M/s PG Commercials Private Limited , Kolkata V. ITO, Ward-10(4), Kolkata

ITA 104/KOL/2020

• Counselvise Citation: [2021] 129 COUNSELVISE.COM (IT) 9844 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-05-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 27-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JOHN VINCENT D LONGSTICH
• Assessee Lawyers: S M SURANA
• Keywords: Principle of natural justice; Assessment record; Penny stocks; Rule 8D; Set aside
• Section: 142(1); 14A; 143(2); 263

Judgement Text

ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 1 | P A GE , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI A. T. VARKEY, JM] I.T.A. NO. 104/KOL/2020 ASSESSMENT YEAR: 2014-15 M/S P G COMMERCIALS PVT. LTD. (PAN: AABCP 7532 N) VS. ITO, WARD-10(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 06.05.2021 DATE OF PRONOUNCEMENT 18.06.2021 FOR THE APPELLANT SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT SHRI JOHN VINCENT D. LONGSTICH, CIT DR ORDER PER SHRI A. T. VARKEY, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PCIT-4, KOLKATA DATED 21.02.2019 PASSED U/S 263 OF INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2014-15. 2. BY PREFERRING THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF LD. PCIT TO INVOKE THE REVISIONAL JURISDICTION U/S 263 OF TH E ACT AGAINST THE ASSESSMENT ORDER PASSED BY THE AO DATED 21.12.2016. ACCORDING TO LD. A.R., SHRI S. M. SURANA, THE LD. PCIT HAS ERRONEOUSLY INVOKED THE JURISDICTION U/S 263 WITHOU T SATISFYING THE CONDITION PRECEDENT AS PRESCRIBED U/S 263 OF THE ACT. CONSEQUENTLY, ACCORD ING TO HIM, THE IMPUGNED ORDER OF LD. PCIT HAS BEEN PASSED WITHOUT REQUISITE JURISDICTIO N AND, THEREFORE, NULL IN THE EYES OF LAW. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE DEC LARED TOTAL INCOME OF RS. 6,56,120/- FOR AY 2014-15 AND THE CASE WAS SELECTED FOR SCRUTINY T HROUGH CASS (COMPUTER AIDED SCRUTINY SELECTION) INTER ALIA FOR THE LOSS IN SHAR ES ALSO. ACCORDING TO LD. A.R., THE AO AFTER ISSUING NOTICE U/S 143(2) DATED 03.09.2015 AND NOTI CE U/S 142(1) DATED 14.07.2016/25.11.2016 WHEREIN THE AO HAD ASKED FOR THE DETAILS IN RESPECT OF SHORT TERM ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 2 | P A GE CAPITAL LOSS AND ASKED IN RESPECT OF IT SPECIFIC DE TAILS ENUMERATED BY QUERIES NUMBERED FROM (I) TO (XIII) AND THEREAFTER TAKING NOTE OF THE DET AILED REPLY OF THE ASSESSEE ALONG WITH SUPPORTING DOCUMENTS FILED DURING THE ASSESSMENT PR OCEEDINGS, THE AO BEING SATISFIED DID NOT TO DRAW ANY ADVERSE INFERENCE/VIEW AGAINST THE CLAIM MADE BY THE ASSESSEE ON THIS ISSUE (SHORT TERM CAPITAL LOSS) AND PASSED AN ASSESSMENT ORDER DATED 21.12.2016 MAKING AN ADDITION OF RS. 30,200/- U/S 14A OF THE ACT READ WI TH RULE 8D OF THE