Smt. Rachna Y.Parekh, Ahmedabad V. The CIT-III, Ahmedabad

ITA 1427/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0520 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: S N SOPARKAR WITH PARIN SHAH
• Keywords: Business income; Principle of natural justice; Earning of tax free income; Assessment record
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SMT. SONAL DIPAKBHAI, MEHTA SUBHASH CORPORATION, JAY BUNGALOW, 132 FT. RING ROAD, SATELLITE, AHMEDABAD PAN: ABOPM4404B (APPELLANT) VS COMMISSIONER OF INCOME TAX - III, 1 ST FLOOR, C.U. SHAH CHAMBER, ASHRAM ROAD, AHMEDABAD (RE SPONDENT) SMT. RAXA S. MEHTA SUBHASH CORPORATION, JAY BUNGALOW, 132 FT. RING ROAD, SATELLITE, AHMEDABAD PAN: ABOPM4405A (APPELLANT) VS COMMISSIONER OF INCOME TAX - III, 1 ST FLOOR, C.U . SHAH CHAMBER, ASHRAM ROAD, AHMEDABAD (RESPONDENT) I T A NO . 1165 / A HD/20 11 A SSESSMENT YEAR 200 6 - 07 ITA NO. 1426 /AHD/20 11 ASSESSMENT YEAR 200 6 - 07 ITA NO. 1427 /AHD/20 11 ASSESSMENT YEAR 200 6 - 07 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 2 SMT. RACHNA Y. PARIKH SUBHASH CORPORATION, JAY BUNGALOW, 132 FT. RING ROAD, SATELLITE, AHMEDABAD PAN: ABRPP6212 B (APPELLANT) VS C OMMISSIONER OF INCOME TAX - III, 1 ST FLOOR, C.U. SHAH CHAMBER, ASHRAM ROAD, AHMEDABAD (RESPONDENT) SMT. USHA PRADIPBHAI MEHTA SUBHASH CORPORATION, JAY BUNGALOW, 132 FT. RING ROAD, SATELL ITE, AHMEDABAD PAN: ABOPM4406D (APPELLANT) VS COMMISSIONER OF INCOME TAX - III, 1 ST FLOOR, C.U. SHAH CHAMBER, ASHRAM ROAD, AHMEDABAD (RESPONDENT) REVENUE BY : S MT. VIBHA BHALLA, CIT - D . R. ASSESSEE BY: S H RI S.N. SOPARKAR WITH PARIN SHAH , A.R. DATE OF HEARING : 30 - 08 - 2 016 DATE OF PRONOUNCEMENT : 26 - 09 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - T HES E FOUR DIFFERENT ASSESSEES HAVE INSTITUTED THE INSTANT AS MANY APPEALS FOR ASSESSMENT YEAR 2006 - 07 AGAINST SEPARATE ORDER S OF THE CIT, AHMEDABAD ; ALL DATED 22 - 03 - 2011 , IN CASE NO. HQ. ITA NO. 1428 /AHD/20 11 ASSESSMENT YEAR 200 6 - 07 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 3 TECH. III/263 - 3/2009 - 10 , HQ. TECH. III/263 - 6/2009 - 10, HQ. TECH. III/2 63 - 5/2009 - 10, & HQ. TECH. III/263 - 4/2009 - 10, RESPECTIVELY; IN PROCEEDINGS U/S 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. BOTH PARTIES INFORM US AT THE OUTSET THAT THIS BATCH OF FOUR APPEALS RAISES IDENTICAL GROUNDS/ISSUES. WE ACCORDINGLY T AKE UP ITA NO 1165/AHD/2011 IN CASE OF SMT. SONAL DIPAKBHAI MEHTA AS THE LEAD CASE INVOLVING FOLLOWING SUBSTANTIVE GROUND S : - 1. LD. CIT HAS ERRED IN LAW AND ON FACTS IN PASSING ORDER U/S 263 OF THE ACT HOLDING THE ASSESSMENT ORDER PASSED IN SCRUTINY PROCE EDINGS U/S 143 (3) OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO THE EXTENT OF ACCEPTANCE OF CLAIM OF LONG TERM CAPITAL GAIN ON SALE OF SHARES BEING EXEMPT U/S 10 (38) OF THE ACT. THE LEARNED CIT FAILED TO APPRECIATE THE FACT THAT T HE ASSESSMENT ORDER SOUGHT TO BE REVISED WAS PASSED AFTER PROPER INQUIRY AND VERIFICATION BY AO OF THE CLAIM MADE BY THE APPELLANT AND HENCE THIS ORDER OF CIT, WHICH IS TOTALLY ERRONEOUS, PREJUDICIAL AND AGAINST PRINCIPLES OF NATURAL JUSTICE DESERVES TO BE QUASHED. 2. LD. CIT HAS ERRED IN FACTS AND ON LAW IN ISSUING DIRECTIONS TO AO TO FRAME A FRESH ASSESSMENT SIMPLY BECAUSE IT APPEARED TO HIM THAT ASSESSMENT ORDER IN SCRUTINY PROCEEDINGS WAS PASSED WITHOUT CONSIDERING VITAL FACTS AND WITHOUT MAKING NECES SARY INQUIRIES. LD. CIT GRIEVOUSLY FAILED IN FORMING AN OPINION THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHOUT DEALING WITH INQUIRIES CONDUCTED AND FACTS VERIFIED BY AO AFTER TAKING INTO CONSIDERATION VARIOUS SUB MISSIONS, EVIDENCES AND FACTUAL INFORMATION GATHERED DURING ASSESSMENT PROCEEDINGS. 3. LD. CIT HAS ERRONEOUSLY DIRECTED AO T O RE ADJUDICATE THE OF LONG TERM CAPITAL GAIN ARISING OUT OF SALE OF SHARES AND CLAIM OF EXEMPTION U/S 10(38) OF THE ACT AFRESH WITHOUT TAKING INTO CONSIDERATION THE SUBMISSIONS, DOCUMENTARY EVIDENCE AND FACTUAL MATRIX PLACED ON RECORD BY THE APPELLANT IN REVISIONAL PROCEEDING, THAT WAS CONSIDERED BY AO WHILE PASSING SCRUTINY ORDER. THIS ACTION OF LD. CIT IS HARSH, UNCALLED FOR AN D COMPLETELY AGAINST THE PRINCIPLES OF I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 4 NATURAL JUSTICE. THE ORDER PASSED BY LD. CIT IN REVISIONAL PROCEEDINGS DESERVES TO BE QUASHED. 