M/s Patron Vinimay Pvt. Ltd., Kolkata V. I.T.O.,Ward-10(4), Kolkata

ITA 1614/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0215 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: S M SURANA
• Keywords: Search and seizure; Share purchase agreement; Principle of natural justice; Transactions in derivatives; Question of law; Tangible material; Wrong claim; Assessment record; Prejudicial to interest; Right to appeal; Sham transactions; Penny stocks; Set aside; Capital Gains
• Section: 143(3); 142(1); 133(6); 205; 43; 72; 13; 131; 148; 263

Judgement Text

ITA NO.1614/KOL/2019 M/S. PATRON VINIMAY PVT. LTD. AY: 2014-15 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ) & SHR I A. T. VARKEY, JM] I.T.A. NO. 1614/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. PATRON VINIMAY PVT. LTD. (PAN: AAECP6165G) VS. INCOME-TAX OFFICER, WARD-10(4), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 14.11.2019 DATE OF PRONOUNCEMENT 31.12.2019 FOR THE APPELLANT SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT DR. P. K. SRIHARI, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE REVISION ORDER OF LD. PR. CIT 4, KOLKATA DATED 06.02.2019 FOR AY 2014-15. 2. BY PREFERRING GROUND NOS.1 TO 6, THE ASSESSEE HA S CHALLENGED THE USURPATION OF JURISDICTION BY THE PR. C.I.T. U/S 263 OF THE ACT, TO INTERFERE IN THE ASSESSMENT ORDER DATED 26.12.2016 PASSED BY THE ASSESSING OFFICER U/S 143( 3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEF FACTS OF THE CASE AS NOTED BY THE PR. CIT IN THE IMPUGNED ORDER IS THAT THE ASSESSEE COMPANY FILED ITS RETURN FOR THE A.Y.2014- 15 DECLARING TOTAL INCOME OF RS.3,59,810/- AND THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 26.12.2016 AT A TOTAL INCOME OF RS.5,22,140/-. THEREAFTER THE LD. PR.CIT CALLED FOR THE ASSESSMENT RECORDS AND ON EXAMINATION THEREOF HE NOTED THAT THE AO HAD ALLOWED THE SET OFF OF THE SHORT TERM CAPITAL LOSS OF RS.15,49,658/- AGAINST OTHER HEADS OF INCOME WITHOUT ENQUIRING INTO THE ALLOWABILITY OF SUCH CLAIM IN TERMS OF THE CBDT INS TRUCTION NO.287/30/2014-IT(INV II)VOL. III 2 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 DATED 16.03.2016, WHICH CIRCULAR, ACCORDING TO HIM, DEBAR FROM ALLOWING SHORT TERM LOSSES ARISING FROM THE TRANSACTION OF PENNY STOCK. HE ACCORDINGLY ISSUED A SHOW CAUSE NOTICE CALLING UPON THE ASSESSEE AS TO WHY HE SHOULD NOT E XERCISE THE REVISIONAL JURISDICTION U/S. 263 OF THE ACT AND AFTER HEARING THE ASSESSEE, THE LD. PR. CIT HELD THAT AO'S ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE REVENUE FOR LACK O F ENQUIRY IN RESPECT OF THE CLAIM OF LOSS AND WAS PLEASED TO SET ASIDE THE ORDER OF AO AND DI RECTED HIM TO PASS ORDER AFRESH AFTER TAKING NOTE OF HIS OBSERVATIONS IN THE IMPUGNED ORD ER PASSED U/S 263 OF THE ACT. AGGRIEVED BY THE IMPUGNED REVISION ORDER OF THE LD. PR. CIT, THE APPELLANT HAS PREFERRED THIS APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE P APER BOOK AND CASE LAWS CITED BY BOTH THE PARTIES. WE NOTE THAT THE APPELLANT COMPAN Y FILED THE RETURN OF INCOME ON 14.09.2014 DECLARING TOTAL INCOME OF RS.3,59,810/-. THE CASE OF THE APPELLANT WAS SELECTED FOR SCRUTINY UNDER CASS AND ONE OF THE REASON FOR S ELECTION WAS RELATING TO SHORT TERM CAPITAL LOSS ON SALE OF SHARES OF M/S. NIKKI GLOBA L. AFTER EXAMINING THE AUDITED ACCOUNTS, TAX AUDIT REPORT & COMPUTATION OF INCOME FURNISHED