RULES. THEREAFTER, THE LD. PCIT-4, KOLKATA PROPOSED TO INTERFERE WITH THE ASSESSMENT ORDER BY EXERCISING HIS REVISIONAL POWER U/S 263 OF THE ACT ON THE ISSUE OF SHORT TERM CAPITAL LOSS ON THE THREE SCRIPS VIZ., M/S LUMINITECH, M/S SHRSHATEX & M/S UNOINDL ( HEREINAFTER THE SCRIPS). ACCORDING TO LD. PCIT, THESE ARE PENNY STOCKS AS PE R THE REPORT OF THE DIRECTORATE OF INVESTIGATION AND CBDTS CIRCULAR DATED 16.03.2016 WHICH DEBARS SHORT TERM CAPITAL LOSS ARISING FROM THE TRANSACTION OF SUCH PENNY STOCK. A CCORDING TO LD. PCIT FROM A PERUSAL OF THE ASSESSMENT RECORDS THERE WAS NO SPECIFIC ENQUIR Y AND INVESTIGATION UNDERTAKEN BY THE AO ON THIS ISSUE AND THE SAID LOSS WAS THUS ERRONEO USLY ALLOWED BY THE AO. THEREFORE HE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 23.01.2 019 REQUIRING IT TO SUBMIT CLARIFICATION OR EXPLANATION TO ITS CLAIM OF THE AFOREMENTIONED L OSS ON SCRIPS AND ALSO TO SHOW CAUSE WHY REMEDIAL ACTION U/S 263 OF THE ACT SHOULD NOT BE TA KEN AGAINST THE ASSESSMENT ORDER DATED 21.12.2016. THEREAFTER, THE LD. PCIT IN HIS IMPUGNE D ORDER NOTES THAT THE ASSESSEE INCURRED SHORT TERM CAPITAL LOSS TO THE TUNE OF RS. 97,12,49 1/- ON THE AFORESAID SCRIPS AND IN THE COMPUTATION OF INCOME THE SAID LOSS WAS SET OFF AGA INST THE OTHER HEADS OF INCOME. ACCORDING TO LD. PCIT, EVEN THOUGH THE AO HAD SPECI FIC INFORMATION THAT THE STOCK FROM WHICH THE ASSESSEE HAD INCURRED THE LOSS WERE FROM PENNY STOCK, STILL HE HAD ALLOWED IT. ACCORDING TO LD. PCIT, THE AO FAILED TO EXAMINE THE ISSUE FOR WHICH THE CASE HAS BEEN SELECTED FOR SCRUTINY. ACCORDING TO LD. PCIT, THE A O WAS SUPPOSED TO ENQUIRE INTO THE FACT AS TO WHETHER THE INVESTMENT MADE BY THE ASSESSEE I N THE AFORESAID SHARES WAS BONA FIDE OR NOT? AND FOR THAT ACCORDING TO LD. PCIT, THE AO SHO ULD HAVE EXAMINED THE BACKGROUND OF INVESTMENT WHICH WAS NOT DONE. FURTHER ACCORDING TO LD. PCIT, THE AO FAILED TO ENQUIRE WHETHER THE ASSESSEE IS A REGULAR INVESTOR OR THE I NVESTMENT WAS DELIBERATELY MADE FOR AVAILING THE LOSS TO SET OFF THE GAIN/INCOME WHICH WERE TAXABLE. MOREOVER, ACCORDING TO LD. PCIT, THE AO HAS NEITHER DISCUSSED ABOUT DETAILS OF CLAIMING OF LOSS ON SALE OF SHARES BY CALLING FOR INFORMATION FROM THE CONCERNED BROKERS/ SEBI AND AO HAS NOT RECORDED THE ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 3 | P A GE STATEMENT OF DIRECTORS OF THE ASSESSEE COMPANY IN O RDER TO CHECK THE GENUINENESS OF THE TRANSACTION. THUS, ACCORDING TO LD. PCIT THE NON-EN QUIRY ON THE ISSUE OF LOSS FROM SALE OF SCRIPS WAS PREJUDICIAL TO THE INTEREST OF THE REVEN UE. THEREFORE, HE WAS PLEASED TO HOLD THAT THE AOS ORDER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE ALSO IN ACCORDANCE WITH EXPLANATION 2(C ) U/S 263 OF THE ACT AND THEREFORE SET ASIDE THE ORDER OF AO AND DIRECTED THE AO TO FRAME THE FRESH ASSESSMENT ORDER. 