9911796707
TMI Blog2025 (4) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... f higher authorities by Ld. AO. 2.3 Following notices had been e-served to the assessee requesting to furnish/submit requisite documents: S No. Notices u/s Date of notice Compliance date 1. 148 of the Income Tax Act, 1961 31/03/2021 30 Days 2. 142(1) of the Income Tax Act, 1961 22/11/2022 07/12/2021 3. 142(1) of the Income Tax Act, 1961 14/12/2021 20/12/2021 4. 142(1) of the Income Tax Act, 1961 08/02/2022 11/02/2021 5. 142(1) of the Income Tax Act, 1961 10/03/2022 14/03/2021 2.4 That In response to the notice u/s 148, assessee filed a return of income on 27/04/2021 declaring total income of Rs. 19,23,970/ -. Subsequently a notice u/s 143(2) was issued to the assessee .In response to the notice u/s 142(1), the assessee furnished reply of the questionnaire, through e-compliance vide e-response dated 04/12/2021, 20/12/2021,11/02/2021,14/03/2022 and 21/03/2022 and submitted/furnished relevant documents, which were checked and verified. After considering the return of income, computation and other submissions/documents filed by the assessee, Assessment was completed on returned income i.e. Rs. 19,23,970/ -. 2.5 That the aforesaid order in assessment bears num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and on behalf of the Assessee appeared and Ld. DR for an on behalf of the Revenue appeared. Both the parties were heard patiently and at length on their respective submissions and arguments. Equal and fair opportunity was afforded to both the parties. 3.2 The Ld. AR has contended as follows: 1. The assessee is an individual and she is regularly filing her ITR and copy of return filed by her for the year under consideration are forming part of paper book at Pg 1-2 of the Paper Book. 2. The assessee had purchased shares of Indusind bank on 06.04.2009 and then sold such shares on 17.03.2015 i.e. in the year under consideration for 29,88,945 resulting in capital gain of Rs. 28,75,041/ which is exempt u/s 10(38) of the Act. 3. Further, the assessee had also purchased two immovable properties during the year under consideration amounting to Rs. 36,55,000/- and Rs. 2,24, 17,500/-respectively. 4.The case of the assessee was reopened u/s 147 of the Act on the reasons to believe that the assessee has claimed bogus long term capital gain (LTCG) of Rs. 60,65,724/- on sale of shares of Indusind Bank which has escaped assessment for AY 2015-16. The copy of the reasons recorded for reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.02.2024 (Pg 21-27 of Paper Book) and 01.03.2024 (Pg 30-34 of Paper Book) were filed wherein it was explained to the worthy PCIT that the assessee has not entered into any bogus transaction and a genuine transaction of sale of shares of Indusind bank has taken place during the year under consideration and following documents were filed to substantiate the claim of the assessee: * Copy of contract note of purchase of shares of Indusind Bank in FY 2009-10 (Pg 35 of Paper Book) * Copy of ITR of AY 2009-10 & 2010-11 depicting source of cash in hands of the assessee for purchase of shares of Indusind Bank (Pg 36-37 of Paper Book) * Copy of notarized affidavit filed by Teena Garg with respect to purchase of shares of Indusind bank (Pg 38-39 of Paper Book) * Copy of contract note of sale of shares of Indusind Bank in FY 2014-15 (Pg 40 of Paper Book) * Copy of net obligation bill issued by broker M/s DSE Financial Services Ltd. depicting issue of sale consideration of Rs. 29,88,945/- (Pg 41-42 of Paper Book) * Copy of Bank statements of the assessee in which the whole sale consideration of Rs 29,88,945/- is credited and no other amount is credited during the year regarding s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of acquisition of Rs. 1,13,904) and the genuineness of the said capital gain was proved by the assessee vide various documents listed in Para 3.2 (9)above. Therefore, after going through the detailed replies filed by the assessee and after due application of mind by the Ld. AO, the issue was accepted by the Ld. AO. 3.6 It was then contended by the Ld. AR that there was full and complete application of mind by the Ld. AO in order in assessment dt .. 20/03/2022 which has been presented to us by following tabular chart: Date of Notice Query raised by the AO Reply filed by the assessee Relevant Page of Paper Book 14.12.2021 Assessee claimed a bogus long term capital gain of Rs. 60,65,724/- by issuing forged contract notes during the FY 2014- 15 and the same is not disclosed in the ITR for AY 2015-16. Therefore it is requested to explain as to why such amount may not be treated as income for A.Y 2015-16. Assessee explained that he had sold shares for a consideration of Rs. 29,88,945/- only and evidences in the shape of contract notes of purchase and sale of shares were also filed alongwith. A specific request to provide information relied upon by the Ld. AO was also filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o placed on judgment of Hon'ble Supreme Court of India in case of PCIT Vs. SPML Infra Ltd. reported