3. THE ASSESSEE - AN INDIVIDUAL DERIVES INCOME FROM BUSINESS AND OTHER SOURCES AS PER THE ASSESSMENT ORDER DATED 31 - 12 - 2 008. SHE FILED RETURN ON 31 - 01 - 2007 STATING TOTAL INCOME OF RS. 3,28,080/ - . THE SAME STOOD PROCESSED. THE ASSESSING OFFICER THEN COMPLETED A REGULAR ASSESSMENT HEREINABOVE ACCEPTING THE RETURNED INCOME. 4 . WE PROCEED FURTHER TO NOTICE THAT THE CIT TH EREAFTER FORMED AN OPINION THAT THE ABOVE REGULAR ASSESSMENT WAS ERRONEOUS CAUSING PREJUDICE TO INTEREST OF THE REVENUE. HE ACCORDINGLY ISSUED SECTION 263 SHOW CAUSE NOTICE DATED 23 - 12 - 2009 READING AS FOLLOWS: - 1. ON VERIFICATION OF YOUR CASE FOR THE AS STT.YEAR 2006 - 07, IT IS SEEN THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961 BY THE ITO WD. - 7(2), AHMEDABAD ON 31 - 12 - 2008 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE FOR THE REASONS MENTIONED IN THE S UBSEQUENT PARAGRAPHS. 2. (I) THE ITO WARD - 7(2), AHMEDABAD HAS/ FINALIZED THE ORDER DETERMINING TOTAL INCOME AT RS.3, 28,080/ - ACCEPTING THE RETURN INCOME. IT IS SEEN THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN IN THE RETURN OF INCOME FOR A.Y. 2006 - 0 7. THIS CAPITAL GAIN WAS ON ACCOUNT OF SALE OF THEIR SHARE HOLDING IN M/S. VISHAL EXPORTS OVERSEAS LTD, AN AHMEDABAD BASED COMPANY BUT DUE TO LACK OF TIME, LOGICAL CONCLUSION COULD NOT BE ARRIVED AT. HOWEVER, INITIAL IMPRESSION WAS THAT THE SHARE TRANSACTI ONS HAVE BEEN MANEUVERED AND PRICES OF SCRIPT HAVE BEEN LARG ELY INFLUENCED BY A FEW PERSONS. THE SHARES OF M/S. VISHAL EXPORTS OVERSEAS LTD HAVE BEEN KEPT AT A HIGH VALUE ARTIFICIALLY THROUGH BROKERS IN ORDER TO GENE RATE CAPITAL GAIN, SINCE THE VALUE OF THESE SHARES DROPPED IMMEDIATELY AFTER THE IMPUGNED SALE OF THE SHARES. ALSO IT IS OBSERVED THAT 2839 TRADES HAVE BEEN TAKEN PLACE WITH RELIGARE SECURITIES LTD. THE NUMBER OF TRADES WITH HARIKIHAN HARILAL WAS NOT ASCERT AINABLE. THUS A MINIMUM OF I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 5 2839 SALE TRANSACTIONS HAVE BEEN CONDUCTED WITHIN THE SHORT PERIOD OF 05/07/2005 TO 09/0 8/2005 I.E. JUST OVER ONE MONTH. THIS REQUIRED MUCH THOUGHT AND PLANNING ESPEC IALLY SINCE IT WAS INTER - WOVEN WITH THE TRANSACTION OF AT LEAST THREE OTHER AS SESSEES. IN THESE 2839 TRADE'S OVER 73,01 ,335 SHARES HAVE BEEN SOLD AT A VALUE OF RS. 15,33,24,628/ - . THESE FACTS WOULD IMPLY T HAT THE CASE WOULD BE COVERED BY BOARD'S CIRCULAR NO. 4 OF 2 007. 2.(II) ANOTHER ANGLE TO THIS ISSUE IS TO DISCOVER THAT C ERTAI N BANK ACCOUNTS WERE OPENED IN THE NAM E OF CERTAIN INDIVIDUALS INTRODUCED BY EITHER M/S. VISHAL EXPORTS OVERSEAS LTD OR BY PEOPLE CLOSE TO THE ASSESSEE AND MONEY WAS CIRCULATED THROUGH THESE BANK ACCOUNTS. 2.(ILL) ALSO INFORMATION IS AVAILABLE ON FIL E THAT CERTAIN INDIVIDUALS WHO HAVE PURCHASED SHARES OF M/S. VISHAL EXPORTS OVERSEAS LTD HAVE SHOWN BUSINESS LOSSES IN THEIR - RETURNS WHICH HAVE BEEN ADJUSTED AGAINST THEIR BUSINESS PROFITS. THUS, THE ASSESSEE HAS CLAIMED LTCG FROM SALE OF SHARES WHICH IS E XEMPT FROM TAX AND ON THE OTHER HAND LOSSES ON SALE OF SAME SHARES WHICH HAVE BEEN SHOWN AS BUSINESS LOSSES IN THE HANDS OF THE PURCHASERS WHO HAVE THUS REDUCED THEIR TAX LIABILITY. 2.(IV) APART FROM THIS, IN THE BALANCE SHEET, THERE ARE RESIDENTIAL PROPERTIES/SHOPS OWNED THE ASSESSEE AND THE ASPECT OF INCOME FROM SUCH PROPERTIES HAVE NOT BEEN VERIFIED BY THE ASSESSING OFFICER KEEPING IN VIEW OF - SECTION 23 OF THE ACT AS IT IS OBSERVED THAT THE ASSESSEE HAS NOT CLAIMED VACANCY ALLOWANCE IN RESPECT OF FOLLOWING PROPERTY KNOWN AS VISHAL HOUSE. 3. IN VIEW OF THE ABOVE FACTS OF THE CASE, THE ASSESSMENT FINALIZED U/S. 143(3) OF THE ACT IN THE CASE OF ASSESSEE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN SO FAR AS THE ISSUE OF LONG TERM CAPITAL GAINS HAS NOT BEEN VERIFIED/INVESTIGATED INTO. 5 . THIS CASE FILE REVEALS THAT THE CIT ISSUED ANOTHER SHOW CAUSE NOTICE DATED 03 - 01 - 2011 CONTAINING THE FOLLOWING REASONING S : - ON VERIFICATION OF YOUR CASE RECORD FOR THE ASSTT.YE AR 2006 - 07, IT IS SEEN THAT THE ASSESSMENT ORDER DATED 31 - 12 - 2008 PASSED BY THE ITO WARD - 7(2), AHMEDABAD UNDER SECTION 143(3) OF THE I.T. ACT, I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 6 1961 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE REASONS MENTIONED IN THE SUBS EQUENT PARAGRAPHS 2. (I) IN THE RETURN OF INCOME FILED, YOU HAVE SHOWN LONG TE RM CAPITAL GAIN ON ACCOUNT OF S ALE OF SHARES OF M/S. VISHAL EXPORTS OVERSEAS LTD, AN AHMEDABAD BASED COMPANY, BUT DUE TO LACK OF TIME, THE ITO WARD - 7(2), AHMEDABAD COULD NOT ARR IVE AT A LOGICAL CONCLUSION ON THESE SHARE TRANSACTIONS, THEREFORE, HE HAD FINALIZED THE ORDER DETERMINING TOTAL