BY THE APPELLANT; THE AO VIDE NOTICE U/S 142(1) DATED 14.07.2016(PAGE 4 OF PAPER BOOK) REQUI RED THE ASSESSEE TO SUBMIT THE SPECIFIC DETAILS OF SHARES IN WHICH IT HAD INCURRED SHORT T ERM CAPITAL LOSS. THE LD. AR DREW OUR ATTENTION TO THE APPELLANTS RESPONSE DATED 08.08.2 016 WHICH IS FOUND PLACED AT PAGE 7 OF THE PAPER BOOK AND HE SUBMITTED THAT THE COMPLETE D ETAILS WERE FURNISHED BY THE APPELLANT VIDE REPLY DATED 08.08.2016 AND THEN THE BROKERS L ETTER DATED 02.12.2016 (PAGE 10 OF PAPER BOOK) ALONG WITH KYC APPLICATION (PAGE 11-12 OF PAP ER BOOK) ALONG WITH COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE BROKER M/S. TRAN SCAN SECURITIES (PAGE 14- 15 OF PAPER BOOK AS WELL AS THE COPY OF THE CONTRAC T NOTE WITH M/S. TRAN SCAN SECURITIES PVT. LTD. FOR AY 2014-15 (PAGE 16 OF PAPER BOOK) CORROBO RATED THE FACTS. HE ALSO TOOK US TO THE COPY OF THE ORDER SHEET MAINTAINED BY THE AO (COPY AT PAGES 2-3 OF PAPER BOOK) WHEREIN WE NOTE THAT THE AO HAD ISSUED NOTICE DATED 14.07.2016 WHICH WE FIND PLACED AT PAGE 4 OF THE PAPER BOOK, WHEREIN THE AO ASKED FOR DETAILS FROM A SSESSEE IN RESPECT OF SHORT TERM CAPITAL LOSS AND DIRECTED IT TO FURNISH THE FOLLOWING DETAI LS AS UNDER: 3 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 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. 5. THEREAFTER, THE AO NOTES IN HIS ORDER SHEET DAT ED 02.08.2016 THAT THE LD. AR OF THE ASSESSEE HAS FILED A COPY OF THE RETURN OF INCOME , COPY OF AUDITED ACCOUNTS, TAX AUDIT REPORT, COMPUTATION OF INCOME, DETAILS OF TRADING IN SHARES , DETAILS OF INVESTMENT AND COPY OF THE CONTRACT NOTE. THEREAFTER, THE AO NOTES ON THE ORDE R SHEET DATED 03.08.2016 THAT THE LD. AR HAS PRODUCED BANK STATEMENT AND ALSO PRODUCED THE B OOKS OF ACCOUNT FOR VERIFICATION. THEREAFTER, THE AO NOTES IN THE ORDER SHEET DATED 0 3.12.2016 THAT INFORMATION HAS BEEN COLLECTED U/S. 133(6) OF THE ACT FROM THE BROKER IN RESPECT OF INVESTMENT MADE IN SHARES AS DERIVED FROM THE BOOKS OF ACCOUNT VIS--VIS BANK ST ATEMENT. WE ALSO NOTE THAT THE AO HAD ISSUED NOTICE DATED 01.08.2016 PLACED AT PAGE 5 OF PAPER BOOK WHEREIN HE HAS ASKED FOR THE FOLLOWING INFORMATION FROM THE ASSESSEE: I) NAME AND ADDRESS OF THE COMPANY IN WHICH INVESTMENT 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 FURNISH T HE EVIDENCE OF MODE OF SUCH PAYMENT ALONG WITH THE DETAILS OF CHEQUE NUMBER SA ND THE COPY OF BANK STATEMENT (FY 2013-14) HIGHLIGHTING THE RELEVANT EN TRIES THEREIN SHOWING THE TRANSACTION. 4 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 6. WE NOTE THAT PURSUANT TO THE AFORESAID NOTICE, THE ASSESSEE HAD REPLIED VIDE LETTER DATED 06.06.2016 WHICH IS FOUND PLACED AT PAGE 6 O F THE PAPER BOOK WHEREIN THE ASSESSEE HAD FILED THE DETAILS OF TRADING IN SHARES, DETAILS OF INVESTMENT AND ATTACHED COPY OF THE CONTRACT NOTE AND LEDGER COPY AS WELL AS FILED THE DETAILS OF STOCK. LIKEWISE, FROM A PERUSAL OF THE REPLY DATED 08.08.2016, WE NOTE THAT THE ASS ESSEE HAD FILED DETAILS OF ALL DIRECTORS, COPY OF TAX AUDIT REPORT, COPY OF BANK STATEMENT, C OPY OF RETURN ALONG WITH COPY OF ACKNOWLEDGMENT DETAILS IN RESPECT OF SHORT TERM CAP ITAL LOSS. WE ALSO NOTE THAT VIDE LETTER DATED 25.08.2016, THE ASSESSEE HAS REPLIED THAT THE GAIN IS FROM STCG AND THE LOSS ARRIVED IS A BUSINESS LOSS. WE NOTE THAT THE AO HAD ISSUED NOTICE TO THE PRIN CIPAL OFFICER OF THE BROKER M/S. TRAN SCAN SECURITIES PVT. LTD. ON 22.11 .2016 WHEREIN HE ASKED FOR THE FOLLOWING DETAILS: DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE AFORESAID ASSESSEE, IT IS FOUND THAT THE ASSESSEE HAS MADE SOME INVESTMENT THROUGH YOUR CONC ERN DURING THE FY 2013-14. YOU ARE THEREFORE REQUESTED TO FURNISH THE FOLLOWING PARTIC ULARS WITHIN 30.11.2016 POSITIVELY. 