in (2024) 164 taxamnn.com 505(SC) and emphasis was laid on following extract: INCOME TAX: SLP dismissed against order of High Court that where Assessing Officer computed capital gain on sale of an asset by raising queries and after considering submissions of assessee, PCIT was not justified in assuming jurisdiction under section 263 by treating assessment order as erroneous. Reliance was also placed on judgement of Hon'ble Delhi High Court Case in PCIT Vs. Clix Finance India (P) reported in (2024) 160 TAxmann.com 357 (Delhi) and emphasis was laid on following extract :- " Where Assessing Officer during assessment proceeding issued a questionnaire to assessee regarding deduction on account of provision for non-performing assets and loss on interest rate swap and same was replied by assessee, it was not a case where no enquiry whatsoever had been conducted by Assessing Officer with respect to claims under consideration and, thus, revision order passed under section263 was not sustainable" Reliance was also placed on judgement of ITAT Chandigarh in case of Pawan Kumar Vs. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that since Assessing Officer has made inquiries in details and accepted genuineness of loans received by assessee, such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial to interest of revenue - Whether SLP against said impugned order was to be dismissed - Held, yes [Para 2] 3.9 The Ld. AR has placed reliance on decision of the ITAT Chandigarh Bench in case of LOIL Continental Foods Ltd. Vs. PCIT in ITA No. 577/Chd/2017 (Chd-Trib) & in particular following extract. The Id. CIT made reference to the Explanation -! to Section 263 and also decision of Hon'ble Supreme Court in the case of CIT Vs. Amitabhachan, 384 ITR 200. It H pertinent to note that Explanation-2 of section 263(1) would help the Id. Commissioner to take cognizance under section 263 of the Act, if no inquiry was conducted by the AO before finalizing the assessment order. No do \ibt the assessment orders are very brief, and did not have elaborate discussion on these issues, but it is pertinent to bear in mind that assessees have no control over the AO and cannot persuade him to draft the assessment order in a particular manner. It is the discretion of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the proceedings before Ld. PCIT the documentary evidence in the shape of purchase deeds (page 43-47, 48-59 of PB) were duly filed by the asssesseealongwith saving bank statement of PNB (page 60-61 of paper book) and so also loan statement (page 62-65 ) which were all filed before Ld. AO to prove the sources of purchase of property. It was contended that investments were made out of declared sources of income, out of bank account and bank loan. Details of two immovable explained and its sources are described in synopsis filed before us which are as under: " 1/2 share in property at village Buranwala, Tehsil Baddi, Distt Solan measuring 4 Bigha 2 Biswa (Registry at pg 43-47 of PB): Date Amount Source 28.07.2014 36,55,000.00 By Cheque No. 129636 under debit SBA/c no. 3887000100031296 in PNB, Ambala Cantt. "1/4 share in H.No. 1065, Sector - 27B, Chandigarh vide registered sale deed dated 30.12.2014 as per details below (Registry at Pg 48- 59 of PB) :- Total cost of Acquisition being 1/4 share 21350000.00 Add: Stamp Duty 1067500.00 Total 22417500.00 As regards the source of investment, the assessee has made investment under debit to his SB A/c No. 388700010003129 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for backend transactions of "Lifeline Securities Ltd." who as a broker purchased the shares from exchange whether in the name of the assessee or not because in so far as assessee is concerned she had paid for the shares of Indusind Bank in good faith. If the shares were not purchased from the exchange in the name of the assessee then fault is only of Life Line Securities Ltd. and not of the assessee herein. The Ld. AO sought all desired information on transaction from assessee and that the same were provided for. The Ld. AO basis evidence concluded that the Transaction had taken place during the year under consideration and were genuine. The AO wrongly accepted the reply of the assesssee and her claim of LTCG in casual and cursory manner is not at all justifiable.Further in support of purchase transaction of shares in cash affidavit by assessee was given; which should be proof enough. It was contended that no report of Investigation Wing of Income Tax Department was supplied to assessee and therefore the impugned order holding that impugned order of assessment is without any inquiry is bad in law. Reliance was placed on judgement of ITAT Bangalore in case of Mahesh Reddy Vs. PCIT r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 4.3 We notice basis provision of Section 263 of the Act that the power of revision are conferred upon superior officers of Department of Income Tax. In the instant case PCIT called for and examined the records of the assessment proceedings which had culminated into passing of the "impugned assessment order