INCOME AT RS.3,28,080/ - ACCEPTING THE RETU RNED INCOME. INITIAL IMPRESSION WAS THAT THE SHARE TRANSACTIONS WERE MANEUVERED A ND PRICES OF SCRIPT WERE LARGELY INFLU ENCED BY A FEW PERSONS. THE SHARES OF M/S. V ISHAL EXPORTS OVERSEAS LTD WERE ARTIFICIALLY KEPT AT A HIGH VALUE THROUGH BROKERS IN ORDER TO GENERATE CAPITAL GAIN, SINCE THE VALUE OF THESE SHARES DROPPED I MMEDIATELY AFTER THE IMPUGNED SALE OF THE SHARES. ALSO IT WAS NOTICED THAT 2839 TRADES WERE TAKEN PLACE WITH RELIGARE SECURITIES LTD. THE NUMBER OF TRAD ES WITH ANOTHER ENTITY, VIZ. HARIKIHAN HARILAL WAS NOT ASCERTAINABLE. THU S, A MINIMUM OF 2839 SALE TRANSACTIONS W ERE EFFECTED WITHIN A SHORT PERIOD OF 05/07 /2005 TO 09408/2005 I.E. JUST OVER ONE MON TH, WHICH REQUIRED MUCH THOUGHT ARID P LANNING ESPECIALLY SINCE IT WAS INTER - WOV EN WITH THE TRANSACTIONS OF AT LEAST THREE OTHER PERSONS. IN THESE 2839 TRADES, OVER 73,0 1,335 SHARES WERE SOLD AT A VALUE OF RS.15,33, 24,628/ - . THESE FACTS WOULD IMPLY THAT THE CASE WOULD BE COVERED BY BOARD'S CIRCUL AR N O. 4 OF 2007. 2.(II) CERTAIN BANK ACCOUNTS WERE OPENED IN THE NAME OF SOME INDIVIDUALS INTR ODUCED BY EITHER M/S.VISHAL EXPORTS OVERSEAS LTD OR BY PEOPLE CLOSE TO THE ASSESSEE AND MONEY WAS CIRCULATED THROUGH THESE BANK ACCOUNT S. 2.(ILL) . ALSO INFORMATION IS AVAILABLE ON RECORD THAT CERTAIN INDIVIDUALS WHO HAVE PURCHASED SHARES OF M/S. VISHAL EXPORTS OVERSEAS LTD HAD DECLARED BUSINESS LOSSES IN THEIR RETURNS WHICH WERE ADJUSTED AGAINST THEIR BUSINESS PROFITS. THUS, YOU HAVE CLAIMED LTCG FROM SALE OF SHARES WHICH IS EXEMPT FROM TAX AND ON THE O THER HAND LOSSES ON SALE OF SAME SHA RES WHICH WERE DECLARED AS BUSINESS LOSSES IN THE HANDS OF THE PURCHASERS WHO IN TURN RE DUCED THEIR TAX LIABILITY. 2.(IV) APART FROM THIS, IN THE BALANCE SHEET, THERE ARE RESIDENTIAL PROPERT IES/SHOPS OWNED BY YOU AND THE ASPECT OF INCOME FROM SUCH PROPERTIES WERE VERIFIED BY THE ASSESSING OFFICER, KEEPING I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 7 IN VIEW OF SECTION 23 OF THE ACT AS IT IS OBSERVED THAT YOU HAVE N OT CLAIMED VA CANCY ALLOWANCE IN RESPECT OF PROPERTY KNOWN AS VISHAL HOUSE. 3. IN VIEW OF THE ABOVE FACTS OF THE CASE, T HE ASSESSMENT FINALIZED U/S . 143(3) OF THE ACT IN YOUR CASE I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN SO FAR AS THE ISSUE OF LONG TERM CAPITAL GAINS WAS NOT VERIFIED/INVESTI GATED I NTO BY THE ASSE SSING OFFICER. 6 . THE ASSESSEE FILED HER REPLY STRONGLY CONTESTING THE ABOVE SHOW CAUSE NOTICE INTER ALIA PLEADING THEREIN THAT THE IMPUGNED REGULAR ASSESSMENT HAD BEEN COMPLETED AFTER MAKING ALL INQUIRIES AND SEEKING DETAILED INFORMATION & CLARIFICATION S WHICH WERE DULY VERIFIED. HER FURTHER C ASE WAS THAT VARIOUS HEARING S HAD TAKEN PLACE DUR ING SCRUTINY AS EVIDENCED FROM THE ASSESSMENT DEMONSTRATING CONFIRMATION S THEREOF. THE ASSESSEE CLAIMED TO HAVE FILED ALL THE RELEVANT DOCUMENTS INCLUDING HER BALANCE SHEET FROM ASSESSMENT YEAR 2004 - 05 TO 2006 - 07 QUA THE IMPUGNED SALE OF SHARES, COPIES OF DEMAT ACCOUNTS, PAYMENT RECEIVED AND LONG TERM CAPITAL GAINS IN QUESTION. SHE FURTHER STATED THAT THE ASSESSING OFFICER HAD FRAMED THE IMPUGNED REGULAR ASSESSMENT UNDER CIT - III S DIRECTIONS AFTER GETTIN G VARIOUS DIRECT INFORMATION FROM BANKERS MAINTAINING HER ACCOUNTS, HE OBTAINED STATEMENT COPIES OF THE CONCERNED BROKERS AS WELL. THE ASSESSEE REQUESTED THE CIT TO CALL FOR THE RELEVANT PROCEEDINGS SHEET AS WELL. 7 . THIS CASE FILE INDICATE S THAT THE A SSESSEE FURTHER STATED BEFORE THE CIT THAT IT WAS WRONG TO S AY THAT THE ASSESSING OFFICER DID NOT HAVE SUFFICIENT TIME TO ARRIVE AT A LOGICAL CONCLUSION QUA THE IMPUGNED I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 8 SHARE TRANSACTION S , THE ALLEGATION OF ARTIFICIAL MANEUVERING THEREOF WAS NOT BASED ON ANY EVIDENCE BUT ON MERE ASSUMPTIONS AND PRESUMPTIONS, M/S VISHAL EXPORTS SHARES HAD BEEN HEAVILY TRADE D IN NSE FOR COM MERCIAL EXPEDIENCY REASONS ETC. THE ASSESSEE ALSO EXPLAINED THAT SHE WAS ORIGINAL ALLOTTEE OF THE SHARES IN QUESTION SINCE 1995 FO LLOWED BY BONUS SHARES ISSUED U PTO 2003 TREATED AS INVESTMENTS ONLY. HER CASE WAS THAT SHARE PURCHASE BUSINESS LOSSES WERE THUS NOT MATERIAL. THE ASSESSEE REPLIED QUA THE LATTER ISSUE OF VACANCY ALLOWANCE THAT THE SAME WAS NEVER CLAIMED DURING ASSESSMENT. SHE A CCORDINGLY SOUGHT TO DROP THE IMPUGNED SECTION 263 SHOW CAUSE NOTICE. 