1. DATE OF ACCOUNT OPENING WITH YOU 2. COPY OF KYC OBTAINED BY YOU ALONGWITH A COPY OF THE AGREEMENT 3. LEDGER COPY OF THE TRANSACTION FOR THE FY 2013-14 4. DETAILS OF TRANSACTIONS BY THE ASSESSEE IN THE SHAR ES OF DIFFERENT COMPANIES FOR THE FY 2013-14 5. IN RESPECT OF SALE AND PURCHASE OF SHARES THROUGH Y OU, PLEASE FURNISH THE DETAILS OF COUNTER MEMBER WHOSE CLIENT HAS PURCHASED/SOLD BY ANY OF YOUR CLIE NTS, PLEASE FURNISH THE COMPLETE DETAILS OF THE SAID CLIENT I.E. NAME, ADDRESS AND PAN 6. DETAILS OF SHARE PRICES OF MOVEMENT OF THE AFORESAI D SHARE FOR THE FY 2013-14 WITH TRADED VOLUMES THROUGH YOUR BROKERAGE. 7. WE NOTE THAT THE SAID BROKER M/S. TRAN SCAN SECURIT IES PVT. LTD. HAD REPLIED VIDE LETTER DATED 25.11.2016 (WHICH IS PLACED AT PAPER BOOK PAG E 10) AND HAS FILED COPY OF KYC APPLICATION FORM, DETAILS OF PROMOTERS/PARTNERS/KAR TA/TRUSTEES & WHOLE TIME DIRECTORS AND GENERAL LEDGER ACCOUNT FOR 2013-14 OF TRANS SCAN SE CURITIES PVT. LTD., (WHICH IS PLACED AT PAGES 11 TO 16 OF THE PAPER BOOK). THUS, FROM THE A FORESAID DISCUSSION, ACCORDING TO THE LD. AR, THE AO ONLY AFTER CALLING FOR THE REQUISITE DET AILS IN RESPECT OF TRANSACTIONS IN SHARES (WHICH RESULTED IN LOSS) AND ON BEING SATISFIED WIT H THE DOCUMENTS & EXPLANATIONS FURNISHED, THE AO FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT ON 26.12.2016. SO, ACCORDING TO LD. AR, AFTER DETAILED ENQUIRY, THE AO BEING SATISFIED HAS NOT DRAWN ANY ADVERSE INFERENCE IN RESPECT OF THE TRANSACTION WHICH RESULTED IN SHORT TERM CAPITAL LOSS OF RS.19,70,000/- WHICH 5 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 WAS DULY DISCLOSED IN THE RETURN OF INCOME FOR AY 2 014-15. HE THEREFORE SUBMITTED THAT IT WAS NOT A CASE OF LACK OF ENQUIRY AS ALLEGED BY TH E LD. PR. CIT IN HIS ORDER U/S 263 OF THE ACT AND, THEREFORE, THE VERY ASSUMPTION OF JURISDIC TION U/S 263 WAS ON AN ERRONEOUS PREMISES AND SO IS BAD IN LAW AND CONSEQUENTLY THE IMPUGNED ORDER DESERVES TO BE QUASHED. 8. PER CONTRA, THE LD. CIT, DR, SUPPORTED THE ORDER OF THE LD. PR. CIT, AND CONTENDED THAT SINCE THE AO DID NOT FOLLOW THE INSTRUCTION OF THE CBDT ON THE SUBJECT AS PER THE EXPLANATION 2(C) OF SEC. 263 THE ORDER OF THE AO IS DEEMED TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DOES NOT WANT US TO INTERFERE IN THE ORDER OF THE LD. PR. CIT. 9. WITH THE AFORESAID FACTUAL BACKGROUND, LET US EX AMINE WHETHER THE FINDING OF THE PR.CIT THAT THE AO'S ORDER IS ERRONEOUS AND PREJUDI CIAL TO REVENUE ON ACCOUNT OF LACK OF ENQUIRY ON THE PART OF AO WAS FACTUALLY AND LEGALLY JUSTIFIED AND SUSTAINABLE. WE NOTE THAT THE ASSESSEE COMPANY HAS CHALLENGED IN THE FIRST PL ACE, THE VERY USURPATION OF JURISDICTION BY LD. PRINCIPAL CIT TO INVOKE HIS REVISIONAL POWERS E NJOYED U/S 263 OF THE ACT. TO ADJUDICATE THIS ISSUE WE HAVE TO FIRST SEE WHETHER THE REQUISI TE JURISDICTION NECESSARY TO ASSUME REVISIONAL JURISDICTION EXISTED BEFORE THE PR. CIT EXERCISED HIS POWERS. FOR THAT, WE HAVE TO EXAMINE WHETHER IN THE FIRST PLACE THE ORDER OF THE