4. AGGRIEVED BY THE AFORESAID ACTION OF LD. PCIT, T HE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT ASSESSMENT ORDER PASSED BY THE AO DATED 21.12.2016 FOR AY 2014 -15 HAS BEEN INTERDICTED BY THE LD. PCIT BY EXERCISING HIS REVISIONAL JURISDICTION U/S 263 OF THE ACT BY HOLDING THE AOS ORDER TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVEN UE ON THE ISSUE OF SHORT TERM CAPITAL LOSS FROM THREE SCRIPS (SUPRA). ACCORDING TO LD. PCIT, T HE AO HAS NOT ENQUIRED INTO THIS ISSUE MAKING THE ORDER PASSED BY THE AO ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE. HOWEVER ACCORDING TO THE ASSESSEE, THE AO HAD DULY CARRIED OUT ENQUIRY INTO THE ISSUE OF SHORT TERM CAPITAL LOSS ON THE SCRIPS WHICH ARE ALL EGED BY THE LD. PCIT NOT TO HAVE BEEN ENQUIRED BY ISSUING NOTICE U/S 142(1) OF THE ACT ON 25.11.2016 AND PURSUANT TO WHICH THE ASSESSEE HAD REPLIED ON 01.12.2016 ALONG WITH SUPPO RTING DOCUMENTS. SO, ACCORDING TO ASSESSEE, THE AO AFTER HAVING GONE THROUGH THE REP LY OF THE ASSESSEE TO THE SPECIFIC QUERIES RAISED BY THE AO ON THIS ISSUE AND AFTER PERUSAL OF DOCUMENTS FILED ON THE ISSUE, AFTER BEING SATISFIED THE AO HAD ACCEPTED THE TRANSACTION ON W HICH THE ASSESSEE CLAIMED THE SHORT TERM CAPITAL LOSS. AND THEREFORE THE ACTION OF AO CANNOT BE TERMED AS A CASE OF NO-ENQUIRY ON THE ISSUE OF SHORT TERM CAPITAL LOSS ON THE SCRIPS AS C LAIMED BY THE ASSESSEE, AND SO, ACCORDING TO ASSESSEE, THE LD. PCIT ERRED IN HIS FACTUAL ASSUMPT ION ON THIS ISSUE, I.E, THE AO HAS NOT CONDUCTED ANY ENQUIRY. THUS ACCORDING TO THE ASSES SEE, THE AO HAS DISCHARGED HIS ROLE OF THE INVESTIGATOR AND AN ADJUDICATOR WHILE FRAMING T HE SCRUTINY ASSESSMENT ORDER AND NO FAULT ON THIS SCORE (I.E. ENQUIRY) OF THIS ISSUE CAN BE A TTRIBUTED ON THE AO ON THE ISSUE OF SHORT TERM CAPITAL LOSS. THEREFORE, ACCORDING TO LD. AR, THE JURISDICTIONAL CONDITION PRECEDENT TO INVOKE THE REVISIONAL JURISDICTION U/S 263 WAS ON W RONG FOOTING AND ERRONEOUS ASSUMPTION OF FACTS, THEREFORE, THE LD. PCITS ACTION IS BAD I N LAW. ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 4 | P A GE 6. BEFORE WE ADVERT TO THE FACTS AND LAW INVOLVED I N THIS LIS BEFORE US, LET US REVISE THE LAW GOVERNING THE ISSUE BEFORE US. THE ASSESSEE HAS CHALLENGED IN THE FIRST PLACE, THE VERY USURPATION OF JURISDICTION BY LD. PRINCIPAL CIT TO INVOKE HIS REVISIONAL POWERS ENJOYED U/S 263 OF THE ACT. THEREFORE, FIRST WE HAVE TO SEE WHE THER THE REQUISITE JURISDICTION NECESSARY TO ASSUME REVISIONAL JURISDICTION IS EXISTING IN THIS CASE BEFORE THE PR. CIT RIGHTFULLY EXERCISES HIS REVISIONAL POWER. FOR THAT, WE HAVE TO EXAMINE AS TO WHETHER IN THE FIRST PLACE THE ORDER OF THE ASSESSING OFFICER FOUND FAULT BY THE