8 . THE CASE FILE DEMONSTRATES THAT THE ASSESSEE S EXPLANATIONS STOOD REJECTED IN THE CIT S ORDER UNDER EXTRACTED BELOW: - 8. M/S VISHAL EXPORT OVERSEAS LTD. WAS ONCE A RENOWNED EXPORT COMPANY, SET UP IN 1995. THE COMPANY WAS FAMILY OWNED. DETAILS OF SHARE HOL DING ON 31 - 3 - 2003 WERE AS UNDER : SUBHASH CHHAGAN MEH TA 9.71% KANTA SUBHASH MEHTA (WIFE) 4.93% PRADEEP SUBHASH DEEPAK SUBHASH RAKSHA SUBHASH RACHNA Y. PARIKH MEHTA ME HTA 24.38% MEHTA 7.29% 7.29% 24.41%(SON) (SON) (DAUGHTER) (DAUGHTER) USHA SUBHASH (W) - SONAL DEEPAK MEHTA 2.77% MEHTA 15.21% I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 9 (DAUGHTER IN LAW) (DAUGHTER IN LAW) 9. IN APRIL, 2004 THE LADIES OF THE VISHAL EXPORT OVERSEAS LTD. G ROUP MADE A PUBLIC OFFER FOR SALE OF, 60 LAKH SHARES AT A PRICE OF RS.45/ - PER SHARE. THE DETAILS OF SHARE HOLDING IN VEOL P RE IPO AND POST IPO IS AS UNDER : TOTAL SHARES HELD BY THE PROMOTER GROUP PRIOR TO IPO POST IPO SR. NAME FACE NUMBER OF PE RCENT AGE NUMBER OF % NO VALUE SHARES SHARES 1 SHRI DIPAKS. MEHTA 5 58,52,000 24.38 58,52,000 24. 38 2. SHRI PRADEEP S. MEHTA 5 51,39,557 21.42 51,39,557 21.42 3. SMT. SONALBEN D. MEHTA 5 36,50,667 15.21 14,60,267 6.0 4. SMT. USHABEN P. MEHTA 5 23,45,333 9.77 9,38,133 3.9 5. SHRI SUBHASHCHAN DRA C. 5 23,31,557 9.71 23,31,557 9.71 MEHTA 6. SMT. RACHNABEN Y. 5 17,48,66 7 7.29 6,99,467 2.91 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 10 PARIKH 7. SMT. RAXABEN M .DOSHI 5 17,48,667 7.29 6,99,467 2.91 8. SMT. KANTABEN S. MEHTA 5 11,83,552 4.93 8,79,552 3.67 9 GENERAL PUBLIC 5 NIL NIL 60,00,000 25 TOTAL 2,40,00,00 0 100% 2,40,00,00 0 100% 10. THEREAFTER SHARES WERE SPL IT AND FOR EACH SHARE OF RS. 5, FIVE SHARES OF RS. 1 WERE ISSUED. THE SHARE HOLDING OF THE LADIES OF VEOL GROUP AFTER THE SPLIT WAS AS UNDER: NAME NO. NO. OF SHARES HELD A) RACHNA Y. PARIKH 34,97,335 B) USHABEN P. MEHTA 50,40,665 C) RAKSHA S. MEHTA 34,97,335 D) SONAL D. MEHTA 73.01,335 TOTAL 1,93,36,6 70 11. DURING THE FINANCIAL YEAR 2005 - 06 THE LADIES OF THE VEOL GROUP SOLD ALL THEIR SHARES AND EARNED CAPITAL GAIN. THE SALE TRANS ACTIONS ARE SUMMARIZED AS U NDER : NAME NO. OF SHARES CAPITAL GAIN A) RACHNA Y. PARIKH 34,97,335 RS.7,56,80,237.45 B) USHABEN P. MEHTA 50,40,665 RS. 10,07,26,357.08 C) RAKSHA S. MEHTA 34,97,335 RS.7,58,55,692.78 D) SONAL D. MEHTA 73,01,335 RS.15,33,24,626.87 TOTAL 1 ,93,36.670 RS. 40,55,86,914.18 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 11 12. THESE SHARES WERE SOLD THROUGH THE STOCK EXCHANGE BETWEEN 29 JUNE, 2005 TO 9 TH AUGUST, 2005. THE MOVEMENT OF THESE SHARES WAS VERY RESTRICTED BEFORE AND AFTER THAT PERIOD. ALSO THE PRICE OF THE SCRIP ESCALATED DURING THI S PERIOD AND IT FELL THERE AFTER. FROM THE BILLS OF SHARE TRANSACTIONS SUBMITTED BY THE ASSESSEES, IT IS SEEN THAT ALL THE ABOVE ASSESSEES HAVE SOLD SHARES THROUGH THEIR BROKER M/S HARIKISHAN HIRALAL (SEBI REGN. NO. INV010797912 - CLEARING NO.267) AND FORT IS SECURITIES LIMITED (NOW RELIGARE) (SEBI REGN. NO. INB230653732 - CLEARING NO. 06537). 13. SCRUTINY OF THE BANK ACCOUNT OF THESE ASSESSEES REVEALS THAT A LARGE NUMBER OF TRANSACTIONS OF HIGH VALUE WERE MADE THROUGH THEIR BANK ACCOUNTS DURING THE RELEVAN T PERIOD. IT WAS GATHERED THAT FUNDS HAD BEEN ROTATE D THROUGH NUMEROUS ACCOUNTS IN A SINGLE DAY. IT WAS ASCERTAINED FROM THE INFORMATION PROVIDED BY THE BANK AUTHORITIES THAT SOME OF THE BANK ACCOUNTS HAD BEEN OPENED IN THIS PARTICULAR PERIOD FOR THE SPECI FIC PURPOSE OF ROTATING FUNDS. THE HEAD OFFICES OF A NUMBER OF CONCERNS THROUGH WHICH MONEY WAS ROTATED WERE LOCATED OUTSIDE AHMEDABAD AND IN SOME CASES EVEN OUTSIDE GUJARAT. THE OTHER NOTICEABLE FACT OR WAS THAT ALL THE ACCOUNTS WERE INTRODUCED BY THE VIS HAL EXPORT OVERSEAS LIMITED. FOR EXAMPLE M/S SHA H & SANGHVI AGRO PVT. LTD. C - 30 2, RAJKISHORE CO.OP. H SG. SOC. M.G. ROAD, KANDIVALI (W), MUMBAI HAD OPENED A BANK ACCOUNT IN THE KALUPUR COMMERCIAL CO - OPERATIVE BANK, ASHRAM ROAD BRANCH ON 01 - 07 - 2005. VISHAL E XPORT OVERSEAS LIMITED HAD INTRODUCED THIS ACCOUNT. FROM THE STATEMENT OF ACCOUNT IT WAS QUITE EVIDENT THAT ALL TRANSACTIONS ENTAILED ROTATION OF FUNDS. FUNDS WERE EITHER TRANSFERRED IN OR TRANSFERRED OUT ON THE VERY SAME DAY. 14. A FEW INSTANCES OF ROTAT ION OF FUNDS AND OPENING OF BANK ACCOUNTS IN KALUPUR COMMERCIAL CO - OPERATIVE BANKS ARE GIVEN BELOW : A FEW INSTANCES OF FUND ROTATION DATE : 8/7/2005 AMOUNT OF CHEQUE : RS.1,00,90,000 VISHAL EXPORT (A/C NO. 2134) SONAL D. MEHTA (A/C NO. 2295) DI PAK MEHTA (A/C NO. 2298) KHAZANA CONSULTANCY PVT. LTD. (A/C NO. 7383) VISHAL EXPORT (A/C NO. 2134) \ I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 