ASSESSING OFFICER FOUND FAULT BY THE PRINCIPAL CIT, WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THAT, LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAI D DOWN BY THE HON'BLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(S C) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS SHOULD BE SATISFIED BEFORE JUR ISDICTION U/S 263 OF THE ACT IS EXERCISED BY THE CIT. THE TWIN CONDITIONS WHICH NEED TO BE SATIS FIED ARE THAT (I) THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND(II) AS A CO NSEQUENCE OF PASSING AN ERRONEOUS ORDER, PREJUDICE IS CAUSED TO THE INTEREST OF THE R EVENUE. IN THE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS I.E. (I ) IF THE ASSESSING OFFICER'S ORDER WAS PASSED ON ASSUMPTION OF INCORRECT FACTS; OR ASSUMPT ION OF INCORRECT LAW; (II) ASSESSING OFFICER'S ORDER IS IN VIOLATION OF THE PRINCIPLES O F NATURAL JUSTICE; (III) IF THE AOS ORDER IS PASSED WITHOUT APPLICATION OF MIND; OR (IV) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM. IN THE CIRCUMSTANCES ENUMERATED ABOVE ONLY THE ORDER PASSED BY THE ASSESSING OFFICER 6 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 CAN BE TERMED AS ERRONEOUS FOR THE PURPOSE OF SECTI ON 263 OF THE ACT. COMING NEXT TO THE SECOND LIMB, THE AOS ERRONEOUS ORDER CAN BE REVISE D BY THE CIT ONLY WHEN IT IS SHOWN THAT THE SAID ORDER IS PREJUDICIAL TO THE INTEREST OF RE VENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (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. FOR INVOKING POWERS CONFERRED BY SECTION 263; THE CIT SHOULD NOT ONLY SHOW THAT THE AOS ORDER IS ERRONEOUS AS A RESULT O F ANY OF THE SITUATIONS ENUMERATED ABOVE BUT CIT MUST ALSO FURTHER SHOW THAT AS A RESULT OF AN ERRONEOUS ORDER SOME REAL AND TANGIBLE LOSS IS CAUSED TO THE INTEREST OF THE REVENUE. THEI R LORDSHIP IN THE SAID JUDGMENT THEREFORE HELD THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS O F REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT FURTHER OBSERVED THAT WHEN THE ASSESSING OFFICER ADOPTS ONE OF THE COURSE PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO THE REVENUE, OR WHERE TWO V IEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UN LESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 10. IN THE GIVEN FACTS OF THE PRESENT CASE THE ONL Y FAULT FOUND BY THE LD. PR. CIT TO INTERFERE WITH THE ORDER OF AO WAS THE ALLEGED LACK OF ENQUIRY IN RESPECT OF SHORT TERM CAPITAL LOSS AND FOR WHICH HE HELD THE ASSESSMENT O RDER TO BE ERRONEOUS AND PREJUDICIAL TO INTEREST OF THE REVENUE. IN THE OPINION OF THE PR. CIT, BEFORE COMPLETING THE ASSESSMENT THE AO DID NOT CONDUCT THE ENQUIRIES WHICH HE WAS EXPEC TED TO CONDUCT IN VIEW OF THE INSTRUCTION DATED 16.03.2016 ISSUED BY CBDT. WE AR E AWARE OF THE FACT THAT THE ASSESSING OFFICER'S ROLE WHILE FRAMING AN ASSESSMENT IS NOT O NLY AS AN ADJUDICATOR BUT HE IS ALSO AN INVESTIGATOR. THE AO HAS A DUAL ROLE TO DISPENSE WI TH I.E. HE IS AN INVESTIGATOR AS WELL AS AN ADJUDICATOR AND THEREFORE, IF HE FAILS IN ANY ONE O F THE TWO ROLES AS AFORE-STATED, HIS ORDER CAN BE TERMED AS ERRONEOUS. KEEPING THIS PROPOSITION AL SO IN MIND AND THE LAW LAID IN MALABAR INDUSTRIAL CO. LTD. (SUPRA), WE NOTE THAT IN THE GI VEN FACTS OF THE PRESENT CASE THE AO HAD MADE SPECIFIC ENQUIRY REGARDING THE CLAIM OF ASSESS EE IN RESPECT OF SHORT TERM CAPITAL LOSS WHILE TRADING IN SHARES. WE