dt. 23/03/2022" in which the return of Income of Rs. 19,23,970/- filed by the assessee was accepted however before that the Ld. AO had issued a notice under section 148 dated 31/03/2021 which we notice is not placed on paper book and reply to it if any. Thereafter there is issuance of Notice under section 142(1) of the Act which is dated 14/12/2021 (PB page 3 & 4) whereby certain accounts and documents were requisitioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuation of assessee earlier reply dated 14/12/2021 it is stated that the assessee has sold only 3360 shares of Indusind Bank for a consideration of Rs. 29,88,945.04. These shares were acquired on 06/04/2009 for a consideration of Rs. 113904/- and the resultant Long Term Capital Gain amounted to Rs. 28,75,041/- which has been duly credited on 17/03/2015 in the assessee's SB A/c No. 3887000100031296 in PNB Ambala Cantt. Necessary evidence in support of same in form of purchase note and sale note were enclosed (PB page 35 & 40). 4.5 Thereafter we observe and note that there was issuance of yet another notice dated 10/03/2022 under section 142(1) of the Act wherein basis aforesaid reply and Form No. 26AS it was found that assessee has not considered following income in her return of income :- 1) Capital gain arising out of sale of 3360 shares of Indusind bank for a consideration of Rs. 29,88,745/ -. 2) Sale of immovable property to Amar Deepika on 30/07/2014 for sum of Rs. 36,55,000/ -. 3) Sale of immovable property to Gurpreet on 02/01/2015 for sum of Rs. 2,13,50,000/- assessee was asked to explain the above transaction and demonstrate how it is disclosed in return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had earned long term capital gain of Rs. 28,75,041/- and that it is exempt under section 10 and not liable to tax but on perusal of return column D-19, it is blank where assessee is required to show 'exempt income'. Accordingly the assessee was called explain as to why entire receipt for Rs. 29,38,945/- should not be treated as unexplained money u/s 69A of the Act. Thus an opportunity was given to assessee to show cause why proposed variation should not be made and the assessment should not be completed accordingly. (Page 14 & 15 of PB) The assessee in response to this notice by a reply (page 16 & 17 of PB) reiterated that the assessee has only sold 3360 shares of Indusind Bank for a consideration of Rs. 29,88,945/- which yielded to him long term capital gain as per details below: Sale proceeds on 17.03.2015 Rs. 2988945.04 Less purchase on 06.04.2009 Rs. 1,13,904.00 Long Term Capital Gain Rs. 28,75,041.00 The above amount was rightly claimed as exempt under section 10 being not liable to capital gain as the shares sold after 31/01/2018 are liable to tax by applying Face Value as on 31/01/2018 & Department contention of Long Term Capital Gain of Rs. 60,65,724/- is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings has been carried out hurriedly and PCIT has also accorded his approval without application of mind. No complete proposal u/s 151 has been provided to assessee. 4.7 We also observe that after aforesaid reply on 21/03/2022 (page 16 & 17 of Paper Book) the impugned assessment order dated 23/03/2022 came to be passed u/s 147 r.w.s 144B of the Act, accepting the return of income. Show cause Notice u/s 263 4.8 Thereafter we observe that a show cause notice dt. 15/03/2022 came to be issued to the assessee under section 263 of the Act (page 18-20 of paper book) in which it was alleged that assessee is one of the beneficiaries of bogus LTCG entries amounting to Rs. 60,65,724/- (Rs. 30,24,000/- from Dayanand Singh & Rs. 30,41,724/- from Life Line Securities Ltd.) during F.Y 2014-15 relevant to A.Y. 2015- 16. The Contract Notes were forged and on the date mentioned on contract notes neither shares were purchased on exchange in your name nor did the broker have these shares. LTCG was claimed as exempt under section 10(38) of the Act through investment in shares of Indusind Bank. The AO had completed the assessment by accepting your submission that you sold shares of Rs. 29,88,945.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 dated 30.03.2021 and in response to said notice, the assessee has filed return on 27.04.2021 vide AR no. 345377510270421 declaring the same income. After filing return u/s 148, the assessee requested for supply of copy of reasons recorded which was provided to assessee and assessee written a letter to AO on 20.12.2021 which is reproduced as below :- On request of furnishing reasons, you have mentioned information by way of Q. No. 6 which is reproduced as below :- As per information available, you have claimed bogus long term capital gain of Rs. 60,65,724/- through reputed stocks namely Lifeline Securities Limited PAN: AAACL3525A by issuing ante dated forged contract notes during the F. Y. 2014-15 relevant to the A.Y. 2015-16. However, you have not disclosed the same in your ITR for the A.Y. 2015-16. Therefore, it is requested to please explain as to why an amount of Rs. 60,65,724/- may not be treated as income for the a. Y. 