PRINCIP AL CIT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THAT, LET US TA KE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DOWN BY THE HONBLE APEX COURT IN MALABAR INDUSTRIE S LTD. VS. CIT [2000] 243 ITR 83(SC) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE C IT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND SO F AR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) IF THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT; OR (II) INCORRECT APPLICATION OF LAW; OR (III)ASSES SING OFFICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND; (V) IF THE AO HAS NOT INVESTIG ATED THE ISSUE BEFORE HIM;[ BECAUSE AO HAS TO DISCHARGE DUAL ROLE OF AN INVESTIGATOR AS WE LL AS THAT OF AN ADJUDICATOR ]THEN IN AFORESAID ANY EVENT THE ORDER PASSED BY THE ASSESSI NG OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO THE SECOND LIMB, WHICH IS REQ UIRED TO BE EXAMINED AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO T HE INTEREST OF REVENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICI AL TO THE INTEREST OF THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIES (SUPRA) HELD THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HEL D THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN TH E ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS TO THE REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW. ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 5 | P A GE 7. IN ORDER TO ADJUDICATE THIS ISSUE AS TO WHETHER THE LD. PCIT HAD SATISFIED THE CONDITION PRECEDENT FOR INVOKING THE REVISIONAL JUR ISDICTION U/S 263 OF THE ACT, WE HAVE TO SEE, WHETHER THE AO HAS EXERCISED HIS DUAL ROLE AS AN INVESTIGATOR AND AS AN ADJUDICATOR ON THE ISSUE RAISED BY THE LD. PCIT. ACCORDING TO LD. PCIT, THE AO HAS NOT CARRIED OUT ENQUIRY IN RESPECT OF THE SHORT TERM CAPITAL LOSS C LAIMED BY THE ASSESSEE ON THE THREE SCRIPS (SUPRA). NOW WE HAVE TO SEE WHETHER THE LD. PCIT IS CORRECT OR NOT. FOR THAT THE LD. AR HAS DRAWN OUR ATTENTION TO PAGE 25-26 OF THE PB WHEREI N THE NOTICE ISSUED BY THE AO U/S 142(1) DATED 25.11.2016 WHICH IS REPRODUCED AS UNDE R: YOUR CASE FOR THE A.Y. 2014-15 HAS BEEN SELECTED F OR SCRUTINY . IN THIS REGARD, NOTICE U/S 143(2) I. T. ACT HAS BEEN DULY SERVED UPON YOU, IN CONTINUATI ON OF THE SAID NOTICE YOU ARE REQUESTED TO FURNISH THE FOLLOWING PARTICULARS/ DOCUMENTS-: 1. NATURE OF BUSINESS 2. COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDE RATION 3. STATEMENT OF ALL BANK A/CS FOR THE F.Y.2013-14 R ELEVANT TO A.Y. 2014-15 4. DETAILS OF INVESTMENT IN EQUITY SHARES DURING TH E YEAR UNDER CONSIDERATION (I) NAME & ADDRESS OF THE COMPANY IN WHICH INVESTME NT IS MADE (II) COPY OF ALLOTMENT LETTER (III) COPY OF 'CONTRACT NOTE' IN RESPECT OF QUOTED SHARES (IV) DATE OF ALLOTMENT OF SHARES (V) NO, OF SHARES (VI) VALUE OF SHARES (VII) SOURCE OF PAYMENT MADE FOR OBTAINING SHARES (VIII) IN THIS-REGARD, YOU ARE ALSO REQUESTED TO FU RNISH THE EVIDENCE OF MODE OF SUCH PAYMENT ALONGWITH THE DETAILS OF CHEQUE NUMBERS AND THE COPY OF BANK STATEMENT (F.Y. 2013-14) HIGHLIGHTING THE RELEVANT ENTRIES THEREIN SHOWING THE TRANSACTION 5. DETAILS OF 'SUNDRY CREDITORS' WITH ADDRESS AND A MOUNT 6. PARTY WISE PURCHASE STATEMENT WITH ADDRESS AND A MOUNT 7. DETAILS OF SHARE APPLICATION MONEY RECEIVED DURI NG THE YEAR UNDER CONSIDERATION 8. PLEASE FURNISH THE FOLLOWING DETAILS IN RESPECT OF SHORT TERM CAPITAL LOSS (I) NAME OF SCRIP (II) DATE OF PURCHASE (III) QUANTITY (IV) RATE (V) MODE OF PAYMENT (VI) DATE OF SALE (VII) QUANTITY SOLD (VIII) RATE (IX) DATE OF DIVIDEND DECLARATION (X) AMOUNT OF DIVIDEND (XI) STT PAID (XII) S. T. CAPITAL LOSS (XIII) COPY OF BROKERS 'CONTRACT NOTE' ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 6 | P A GE IN THIS REGARD, YOU ARE ALSO REQUESTED TO FURNISH T HE EVIDENCE OF MODE OF SUCH PAYMENT ALONGWITH THE DETAILS OF CHEQUE NUMBERS AND THE COPY OF BANK STATEMENT (F.Y, 2013-14) HIGHLIGHTING THE RELEVANT ENTRIES THEREIN SHOWING THE TRANSACTION 9. 'THERE IS MISMATCH IN THE SALES TURNOVER AS REPO RTED IN ANNUAL AUDITED REPORT IN COMPARISON OF INCOME TAX RETURN FOR THE YEAR UNDER CONSIDERATION IN THIS CONTEXT, AND THIS IS TO INFORM YOU THAT, YO UR CASE FOR THE A.Y. 2014-15 HAS BEEN FIXED FOR HEARING ON 01/12/2016 AT 03:30 P.M. YOU ARE THEREFO RE DIRECTED TO APPEAR BEFORE THE UNDERSIGNED ON THE SAID DATE EITHER IN PERSON OR THROUGH AN AUT HORIZED REPRESENTATIVE AND FURNISH THE PARTICULARS/DOCUMENTS AS ENUMERATED ABOVE. 8. FROM A PERUSAL OF THE QUESTION NO.4 (SUPRA), WE NOTE THAT THE AO HAS ASKED FOR THE DETAILS OF INVESTMENT IN EQUITY SHARES AND ASKED TH E SPECIFIC DETAILS REGARDING IT ARE ASKED FROM CLAUSE (I) TO (VIII). AND A PERUSAL OF QUESTI ON NO. 8 IT WOULD REVEAL THAT THE AO HAD ASKED THE ASSESSEE TO FURNISH THE DETAILS IN RESPEC T OF SHORT TERM CAPITAL LOSS AND ALSO ASKED FOR SPECIFIC DETAILS PERTAINING TO IT WHICH ARE EN UMERATED FROM QUERIES RAISED FROM CLAUSE (I) TO (XIII) AND FURTHER THE AO ALSO HAS DIRECTED THE ASSESSEE TO FURNISH THE EVIDENCE OF MODE OF SUCH PAYMENT ALONG WITH DETAILS OF CHEQUE NUMBER S AND THE COPY OF BANK STATEMENT HIGHLIGHTING THE RELEVANT ENTRIES EVIDENCING THE TR ANSACTION. WE NOTE THAT THE ASSESSEE HAD FILED THE REPLY TO THE AOS NOTICE DATED 25.11.2016 ON 01.12.2016 WHICH IS FOUND PLACED AT PAGE 27 ALONG WITH SUPPORTING DOCUMENTS CALLED FOR BY THE AO WHICH EVIDENCES SUPPORT TRANSACTION IN SHARES WHICH RESULTED IN LOSS AND TH E SAME IS FOUND PLACED AT PAGE 28 TO 69 OF PB. FROM THE REPLY OF THE ASSESSEE TO THE