12 DATE : 8/7/2005 AMOUNT OF CHEQUE: RS. 1,01,95,000 VISHAL EXPORT (A/C NO. 2134) USHA P. MEHTA (A/C NO. 2299) PRADIP MEHTA (A/C NO. 2294) KHAZANA CONSULTANCY PVT. LTD. (A/C NO. 7383) VISHAL EXPORT (A/C NO. 2134) DATE : 8/7/2005 AMOUNT OF CHEQUE : RS.1,00,90,000 VISHAL RAXA S. DIPAK MEHTA KHAZANA VISHAL EXPORT MEHTA (A/C (A/C NO. 2298) CONSULTANCY EXPORT (A/C NO. NO. 2300) PVT. LTD. (A/C NO. 2134) (A/C NO. 7383) 2134) DATE : 8/7/2005 AMOUNT OF CHEQUE : RS.1,69,50,000 YISHAL EXPORT (A/C NO. 2134) KANTA S. MEHTA (A/C NO. 2297) SUBHASH CHANDRA MEHTA (A/C NO. 2296) KHAZANA CONSULTANCY PVT. LTD. (A/C NO. 7383) - > VISHAL EXPORT (A/C NO. 2134) DATE : 8/7/2005 AMOUNT OF CHEQUE : RS.2,73,40,000 VISH AL EXP ORT (A/C NO. 213 4) DIPAK MEHTA (A/C NO. 2298) KHAZANA CONSULTANC Y PVT. LTD. (A/C NO. 7383) VISHAL EXPORT (A/C NO. 2134) I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 13 DATE : 4/1/2006 AMOUNT OF CHEQUE : RS.1,39,41,000 VISH AL EXP ORT (A/C NO. 213 4) SHAH & SANGHVI (A/C NO. 7384) VISHAL PLASTOMER (A/C NO. 2420) VISHAL EXPORT (A/C NO. 2134) DATE : 2/3/2006 AMOUNT OF CHEQUE : RS.40,00,000 (5 INSTANCES) VISHAL EXPORT (A/C NO. 2 134) JAYRAJ AGRO (A/C NO. 7405) VISHAL PLASTOMER (A/C NO. 2420) VISHAL EXPORT (A/C NO. 2134) DATE: 29/3/2006 AMOUNT OF CHEQUE : RS.50,00,000 (4 INSTANCES) VISHAL EXPORT (A/C NO. 2134) ALGI (A/C NO. 7424) VISHAL PLASTOMER (A/C NO. 2420) VISHAL EXPORT (A/C NO. 2134) NEW ACCOUNTS INTRODUCED BY VISHAL EXPORTS NAME ADDRESS DATE OF OPENIN G SHAH & SANGHVI C - 302, RAJ KISHORE CO. OP. HOUSD. SOCY., M.G.ROAD, KANDIWALI, MUM BAI . 1/7/20 05 JAYRAJ AGRO PVT. LTD. B - 3204, KHAZARIA TILAK TASK.ROAD, KANTIWALI, MUMBAI 4/8/20 05 ALGI IMPEX PVT. LTD. 301, SHANTA SADAN, ANANDNAGAR, VASAI, THANE 24/8/2 005 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 14 WELL WORTH OVERSEAS LTD. 408, SAMAN COMPLEX, VASTRAPUR, AHMEDABAD 20 /6/2 005 GCCL INFRASTRUCTURE & PROJECTS LTD. SAKAR - I, ASHRAM ROAD, AHMEDABAD 19/8/2 005 15. THE NAME OF PURCHASING PARTIES WAS OBTAINED. IT WAS NOTICED FROM THE LIST THAT SOME OF THE PERSONS HAD PURCHASED A LARGE NUMBER OF SHARES OF VEOL ON CERTAIN D ATES AND HAD BOOKED LOSSES ON THESE SHARES. A) DIPAK J. PANCHAL HUF ( - )RS.44,15,842/ - B) TEJAS K. PATEL ( - )RS.L,05,84,401/ - AN AMOUNT OF RS.90 LAKHS WAS PAID TO THIS PERSON BY SMT. SONAL D. MEHTA ON 18 - 7 - 2005 AND ANOTHER AMOUNT OF RS.90 LAKHS WAS PAID BY USHA P. MEHTA ON SAME DAY. C) UDAY H. VORA ( - )RS.36,62,936/ - 16. THE ABOVE FACTS COULD NOT BE CONFRONTED TO THE ASSESSEES BECAUSE NONE ATTENDED IN THE 263 PROCEEDINGS AFTER 16 - 3 - 2011. 17. IT WOULD, THEREFORE, APPEAR THAT THE CASE IS NOT AS SIMPLE AS THE LEARNED A.R. WOULD HAVE US BELIEVE. THERE ALSO APPEARS TO BE AN ELEMENT OF CRIMINALITY INVOLVED BECAUSE SRI SUBHASHCHANDRA C. MEHTA, SRI DIPAK S. MEHTA AND SRI PRADEEP S. MEHTA WERE ARRESTED BY THE CBI IN FEBRUARY, 2010 FO R COMMITTING A FINANCIAL FRAUD OF AROUND RS.500 CRORES. TRADING IN SHARES OF VEOL HAS BEEN SUSPENDED AND WHEN LAST HEARD THE SHARES OF VEOL WERE QUOTED AT RS.0.45. I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 15 18. LASTLY, THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSMENT ORDER WAS FINALIZED UNDER THE GUIDANCE OF THE COMMISSIONER OF INCOME - TAX. 19. IN LIGHT OF THE ABOVE DISCUSSION IT APPEARS THAT THE ASSESSMENT ORDER WAS PASSED BY THE A.O. WITHOUT CONSIDERING VITAL FACTS AND WITHOUT MAKING NECESSARY ENQUIRIES. THEREFORE, THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO REVENUE WHICH IS BEING SET ASIDE ON THE ISSUES ENUMERATED IN THE NOTICE U/S. 263. THE A.O. IS DIRECTED TO PASS A FRESH ASSESSMENT ORDER AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 9 . LEARNED AUTHORIZED REPRESENTATIVE RAIS ES MULTI - FOLDED ARGUMENTS IN THE COURSE OF HEARING. HIS FIRST PLEA IS THAT THE ASSESSING OFFICER HAD ISSUED A DET AILED QUESTIONNAIRE IN SECTION 142(1) NOTICE DATED 14 - 07 - 2008 ( QUERY NO. 8 ) ASKING FOR DETAILS OF SHARE PURCHASES, NAMES OF SCRIPS, NO. OF UN ITS, DATE OF SALE QUA EXEMPT INCOME AND LONG TERM CAPITAL GAINS. HE TAKES US TO PAGE 51 OF THE PAPER BOOK COMPRISING OF A YET ANOTHER SHOW CAUSE DATED 18 - 09 - 2008 RAISING SPECIFIC QUESTIONS ON LONG TERM CAPITAL GAINS ISSUE. LEARNED COUNSEL THEN REFERS PAG E 53 TO 180 TO STATE THAT THE ASSESSEE HAD FILED ALL NECESSARY DETAILS OF HER FAMILY MEMBERS, DEMAT ACCOUNT, BANK ACCOUNT/STATEMENTS, BALANCE SHEET, P & L ACCOUNT, CAPITAL ACCOUNTS FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 WITH LONG TERM CAPITAL GAINS CHARTS , LEDGER ACCOUNT OF M/S. VISHAL EXPORTS ALONG WITH THOSE OF THE TWO BROKERS M/S. HARIKISHAN HIRALAL AND FORTIS SECURITIES COUPLED WITH A BRIEF HISTORY OF THE ABOVE EXPORT FIRM. THE ASSESSEE ACCORDINGLY CONTENDS THAT THIS IS CERTAINLY NOT A CASE OF NO IN QUIRY AT ALL AS PER HON BLE JURISDICTIONAL HIGH COURT S DECISIONS I.E. CIT VS. NIRMA CHEMICAL WORKS (2009 ) 309 ITR 67 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 16 (GUJARAT), AND IN TAX APPEAL NO. 177 OF 2016 DECIDED ON 29 - 06 - 2016 DCIT VS. SHRI PRAKASH B. KHATRI. 