NOTE THAT VIDE NOTICE U/S 142(1) DATED 14.07.2016 WHICH IS 7 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 AVAILABLE AT PAGE 4 OF THE PAPER BOOK, THE AO HAD I NFORMED THE ASSESSEE THAT HE HAD RECEIVED INPUTS FROM INVESTIGATION WING REGARDING A SSESSEES SUSPICIOUS TRANSACTIONS RELATING TO SHORT TERM CAPITAL LOSS CLAIMED IN TH E RETURN AND THEREFORE TO EXAMINE ITS VERACITY HE REQUIRED THE ASSESSEE TO FURNISH THE FO LLOWING DETAILS: 10. DETAILS OF SUSPICIOUS TRANSACTION RELATING T O SORT TERM CAPITAL LOSS ON SHARES (INPUTS FROM INVESTIGATION WING) I.E. NAME OF SCRIP, DATE OF PUR CHASE, QUANTITY, RATE IN MODE OF PAYMENT. DATE OF SALE, QUANTITY SOLD, RATE, DATE OF DIVIDEND DECLARATION, AMOUNT OF DIVIDEND, STT PAID, S.T. CAPITAL LOSS. 11. WE NOTE THAT IN COMPLIANCE WITH THE AOS NOTICE U/S.142(1)THE APPELLANT FURNISHED THE REQUIRED DETAILS VIDE ITS SUBMISSION DATED 08.0 8.2016. ALONG WITH THE LETTER DATED 08/08/2016 THE APPELLANT FURNISHED A STATEMENT GIV ING DETAILED BREAK-UP OF THE SHORT TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL LOSS INCURRED ON SALE OF INVESTMENTS IN SHARES AND OTHER SECURITIES. IT IS FURTHER NOTED THAT THE APPE LLANT FURNISHED COPIES OF ITS BANK STATEMENTS, CONTRACT NOTES, ETC. IN SUPPORT OF ITS TRANSACTIONS CONDUCTED IN SHARES OF NIKKI GLOBAL WHICH RESULTED IN SHORT TERM CAPITAL LOSS OF RS.19,70,000 /-. ON EXAMINATION OF THE DETAILS FURNISHED, WE FIND THAT THE DIRECT EVIDENCES FURNIS HED BY THE APPELLANT EX-FACIE SUBSTANTIATED ITS CLAIM OF SHORT TERM CAPITAL LOSS. HENCE WE DO N OT FIND ANY SUBSTANCE IN THE SCN OF PR. CIT ISSUED U/S 263 OF THE ACT WHEREIN HE ALLEGED T HAT AO DID NOT CONDUCT ANY ENQUIRY ON THIS ISSUE. AT THE MOST IT CAN BE SAID THAT THE ENQ UIRY CONDUCTED BY THE AO BEFORE PASSING OF THE ORDER WAS NOT AS PER THE STANDARDS EXPECTED BY THE LD. PR. CIT. THE QUESTION THAT ARISES ON THE FOREGOING FACTS THEREFORE IS WHETHER IT WAS INDEED A CASE OF LACK OF ENQUIRY OR ALLEGED INADEQUATE ENQUIRY. THE SETTLED POSITION OF LAW IS THAT LACK OF ENQUIRY ON THE PART OF THE AO ON AN ISSUE MAKES HIS ORDER ERRONEOUS ON THAT ISSUE WHEREAS INADEQUATE ENQUIRY DOES NOT MAKE THE ORDER ERRONEOUS UNLESS, THE LD. PR.CIT AFT ER HIMSELF CONDUCTING THE INQUIRY ON THE ISSUE, DEMONSTRATES WITH TANGIBLE MATERIAL THAT THE FINDING OF FACT OF AO IN THE ORDER PASSED ON THE ISSUE, WAS FACTUALLY OR LEGALLY WRONG OR VIE W FOLLOWED BY HIM IN THE ORDER WAS UNSUSTAINABLE IN LAW. IN SUCH AN EVENT ONLY THE LD. PR.CIT WOULD BE ABLE TO SATISFY THE JURISDICTIONAL FACT WHICH IS REQUIRED TO INTERDICT AND EXERCISE REVISIONAL JURISDICTION U/S 263 OF THE ACT. 8 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 12. IN ORDER TO UNDERSTAND THE DIFFERENCE BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY' AND WHEN IT CAN BE TERMED AS ERRONEOUS, LE T US LOOK AT THE FOLLOWING CASE LAWS WHEREIN THEIR LORDSHIPS EXPLAINED THE DIFFERENCE BE TWEEN THE TWO AS FOLLOWS:- INCOME TAX OFFICER VS. DG HOUSING PROJECTS LTD343 I TR 329 (DELHI) REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO THE FI RST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. S. 263 HAS BEEN EN ACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND REVISE ANY ORDER PASSED BY THE ASSE SSING OFFICER, IF TWO CUMULATIVE CONDITIONS ARE SATISFIED. FIRSTLY, THE ORDER SOUGHT TO BE REVI SED SHOULD BE ERRONEOUS AND