AO, IT I S NOTED THAT THE ASSESSEE HAD FILED, INTER ALIA, THE DETAILS OF PURCHASE AND SALE OF SHARES IN QUESTION ALONG WITH COPY OF CONTRACT NOTES ,BILLS, COPY OF BANK STATEMENTS AND THUS ALONG WITH THE REPLY TO THE NOTICE OF AO, THE ASSESSEE HAD FILED THE DETAILS OF SHORT TERM CAPITA L LOSS ALONG WITH SUPPORTING MATERIAL. THEREAFTER THE AO HAS PASSED THE ASSESSMENT ORDER W ITHOUT DRAWING ANY ADVERSE VIEW. IN THE AFORESAID SCENARIO THE ONLY INFERENCE THAT CAN BE DRAWN IS THAT THE AO HAVING GONE THROUGH THE REPLY AND THE SUPPORTING MATERIAL BEING SATISFIED WITH THE SAME HAS NOT PREFERRED TO DRAW ANY ADVERSE VIEW AGAINST THE CLAI M OF THE ASSESSEE IN RESPECT OF SHORT TERM CAPITAL LOSS FROM THE SALE OF THREE SCRIPS. THEREFO RE, THE ALLEGATION ON THE BASIS OF WHICH THE LD. PCIT WANTED TO INTERFERE IN THE AOS ORDER I.E. THE NON-ENQUIRY BY THE AO ON THE CLAIM OF THE SHORT TERM CAPITAL LOSS ON THESE SCRIPS IS E RRONEOUS SINCE WE HAVE ALREADY DISCUSSED THE CONTENTS OF NOTICE U/S. 142(1) OF THE ACT, WHER EIN DETAILS IN RESPECT OF LOSS WERE CALLED FOR AND SPECIFIC DETAILS OF WHICH HAVE BEEN ELICITE D BY THE AO IN RESPECT OF SHORT TERM ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 7 | P A GE CAPITAL LOSS CLAIMED AS WELL AS THAT OF THE DETAILS OF INVESTMENT IN EQUITY SHARES WERE ENQUIRED AND COLLECTED IN THAT PROCESS. SINCE THE A O HAD ISSUED THE NOTICE U/S. 142(1) OF THE ACT ON 25.11.2016 IT IS PRESUMED THAT THE AO WAS AW ARE OF THE REPORT OF DIRECTORATE OF INVESTIGATION AND ALSO THE CBDT VIDE ITS ORDER NO. F NO. 287/30/2014-IT(INV.II)-VOL-III DATED 16.03.2016 WHEREIN THE INVESTIGATION WING HAS ALERTED THE FIELD OFFICERS IN RESPECT OF CERTAIN NEFARIOUS ACTIVITIES INVOLVING BUSINESS OF PENNY STOCKS. THIS PRESUMPTION OF FACT IS BASED ON THE FACTUAL MATRIX WHICH IS EVIDENT FROM A PERUSAL OF THE NOTICE ISSUED BY AO U/S. 142(1) OF THE ACT DATED 25.11.2016 WHICH HAVE PROMP TED HIM TO ASK SUCH DETAILED QUESTIONS IN ORDER TO ELICIT ANSWERS FOR IT ALONG WITH SUPPOR TING MATERIAL/DOCUMENTS TO SUBSTANTIATE THE CLAIM OF LOSS ON SCRIPS AND ALSO WE TAKE THE AID OF SECTION 114(E) OF INDIAN EVIDENCE ACT, 1872 WHEREIN THE COURT/TRIBUNAL MAY PRESUME THE EXI STENCE OF ANY FACT WHICH IT THINKS LIKELY TO HAVE HAPPENED, REGARD BEING HAD TO THE CO MMON COURSE OF NATURAL EVENTS, HUMAN CONDUCT IN THEIR RELATION TO THE FACTS OF THE PARTI CULAR CASE. AND THE ILLUSTRATION (E) TO SECTION 114 OF THE INDIAN EVIDENCE ACT EMPOWERS DISCRETION TO THE COURT/TRIBUNAL TO PRESUME THE EXISTENCE OF FACT THAT OFFICIAL/QUASI JUDICIAL/JUDI CIAL ACTS HAVE REGULARLY BEEN PERFORMED. HOWEVER, BEFORE WE DRAW SUCH A PRESUMPTION WE ALSO SHOULD HAVE REGARD TO SUCH FACT AS TO WHETHER THE OFFICIAL ACT, THE REGULARITY WHICH WAS IN QUESTION WAS PERFORMED UNDER