10 . SHRI SOPARKAR S NEXT ARGUMENT REFERS TO CBDT CIRCULAR NO. 4/2007 AND STATES THAT THE SAME IS NO LONGER A GOOD LAW SINCE SUPERSEDED BY A YET ANOTHER CIRCULAR NO. 6 OF 2016 DATED 29 - 02 - 2016 ITSELF CLARIFYING THAT WHERE LISTED SHARES AND SECURITIES ARE HELD FOR A PERIOD OF MORE THAN 12 MO NTHS IMMEDIATELY PRECEDING TRANSFER THE INVESTOR CONCERNED DESIRES TO TREAT THE SAME AS CAPITAL GAINS, IT SHALL NOT BE PUT TO DISPUTE. 11 . THE ASSESSEE S THIRD ARGUMENT IS THAT THE CIT HAS TRAVERSED BEYOND HIS SECTION 263 SHOW CAUSE REASON WHILST EXERC ISING THE REVISIONAL JURISDICTION WHEREIN THE ORIGINAL SHOW CAUSE WAS VERY MUCH VAGUE ONE NOT INDICATING ALL NECESSARY DETAILS OF THE ACCOUNT HOLDER. WE INVITED SHRI SOPARKAR S ATTENTION TO PAGE 16 OF THE CIT S ORDER A T THIS STAG E THAT ALL THIS MATERIAL C OULD NOT BE CONFRONTED TO THE ASSESSE E BECAUSE OF HER ABSENCE IN SECTION 263 PROCEEDINGS ON 16 - 03 - 2011 . AND ALSO THAT HON BLE APEX IN A LATEST DECISION CIT VS. AMITABHVACHAN (2016) 384 ITR 200 (SC) HAS DECIDED TH E EVERY ISSUE OF CIT S ACTION IN TRAVERSIN G BEYOND SECTION 263 SHOW CAUSE NOTICE REASONS IN REVENUE S FAVOUR. LEARNED COUNSEL PRODUCES HON BLE BOMBAY HIGH COURT S DECISION IN CIT VS. NIRAV MODI INCOME TAX APPEAL NO. 117/2014 DECIDED ON 16 - 06 - 2016 AS WELL AS A CO - ORDINATE BENCH DECISION IN (2016) 72 TAXMANN.COM 127 (KOL) DAMODAR VALLEY CORPORATION VS. DCIT TO HAVE ALREADY D ISTINGUISHED THE SAME . I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 17 12 . THE ASSESSEE FURTHER CLARIFIES THAT THE ISSUE OF VACANCY ALLOWANCE IS NOT BEING CONTESTED. SHE ACCORDINGLY PRAYS FOR ACCEPTANCE OF HER APPEAL. 13 . THE REVENUE STRONGLY OBJECTS TO ASSESSEE S ARGUMENTS . IT TAKES US TO THE IMPUGNED ASSESSMENT ORDER. IT INTER ALIA STATES THAT THERE IS NO DISCUSSION AT ALL QUA ASSES SEE S LONG TERM CAPITAL GAINS RATHER ASSESSING OFFICER HAS IGNORED THIS CLINCHING ASPECT BY OBSERVING THAT THE ASSESSEE DERIVES BUSINESS INCOME AND FROM OTHER SOURCES WITHOUT EVEN VERIFYING HER EXPLANATION S OUGHT TO BE OBTAINED BY VARIOUS SHOW CAUSE NOTICES. MS. BHALLA INVITES OUR ATTENTION TO NOTE SHEET DATED 20 - 10 - 2015 IN THE INSTANT CASE FILE DIRECTING THE REVENUE TO PRODUCE ALL ASSESSMENT RECORDS. SHE STATES THAT THE SAME IS VERY MUCH AVAILABLE NOW . SHE PRODUCES ON RECORD CIT - III S AHMEDABAD LETTER DATED 11 - 08 - 2009 ADDRESSED TO THE CIT - II READING AS FOLLOWS: - SUB: - R EPORT IN THE CASES OF CLAIM OF LTCG IN SHARES OF VISHAL EXPORTS OVERSEAS LIMITED. KINDLY FIND ENCLOSED HEREWITH A REPORT OF I.T.O. WARD 7(2), AHMEDABAD AND OF ADDITIONAL C.I.T. RANGE - 7, AHMEDABAD. 2. IT MAY BE STATED THAT I.T.O. WARD 7(2) HAD BROUGHT TO MY NOTICE LAST YEA R THAT IN THE CASES OF FOUR LADIES I.E. RACHNA Y. PARIKH, USHABEN P. MEHTA, RAKSHA S. MEHTA AND SONAL D. MEHTA WERE SHOWN LONG TERM CAPITAL GAINS OF RS.40,55,86,914.98 IN THE RETURNS OF INCOME FOR ASSTT. YEAR 2006 - 07. THIS CAPITAL GAIN WAS ON ACCOUNT OF SA LE OF THEIR SHARE HOLDING IN M/S VISHAL EXPORTS OVERSEAS LTD. AN AHMEDABAD BASED COMPANY. IN THE SHORT TIME AVAILABLE WITH THE I.T.O. AND DESPITE HIS PENDENCY OF MORE THAN 600 SCRUTINY CASES, I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 18 INQUIRIES WERE GOT CONDUCTED IN DELHI AND BOMBAY AND IN A.HMEDAB AD. HOWEVER, NO EVIDENCE WAS FORTH COMING TO SUPPORT THE INITIAL IMPRESSION THAT THESE CAPITAL GAINS WERE BECAUSE OF INTRODUCTION OF UNACCOUNTED CASH IN SOME HANDS. BUT INQUIRIES DID REVEAL THAT THE SHARES OF M/S VISHAL EXPORTS OVERSEAS LTD. HAVE BEEN KEPT AT A HIGH VALUE ARTIFICIALLY THROUGH BROKERS IN ORDER TO GENERATE CAPITAL GAINS. 3. A SIMILAR PATTERN WAS ALSO SEEN IN THE EARLIER ASSESSMENT YEAR 2005 - 06. DUE TO SHORTAGE OF TIME, TREMENDOUS PRESSURE OF SCRUTINY ASSESSMENTS AND LACK 6F EVIDENCE, THE ASS ESSMENTS HAD TO BE COMPLETED ON THE RETURNED INCOME IN THE CASE OF ALL THE FOUR LADIES. 