2015-16 from unexplained source. The assessee desired the source of information and copy of statement on the basis of which department has form the opinion that Long Term capital gain of Rs 6065724/- otherwise not liable to tax u/s 10(38) are bogus, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gain of Rs2875041/- not liable to tax, necessary evidence in support of same has already been filed along with reply dated 11.02.2022. As regards the sale of immovable property at Rs 3655000/- to Amar Deepika on 30.07.2014 as mention in 26-AS, it is clarified that this information has been misread and correct version is that Amar Deepika had sold immovable property to assessee and assessee has deducted TDS while making payment and as such Amar Deepika is seller/deductee and as such there is no question of any capital gain out of said transactions. As regards the sale of immovable property at Rs 21350000/- to Gurpreet Kaur on 02.01.2015 as mention in 26-AS, first of all figure of Rs 213500000/- has been misprinted against real figure of Rs 21350000/-, more so, this information has also been misread and correct version is that Gurpreet Kaur had sold immovable property to assessee and assessee has deducted TDS while making payment and as such Gurpreet Kaur is seller/deductee and as such there is no question of any capital gain out of said transactions. Then after a SCN dated 15.03.2022 was issued as is necessary desired within the meaning of section 144B(1) (xii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 29,88,945.04 was credited in PNB A/c No. 3887000100031296. * Regarding transactions with Dayanand Singh amounting to Rs. 30,24,000/- it was stated that "AO could have easily turn down denial of assessee clearly indicating that AO did not have any cogent reason to reject the denial of assessee and as such AO had fully investigated the facts of the case and reach the conclusion not to make addition. * The assessee has only one Demat Account in "DSE Financial Services Ltd." wherein only sale proceeds of shares at Rs. 29,88,945/- .04 has duly been credited. There is no other demat account held by the assessee. * The assessee had another bank account no. 914010055708781 in Axis Bank. In the said Axis Bank Account no credit on account of sales are found to be appearing. No payment other than the payments of amount of Rs. 29,88,945.04 are seen. * Assessing Officer has taken a view which though may not be the only view but was a possible view. Basis replies filed by the assessee in response to Notice(s) 142(1) & 143(2) necessary replies were filed before Ld. AO, the enquiries were made hence order of Ld. AO of assessment cannot be called erroneous and prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of immovable properties. With regard to sale of shares Reliance is placed on 41-42 of paper book. We have perused the documents from page 43 to 65 of paper book with regard to purchase of property. 4.10 We notice that yet another notice dated 26/02/2024 was issued to the assessee in course of revision proceedings u/s 263 of the Act wherein following queries were raised :- (i) That on 06/04/2009 shares worth Rs. 1,13,904/- were purchases by the assessee. Please confirm whether these shares were purchased online through stock exchange or offline. Also furnish documentary evidence with regard to purchase of shares. (ii) Please explain the mode of payment for purchase of shares in F.Y. 2009-10. If payment was made through bank account, please furnish bank account statement of relevant period. (iii) Please furnish Demat Account statement for the period 01/04/2009 to 31/03/2015. The hearing was fixed for 01/03/2024 before PCIT. In reply dt. 01/03/2024 (page 30 to 34 of paper book ) and (35 to 42 of paper book) to the aforesaid notice dated 26/02/2024, it was brought to the notice of PCIT that during the course of the assessment proceedings it was placed on the file of AO that sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that of an accommodation entry. The name of the assessee appears at serial no. 1044ofthe List ofbeneficiaries annexed with the above verification report uploaded by the Investigation wing as per which she was shown to have purchased shares through the broker Lifeline Securities Limited. The contract notes were forged and on the date mentioned on contract notes, neither shares were purchased on the Exchange in the name of the assessee nor did the brokers have these shares. LTCG was claimed as exempt u/s 10(38) of the Act by the assesse whereas it was an accommodation entry. (ii) The AO accepted the reply of the assesse and her claim of LTCG in a casual and cursory manner. In the Purchase Contract Note of Life Line Securities Ltd., New Delhi, the assessee is mentioned to have purchased 3360 shares of Indusind Bank for Rs. 1,13,904/ -. No payment for the same is mentioned in the Purchase Contract Note. During assessment proceedings, no proof of payment for purchase of shares was furnished by the assessee. The AO also did not call for this information and did not examine the genuineness of purchase of shares. The AO