are based upon the information received from the Investigation Wing that "Ojas Asset Reconstruction Company Ltd." is a penny scrip and the assessee had traded in same through M/s. Durable Vinimay Pvt. Ltd., during the year under consideration, but has not disclosed/explained the same in its return of income filed for the year under consideration. We find that in both the notices issued u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. Complete details of all transaction made with M/s Durable Vinimay Pvt. Ltd. during the year. 5. Please provide the details of all bank accounts and copy/ies of all the bank a/c statement during the year. 6. Please furnish the copy of income tax return along with computation sheet filed in response to notice under section 148 of IT Act, 1961." 13. We find that in response to the aforesaid notice, the assessee filed its submissions on 03.01.2022 and 04.01.2022 submitting his bank account statement, balance sheet with detailed schedule, share certificate, allotment letter and transaction statement. We find that on 10.01.2022, the AO granted additional time to the assessee to submit the reply and necessary documents as requested vide notice issued under section 142(1) of the Act. Accordingly, in response thereto, the assessee vide its submission dated 13.01.2022 submitted capital account statement, fixed asset schedule with details, income computation statement, ledger account of the assessee in books of its broker, transaction statement, capital gains or loss computation statement, Demat account statement and profit and loss account along with detail schedule. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction with M/s. Durable Vinimay Pvt Ltd. In order to support its submission, we find that the assessee again furnished the following documents before the learned PCIT, as noted on page 78 of the paper book: Sr. No. Particulars Annexure 1. All share sale bills for F.Y. 2015-16 B1 2. Purchase invoice in respect of shares of Ojas Asset, Official receipt cum delivery note in respect of purchase of shares of Ojas Asset specifying the mode of payment being RTGS B2 3. Bank Statement evidencing payment for purchase via banking channels C 4. Broker ledger for F.Y. 2015-16 D 5. Contract notes of sale evidencing sale of shares on stock exchange E 6. Global Report for F.Y. 2015-16 F 7. All bank statements for F.Y. 2015-16 G 8. Computation of Capital Gains on sale of shares of Ojas Assets H 16. Thus, even during the proceedings before the learned PCIT under section 263 of the Act, the assessee in response to the notice provided a detailed explanation along with all the relevant documents regarding its transaction in shares of "Ojas Asset Reconstruction Company Ltd.". However, without addressing/dealing with any of the details filed by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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