SECONDLY, IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' IS OF WIDE IMPORT AND IS NOT CONFINED TO M ERELY LOSS OF TAX. THE TERM 'ERRONEOUS' MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW . THIS EXPRESSION POSTULATES AN ERROR WHICH MAKES AN ORDER UNSUSTAINABLE IN LAW. THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND A N ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDICATOR DECIDES A QUESTION OR ASPECT AND MAKES A WRONG ASSESSMENT WHICH IS UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE COMMISSIONER IN EXERCISE OF REVISIONARY POWER. AS AN INVESTIGATOR, IT IS INCUMBENT UPON THE ASSESSING OF FICER TO INVESTIGATE THE FACTS REQUIRED TO BE EXAMINED AND VERIFIED TO COMPUTE THE TAXABLE INCOME . IF THE ASSESSING OFFICER FAILS TO CONDUCT THE SAID INVESTIGATION, HE COMMITS AN ERROR AND THE WORD 'ERRONEOUS' INCLUDES FAILURE TO MAKE THE ENQUIRY. IN SUCH CASES, THE ORDER BECOMES ERRON EOUS BECAUSE ENQUIRY OR VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PA SSED ON MERITS. THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME T O THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY , IF REQUIRED AND NECESSARY, BEFORE THE ORDER UNDER S. 263 IS PASSED. IN SUCH CASES, THE OR DER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER T O DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUI RY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUI RY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AN D HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING TH E ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIF IED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEO USLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEB ATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRON EOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDE R S. 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMP LY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT H AS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT WH ILE EXERCISING JURISDICTION UNDER S. 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDE R IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED 'INADEQUATE INVESTIGATION', IT WILL BE DIFF ICULT TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE ORDER OF T HE ASSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GR OUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY THE CIT TO AS K THE ASSESSING OFFICER TO DECIDE WHETHER 9 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. A N ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER W ILL NOT BECOME ERRONEOUS BECAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE O RDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. IT MAY BE NOTICED THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS P ASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY T HE CIT. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL /EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. COMMISSIONER OF INCOME TAX VS. J. L. MORRISON (INDI A) LTD. 366 ITR 593 AS REGARD THE SUBMISSION ON BEHALF OF THE REVENUE T HAT POWER UNDER SECTION 263 OF THE ACT CAN BE EXERCISED EVEN IN A CASE WHERE THE ISSUE IS DEBA TABLE, IT WAS HELD THAT THE CASE OF CIT VS. M. M. KHAMBHATWALA WAS NOT APPLICABLE. THE OBSERVATION THAT THE COMMISSIONER CAN EXERCISE POWER UNDER SECTION 263 OF THE ACT EVEN IN A CASE