erred in not taking cognizance of the facts mentioned in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of the Investigation Wing, the claim of the assessee that sum of Rs. 30,41,724/- credited in her bank account was on account of sale of shares was a false claim. An addition of the same was required to be made u/s 68 of the Act. The claim made by her in the return of income of exempt LTCG was also a false claim and was required to be disallowed. The AO erred in not taking cognizance of the facts mentioned in the report of the Investigation Wing. The amount of Rs. 30,41,724/- was omitted to be assessed as income of the assessee from unexplained sources though the proceedings u/s 148 had been initiated on this very ground. It is not a case of inadequate enquiry but of NO enquiry. Per contra we observe that the assessee during the course of the assessment proceedings before Ld. AO was expressly asked to produce accounts, documents and explanations with regard to the claim of long term capital gain of Rs. 60,65,724/ -. It was alleged that assessee has used bogus (forged contract notes issued by Life Line Securities ltd. PAN No.: AAACL3525A who has issued Antedated forged contract notes during F.Y. 2014-15 relevant to A.Y. 2015-16 the same was not declared by the assessee in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen this and further ought to have taken cognizance of the same, basis which assessee's case was reopened U/s 148. The Assessee never preventedLd.AO after the submission of purchase contract notes, not to verify and cross check the details mentioned in the purchase contract note. It was entirely upto Ld. AO to have tallied the purchase contact notes details with information and material available with Department before accepting the ROI. If AO has faulted on investigative and verification skills the assessee cannot be blamed. The initial burden of proof of producing document basis which LTCG of Rs. 2875041.00 was claimed was thus discharged and to establish contrary was the responsibility of the Ld. AO which too has not happened as after checking and verifying AO found all to be order and accepted ROI. PCIT thus h as erred in law in impugned order on this score. Further by virtue of Section 263 the PCIT has been even vested with power of "making or causing to be made such inquiry as he deems necessary" but in the instant case no such even bare or primafacie inquiry with regard to purchase contract notes which was alleged to have been as bogus and fraudulent was made. We theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of the revenue on this account as per clauses (a) and (b) of Explanation 2 to Sec 263 of the Act. During proceedings u/s 263 of the Act, the assessee has simply stated that the investment of Rs.36,55,000/- and of Rs.2, 13,50,000/- was made out of her declared sources and out of her bank account and bank loan. The submission of the assessee needs to be verified by the Assessing Officer in assessment proceedings. Return of income for A.Y. 2015-16 has been filed by the assessee declaring total income of Rs. 19,23,970/- only. We observe that by notice dt. 10/03/2022 issued in terms of section 142(1) of the Act Ld. AO had sought information on immovable property sold to Amar Deepkia on 30/07/2014 for sum of Rs. 36,55,000/- and further one more property to Gurpreet Kaur on 02/01/2015 for sum of Rs. 2,13,50,000/- on this score the assessee in reply (page 12 & 13 of paper book) had clearly stated that Department has misread the information on 26AS as it is case of purchase and not sale. The assessee then gave correct version that Amar Deepika is seller and assessee is buyer. It is the assessee who has deducted the TDS. Since it is a buy transaction question of capital gain does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh assessment is ordered. 4.14 We also hold that during the course of the proceedings u/s 147/148 of the Act several queries were raised and that the same were properly replied by the assessee. The same were duly considered. There was a "checking and verification" which fact is recorded. Therefore in law it cannot be said that assessment u/s 147/148 of the Act was done by Ld. AO without conducting any inquiry and verification& the case is one of no inquiry. 4.15 The Ld. PCIT in the impugned order has failed to establish erroneous character of assessment order and that too in such a manner that it is prejudicial to the interest of Revenue. 4.16 We further hold that in the assessment proceedings where Ld. AO is consciously satisfied with the material on record, does checking and verification and accepts the return of income then such an assessment order cannot be called erroneous and prejudicial to the interest of Revenue. In the instant case all this has happened. 4.17 We also hold that in proceedings u/s 263 reply to the show cause notice and all other queries of Ld. PCIT is satisfactorily given to establish that order in assessment of Ld. AO is not erroneous and prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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