EXCEPTIONAL CIRCUMSTANCES. WHEN WE CONSIDER THIS A SPECT ALSO WE NOTE THAT NO EXCEPTIONAL CIRCUMSTANCES IN RESPECT OF THE ACTION OF AO WHILE ENQUIRING INTO THE ISSUE OF SHORT TERM CAPITAL LOSS WERE CITED BY THE LD. PCIT IN HIS IMPU GNED ORDER OR THE LD. DR. SO, WE PRESUME THE FACT THAT AO WAS AWARE OF THE CONTENTS OF THE CIRCULAR OF CBDT REGARDING PENNY STOCK AND THEREAFTER HAD ISSUED NOTICE U/S. 1 42(1) O THE ACT (SUPRA). THUS INVOKING EXPLANATION 2(C) OF SECTION 263 OF THE ACT IS NOT C ORRECT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. MOREOVER, THE LD. PCIT HAS NOT BOTHERED TO REFER TO ANY COGENT MATERIAL ON THE BASIS IT CAN BE SAID THAT THESE THREE SCRIPS IN QUE STION ARE PENNY STOCK. THEREFORE, THE ASSUMPTION OF LD. PCIT IS BASED ON SURMISES AND CON JECTURES AND IT IS SETTLED PRINCIPLE OF LAW THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE/PROOF. IN THE LIGHT OF THE DISCUSSION, THEREFORE, CONSIDERING THE ENQUIRY MADE BY AO ON THE ISSUE, WE PRESUME THAT THE AO HAS PERFORMED HIS TASK OF AN INVESTIGAT OR ON THE ISSUE OF SHORT TERM CAPITAL LOSS ON THE SCRIPS IN QUESTION AFTER TAKING NOTE OF CBDT CIRCULAR NO. 287/30/2014-IT(INV.II)- VOL-III DATED 16.03.2016 ON PENNY STOCK AND THERE AFTER CONDUCTED THE ENQUIRY. AND AFTER ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 8 | P A GE PERUSAL OF THE REPLY OF THE ASSESSEE TO THE SPECIFI C QUERIES AND DETAILS CALLED FOR AND AFTER PERUSAL OF THE SUPPORTING MATERIALS, THE AO BEING S ATISFIED HAS ACCEPTED THE CLAIM OF ASSESSEE IN RESPECT OF LOSS ON THESE SCRIPS. THEREF ORE THE AOS ACTION OF ACCEPTING SHORT TERM CAPITAL LOSS ON THE THREE (3) SCRIPS CANNOT BE TERMED AS A CASE OF NO-ENQUIRY ON THE PART OF THE AO AS WELL AS DISCUSSED SUPRA THE LD. PCITS OPINION THAT EXPLANATION 2(C) U/S. 263 IS ATTRACTED IN THIS CASE IS INCORRECT IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS AFORESTATED. IN SUCH A SCENARIO, THE CONDITION PRECEDENT TO INVO KE REVISIONAL JURISDICTION U/S 263 OF THE ACT IS ABSENT AND THEREFORE THE LD. PCIT HAS INVOKE D THE JURISDICTION WITHOUT SATISFYING THE CONDITION PRECEDENT I.E. THE AOS ACTION SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE. THEREFORE, THE IMPUGNED ORDER OF LD. PCIT IS QUASHED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2021 SD/- SD/- (J.S. REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18.06.2021 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- M/S PG COMMERCIALS PVT. LTD, C/O, RAJESH MOHAN & ASSOCIATES UNIT NO. 18, 5 TH FLOOR, BAGATI HOUSE, 34, GANESH CHANDRA AVENUE, KO LKATA-700013. 2. RESPONDENT ITO, WARD-10(4), KOLKATA 3. THE PCIT- 4, KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES, KOLKATA ITA NO.104/KOL/2020 M/S P G COMMERCIALS PVT. LTD. A.Y. 2014-15 9 | P A GE