W ERE THE ISSUE IS DEBATABLE WAS A MERE PASSING REMARK WHICH IS AGAIN CONTRARY TO THE VIEW TAKEN BY THE APEX COURT IN THECASE OF MALABAR INDUSTRIAL COMPANY LTD. & MAX INDIA LTD. IF THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW, IT CANNOT BE SAID THAT THE VIEW TAKE N BY HIM IS ERRONEOUS NOR THE ORDER OF THE ASSESSING OFFICER IN THAT CASE CAN BE SET ASIDE IN REVISION. IT HAS TO BE SHOWN UNMISTAKABLY THAT THE ORDER OF THE ASSESSING OFFICER IS UNSUSTAINABLE . ANYTHING SHORT OF THAT WOULD NOT CLOTHE THE CIT WITH JURISDICTION TO EXERCISE POWER UNDER SECTI ON 263 OF THE ACT. CIT VS. M. M. KHAMBHATWALA REPORTED IN 198 ITR 144; CIT VS. RALSO N INDUSTRIES LTD. REPORTED IN 288 ITR 322 (SC), NOT APPLICABLE; MALABAR INDUSTRIAL CO. LTD. V . CIT REPORTED IN 243 ITR 83, RELIED ON. (PARA 72) AS REGARD THE THIRD QUESTION AS TO WHETHE R THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND, IT W AS HELD THAT THE COURT HAS TO START WITH THE PRESUMPTION THAT THE ASSESSMENT ORDER WAS REGULARLY PASSED. THERE IS EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO ANSW ER 17 QUESTIONS AND TO FILE DOCUMENTS IN REGARD THERETO. IT IS DIFFICULT TO PROCEED ON THE B ASIS THAT THE 17 QUESTIONS RAISED BY HIM DID NOT REQUIRE APPLICATION OF MIND. WITHOUT APPLICATION OF MIND THE QUESTIONS RAISED BY HIM IN THE ANNEXURE TO NOTICE UNDER SECTION 142 (1) OF THE ACT COULD NOT HAVE BEEN FORMULATED. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE RETUR N FILED BY THE ASSESSEE IN ORDER TO ASCERTAIN HIS INCOME AND TO LEVY APPROPRIATE TAX ON THAT BASI S. WHEN THE ASSESSING OFFICER WAS SATISFIED THAT THE RETURN, FILED BY THE ASSESSEE, WAS IN ACCO RDANCE WITH LAW, HE WAS UNDER NO OBLIGATION TO JUSTIFY AS TO WHY WAS HE SATISFIED. ON THE TOP OF T HAT THE ASSESSING OFFICER BY HIS ORDER DATED 28TH MARCH, 2008 DID NOT ADVERSELY AFFECT ANY RIGHT OF THE ASSESSEE NOR WAS ANY CIVIL RIGHT OF THE ASSESSEE PREJUDICED. HE WAS AS SUCH UNDER NO OBLIGA TION IN LAW TO GIVE REASONS. THE FACT, THAT ALL REQUISITE PAPERS WERE SUMMONED AND THEREAFTER T HE MATTER WAS HEARD FROM TIME TO TIME COUPLED WITH THE FACT THAT THE VIEW TAKEN BY HIM IS NOT SHOWN BY THE REVENUE TO BE ERRONEOUS AND WAS ALSO CONSIDERED BOTH BY THE TRIBUNAL AS ALS O BY US TO BE A POSSIBLE VIEW, STRENGTHENS THE PRESUMPTION UNDER CLAUSE (E) OF SECTION 114 OF THE EVIDENCE ACT. A PRIMA FACIE EVIDENCE, ON THE BASIS OF THE AFORESAID PRESUMPTION, IS THUS CON VERTED INTO A CONCLUSIVE PROOF OF THE FACT THAT THE ORDER WAS PASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND. MEERUT ROLLER FLOUR MILLS PVT. LTD. VS. C.I.T., ITA NO. 116 /COCH/ 2012 ; CIT VS. INFOSYS TECHNOLOGIES LTD., 341 ITR 293 (KARNATAKA); S.N. MUKHERJEE VS. UNION OF INDIA, AIR 1990 SC 1984; A. A. DOSHI VS. JCIT, 256 ITR 685; HINDUSTHAN TIN WORKS LTD. VS. CIT, 275 ITR 43 (DEL), DISTINGUISHED. 13. FROM A PERUSAL OF THE IMPUGNED ORDER OF LD. PR. CIT, WE NOTE THAT THE SHEET ANCHOR ON WHICH HE HAS FOUND FAULT WITH THE AO'S ORDER IN THE PRESENT CASE IS THE LACK OF ENQUIRY ON 10 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 THE PART OF THE AO IN ALLOWING APPELLANTS CLAIM FO R SHORT TERM CAPITAL LOSS. IN THIS CONTEXT WE FIND THAT THERE IS A CLEAR DISTINCTION BETWEEN ' LACK OF ENQUIRY' AND 'INADEQUATE ENQUIRY. IF THERE IS AN ENQUIRY, EVEN IF INADEQUATE, THAT WO ULD NOT BY ITSELF GIVE OCCASION TO THE LD. PR.CIT TO