4. BUT THE EVIDENCE COLLECTED SO FAR WAS AGAIN REVIEWED BY ME SOME TIME LAST MONTH AND THE NEW ADDL. C.I.T. WAS ASKED TO SUBMIT A REPORT IN THE MATTER AFTER GOING THRO UGH THE EVIDENCE COLLECTED SO FAR AND ANY - OTHER EVIDENCE THAT COULD BE COLLECTED FROM FORMAL AND INFORMAL SOURCES. THE PRESENT REPORT OF THE ADDL. CIT. RANGE - 7 IS THE RESULT OF THESE DIRECTIONS. 5. THE ADDL. CIT. RANGE - 7 HAS UTILIZED THE INTERNET AND THE WEBSITE OF NSE AND BSE TO COLLECT FURTHER EVIDENCE WHICH CONFIRMS THE SUSPICION THAT THE LONG TERM CAPITAL GAINS EARNED BY THE FOUR LADIES WAS THE RESULT OF ARTIFICIAL PROPPING UP OF THE SHARES OF VISHAL EXPORTS OVERSEAS LTD. SPECIALLY SINCE THE VALUE OF T HESE SHARES DROPPED IMMEDIATELY AFTER THE SALE OF THE IMPUGNED SHARES. 6. ANO THER ANGLE TO THIS ISSUE IS THE DISCOVERY THAT CERTAIN BANK ACCOUNTS WERE OPENED THE NAME OR CERTAIN INDIVIDUALS INTRODUCED BY EITHER M/S VISHAL EXPORTS OVERSEAS LTD. OR BY PEOPL E CLOSE TO THE FOUR LADIES AND MONEY WAS CIRCULATED THROUGH CHEQUES IN THESE BANK ACCOUNTS. THE IMPRESSION THAT ONE GETS ON EXAMINING THESE BANK ACCOUNTS IS THAT THESE ACCOUNTS HAVE BEEN UTILIZED TO SHOW CIRCUL ATION OF MONEY BUT WE ARE UNABLE TO ASCERTAIN AT THIS STAGE, THE BIG GER PURPOSE BEHIND THE SAME. 7. INFORMATION IS ALSO AVAILABLE ON FILE THAT CERTAIN INDIVIDUALS WHO HAVE PURCHASED SHARES OF M/S VISHAL EXPORTS OVERSEAS LTD. HAVE SHOWN BUSINESS LOSSES IN THEIR RETURNS WHICH HAVE BEEN ADJUSTED AGAINST THEIR BUSINESS PROFITS. THUS WE HAVE ON THE ONE HAND GAINS FROM SALE OF SHARES WHICH ARE EXEMPT FROM TAX AND ON THE OTHER HAND LOSSES ON SALE OF SAME SHARES WHICH HAVE BEEN SHOWN AS I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 19 BUSINESS LOSSES IN THE HANDS OF PURCHASERS WHO HAVE THUS REDUCED THEIR TA X LIABILITY. 8. IT IS EVIDENT THAT HUGE AMOUNTS OF EXEMPT INCOME HAS BEEN EARNED BY MANIPULATING THE VALUE OF SHARES OF M/S VISHAL EXPORTS OVERSEAS LTD. BY CERTAIN INDIVIDUALS INCLUDING THE FOUR LADY ASSESSEES IN WHICH BROKERS MAY ALSO HAVE BEEN INVOLVED. FULL INQUIRY INTO ALL THE RAMIFICATIONS OF THIS ISSUE WOULD REQUIRE INQUIRIES IN THE HANDS OF INDIVIDUALS BEING ASSESSED IN DIFFERENT CHARGES OF AHMEDABAD AND ALSO OUT SIDE AHMEDABAD. THIS IS BEYOND THE WHEREWITHAL OF ITO. WARD. 7(2), AHMEDABAD. THE ONLY ORGANIZATION WHICH IS EQUIPPED TO MAKE IT FULL - FLEDGED INQUIRY IS THE INVESTIGATION WING. SINCE THE AMOUNT INVOLVED IS VERY SUBSTANTIAL AND EXTENSIVE INQUIRIES HAVE TO BE MADE TO CONFIRM THE INITIAL IMPRESSION, IT IS REQUESTED THAT, IF APPROVED, THE MATTE R MAY BE REFERRED TO THE INVESTIGATION WING AT AHMEDABAD FOR FULL - FLEDGED INQUIRIES. 9. AS FAR AS THE FOUR LADIES ARE CONCERNED, I AM DIRECTING THE ADDL. CIT. RANGE - 7 AND ITO. WD. 7(2), AHMEDABAD TO EXAMINE THE FEASIBILITY OF MOVING A PROPOSAL U/S. 263 FO R TAXING THESE LONG TERM CAPITAL GAINS AS BUSINESS PROFITS IN A.Y. 2006 - 07, AND, IF POSSIBLE, A.Y. 2005 - 06 ALSO. 14 . THE REVENUE S STAND ACCORDINGLY IS THAT THERE IS NO EVIDENCE IN THE CASE FILE INDICATING THE CI T - III TO HAVE SUPERVISE D THE IMPUGNED REGU LAR ASSESSMENT. IT THEREAFTER FILES ON RECORD A COMPLETE COMPILATION OF THE ASS ESSMENT NOTE SHEETS AS FOLLOWS: - 1. RETURN OF INCOME WAS FILED WITH ITO, WD. 7(2) VIDE RECEIPT NO. 0721016306 ON 31/1/2007 DECLARING TOTAL INCOME AT RS. 328080/ - . 2. THE CASE WAS SELECTED UNDER CASS. 28/12/07 NOTICE U/S. 143(2) WAS ISSUED ON 28/12/07 FOR HEARING ON 4/1/2008 14/07/08 NOTICE U/S. I42(1) WAS ISSUED ON 14/07/2008 FOR HEARING ON 26/8/08 I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 20 16/10/08 IN RESPONSE TO THE SAID NOTICE SHRI G.N. PATEL, ITP ATTENDED ON BEH ALF OF THE ASSESSEE AND FILED THE DETAILS CALLED FOR. 15 . THE REVENUE THEN HIGHLIGHTS THE FACT THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND AT ALL ON THE RELEVANT DETAILS FILED ON RECORD AS EVIDENCED FROM HIS EXTRACTED NOTE - SHEET. ITS CASE IS THAT THE ASSESSING OFFICER HAS RATHER KEPT THE DOCUMENTS ON RECORD. MS. BHALLA RAISES A VERY OBJECTION OF ASSESS EE S CERTIFICATION THAT ALL THE RELEVANT DETAILS CONTAINED IN THE PAPER BOOK CONFIRM TO THE CASE RECORDS . SHE ACCORDINGLY PRAYS FOR UPHOLDING THE C IT S ORDER UNDER CHALLENGE. 16 . WE AFFORDED REBUTTAL OPPORTUNITY TO ASSESSEE. SHRI SOPARKAR REITERATES THE SUBMISSIONS ALREADY MADE. HE IS HOWEVER UNABLE TO PROVE THE FACT THAT THE ASSESSEE HAD PLACED ON RECORD ALL RELEVANT DETAILS OF HER LONG TERM CA PITAL GAINS IN QUESTION. 17 . WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DISPUTE THAT THE CIT HAS EXERCISED HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT BY TERMING THE IMPUGNED REGULAR ASSESSMENT AS ERRONEOUS CAUSING PREJUDICE TO INTEREST OF REVENUE MAINLY ON THE GROUND THAT THE ASSESSING OFFICER DID NOT INQUIRE AND VERIFY INTO ASSESSEE S LONG TERM CAPITAL GAINS ARISING FROM SALE OF SHARES IN M/S VISHAL EXPORTS. IT HAS COME ON RECORD THAT THE ASSESSING OFFICER MERELY ISSUED A QUESTIONNAIRE OF LONG TE RM CAPITAL GAINS VIDE SCRUTINY NOTICE DATED 14 - 07 - 2008 AND 18 - 09 - 2008 (SUPRA). THE ASSESSEE CLAIMS TO HAVE FILED I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 21 ALL THESE DETAILS. WE DO NOT FIND ANY SUCH PARTICULAR S TO BE EMANATING FROM THE CASE RECORDS PRODUCED AT REVENUE S BEHEST WHO RAISES A STRONG LY PITCH CHALLE NGING CORRECTNESS OF CERTIFICATION OF CONTENTS IN THE PAPER BOOK. WE INFER IN THESE FACTS THAT THE ASSESSEE HAS NOT PLACED ON RECORD HER LONG TERM CAPITAL GAINS SO AS TO ENABLE THE ASSESSING OFFICER TO CONDUCT FURTHER NECESSARY INQUIRY/VERI FICATION. OUR INFERENCE IS FURTHER STRENGTHENED FROM THE FACT THAT THE ASSESSMENT NOTE - SHEETS EXTRACTED HEREINABOVE NOWHERE DISCUSS THE SAME AT ALL. WE TAKE NOTE OF THE FACT THAT THE ASSESSING OFFICER MERELY STATES THAT THE ASSESSEE DERIVES BUSINESS INCO ME AND FROM OTHER SOURCES I.E . WITHOUT EVEN MAKING MENTION OF HE R LONG TERM CAPITAL GAINS. T HE ASSESSEE HAS ALSO FAILED IN PROVING THE FACT THAT THE CIT - III, AHMEDABAD HAD EVER SUPERVISED THE IMPUGNED REGULAR ASSESSMENT. ALL THIS LEADS US TO A CONCLUSION THAT THE IMPUGNED ASSESSMENT IS A CASE OF NO INQUIRY SO AS TO RENDER THIS REGULAR AS SESSMENT EXIGIBLE TO INVOKING CIT S SECTION 263 JURISDICTION . 18 . WE NOW COME TO ASSESSEE S RELIANCE OF A CATENA OF CASE LAW I.E. NIRMA CHEMICAL WORKS AND SHRI PRAK ASH B. KHATRI (SUPRA). WE DO NOT FIND THESE JUDICIAL PRECEDENT S TO BE APPLICABLE IN FACTS OF THE CASE WH EREIN IT HAS BEEN ALREADY HELD TO BE A CASE OF NO INQUIRY. ASSESSEE S RELIANCE ON BOARD CIRCULAR ON MERITS OF THE ISSUE IS ACCORDINGLY RENDERED ACADEM IC. 19 . WE PROCEED TO DEAL WITH ASSESSE E S CRUCIAL ARGUMENT THAT THE CIT HAS NOT ACTED AS PER LAW IN EXERCISING SECTION 263 JURISDICTION I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 22 WHILST TRAVERSING BEYOND THE SHOW CAUSE NOTICE REASONS. WE OBSERVE FIRST OF ALL THAT THERE IS NO ARGUMENT ON ASSESSE E S BEHEST QUA VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AS NOT HAVING BEEN MET SINCE SHE DID NOT COME PRESENT IN COURSE OF SECTION 263 PROCEEDINGS. HON BLE APEX COURT (SUPRA) HAS ALREADY UPHELD A SIMILAR INSTANCE OF CIT S JURISDICTIONAL BEYOND THE R EASONS CONTAINED IN SECTION 263 NOTICE. LEARNED CO - ORDINATE BENCH DECISION IN DAMODAR VALLEY CASE (SUPRA) IS FOUND TO BE INVOLVING A DIFFERENT SET OF FACTS WHEREIN SECTION 263 SHOW CAUSE NOTICE DEALT WITH ASSESSING OFFICER S ACTION IN ASSESSMENT WRONGLY A PPLYING SECTION 32(1)(IIA) TO THAT OF NO INQUIRY WITHOUT AFFORDING AN OPPORTUNITY OF HEARING. THIS BENCH HOLDS IN PARA 6.3 THAT THE CIT CONCERNED CAN DEAL WITH OTHER REASONS O NLY AFTER PUTTING AN ASSESSEE TO NOTICE AND NOT OTHERWISE. WE REITERATE THAT TH IS ASSESSEE HAD ALREADY BEEN PUT TO NOTICE IN SECTION 263 PROCEEDINGS (SUPRA). 20. THIS LEAVES US WITH HON BLE BOMBAY HIGH COURT DECISION IN NIRAV MODI S CASE (SUPRA). WE FIND THAT THIS CASE INVOLVED A REGULAR ASSESSMENT WHERE IN TH E ASSESSING OFFICER HAD MADE NECESSARY INQUIRY AND EXAMINED THE EVIDENCE TO ADO PT ONE OF THE POSSIBLE VIEW AS AGAINST FACTS OF THE INSTANT CASE ALREADY HELD TO BE AN INSTANCE OF NO INQUIRY . THE ASSESSEE S ARGUMENTS ARE ACCORDINGLY D EVOID OF MERIT. THE SAME STAND REJECTED ACCORDINGLY. WE FIND NO REASON TO INTE RFERE WITH THE CI T S ORDER UNDER CHALLENGE. ITA 1165/AHD/2011 FAILS. I.T.A NO S.1165, 1426 TO 1428 /AHD/20 11 A.Y. 2006 - 07 PAGE NO FOUR DIFFERENT ASSESSEES VS. CIT 23 21. WE COME TO REMAINING THREE APPEAL S ITA 1426 TO 1428/AHD/2011 INVOLVING AS MANY DIFFERENT ASSESSEE ES. BOTH PARTIES INDICATE THAT THE ISSUES INVOLVED THEREIN ARE THE SAME AS DECIDED IN REVENUE S FAVOUR HEREINABOVE. WE NOTICE THAT THESE ASSESSEES ALSO CHALLENGE CIT S ORDER INVOKING SECTION 263 JURISDICTION ON VERY BACKGROUND OF FACTS. WE UPHOLD THESE CIT S ORDERS AS WELL. SAME ORDERS TO FOLLOW IN ITA NOS. 1426 TO 1428/AHD/2011. 22. ALL THESE FOUR ASSESSEES APPEALS ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 09 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 26 /0 9 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,