INTERDICT AND INTERFERE BY EXERCISING HIS REVISIONAL JURISDICTION MERELY BECAUSE HE IS OF THE OPINION THAT SOME MORE ENQUIRIES SHOULD H AVE BEEN CONDUCTED IN THE MATTER. IN A CASE WHERE THE CIT FINDS THAT THE ENQUIRY CONDUCTE D BY THE AO IS NOT IN ACCORDANCE WITH HIS SUBJECTIVE STANDARDS, THEN THE LD. PR. CIT SHOU LD HIMSELF CONDUCT THE INVESTIGATION AND THEREAFTER RECORD A CLEAR FINDING IN HIS ORDER U/S. 263 THAT THE VIEW FOLLOWED OR ACTED UPON BY THE AO IN HIS ORDER WAS UNSUSTAINABLE IN LAW. KEEPI NG THE JUDICIAL PRECEDENTS CITED ABOVE AND THE DISCUSSION MADE IN PARAS 4 7 AND PARA 10 ABOVE AND IN THE GIVEN FACTS OF THE PRESENT CASE, AS NOTED EARLIER, THE AO HAD MADE DUE ENQUIRIES INTO THE CLAIM OF SHORT TERM CAPITAL LOSS INCURRED BY THE APPELLANT IN THE SHARE S OF NIKKI GLOBAL. THE AO HAD CALLED FOR COMPLETE DETAILS OF THE SHORT TERM CAPITAL LOSS INC URRED IN SHARES WHICH WAS REPORTED TO BE SUSPICIOUS BY THE INVESTIGATION WING. AFTER EXAMIN ING THE SPECIFIC DETAILS FURNISHED BY THE APPELLANT VIDE ITS LETTER DATED 08/08/2016 THAT THE AO ISSUED ANOTHER QUESTIONNAIRE DATED 15.09.2016 WHEREIN HE ONCE AGAIN CALLED FOR THE FOL LOWING DETAILS : 2. DETAILS OF INVESTMENT IN EQUITY SHARES OF RS.86 06987/- DURING THE YEAR UNDER CONSIDERATION. (I) NAME & ADDRESS OF THE COMPANY IN WHICH INVE STMENT IS MADE (II) COPY OF ALLOTMENT LETTER (III) COPY OF CONTRACT NOTE IN RESPECT OF QUOTE D 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 ALONG WITH THE DETAILS OF CHEQUE NUMBERS AND THE COPY OF BANK STATEMENT (F.Y. 2013-14) HI GHLIGHTING THE RELEVANT ENTRIES THEREIN SHOWING THE TRANSACTION. 3. PLEASE FURNISH THE FOLLOWING DETAILS IN RESPE CT 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 11 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 (XII) S.T. CAPITAL LOSS. 14. WE NOTE THAT THE APPELLANT COMPLIED WITH THE AB OVE QUESTIONNAIRE AS WELL BY REPLYING TO IT. ON THESE FACTS THEREFORE IT CANNOT BE SAID T HAT AO DID NOT ENQUIRE INTO THE CLAIM OF SHORT TERM CAPITAL LOSS OR THAT THE ASSESSMENT ORDE R SUFFERED FROM LACK OF ENQUIRY. IT IS NOTED THAT THE SCN AS WELL AS THE IMPUGNED ORDER PR OCEEDED ON THE PREMISE THAT THE AO DID NOT ENQUIRE INTO THE SHORT TERM CAPITAL LOSS IN THE MANNER SET OUT BY THE CBDT IN ITS INSTRUCTION NO.287/30/2014-IT(INV II)VOL. III DATED 16.03.2016 . THE RELEVANT EXTRACTS OF THE SAID CIRCULAR IS AS FOLLOWS: KIND ATTENTION IS INVITED TO THE ABOVE REFERRED EF S INSTRUCTION ISSUED BY THE SYSTEM DIRECTORATE REGARDING HANDLING CASES OF PENNY STOCK S (SUSPECT LONG TERM CAPITAL GAINS/SHORT TERM CAPITAL LOSS ETC). 2. IT IS INFORMED THAT THE SAID INSTRUCTION IS IN T HE CONTEXT OF INVESTIGATION CONDUCTED BY KOLKATA INVESTIGATION DIRECTORATE IN RESPECT OF LARGE NUMBE R OF PENNY STOCK COMPANIES, WHOSE SHARE PRICES WERE ARTIFICIALLY RAISED ON THE STOCK EXCHAN GES IN ORDER TO BOOK BOGUS CLAIMS OF LONG TERM CAPITAL GAINS OR SHORT TERM CAPITAL LOSS BY VA RIOUS BENEFICIARIES. EXTENSIVE INVESTIGATION, INCLUDING SEARCH AND SEIZURE/SURVEY ACTION ON ENTRY PROVIDERS, RIGGERS, BENEFICIARIES ETC. WAS CONDUCTED BY THE INVESTIGATI ON DIRECTORATE IN SUCH CASES. BASED UPON OUTCOME OF SUCH INVESTIGATION AND ANALYSIS OF THE D ATA, THE SYSTEMS DIRECTORATE HAS NOW UPLOADED DETAILS OF SUCH INFORMATION IN RESPECT OF INDIVIDUAL ASSESSEES WHO HAVE MADE TRANSACTIONS IN SUCH PENNY STOCKS. 3. VIDE EFS INSTRUCTION UNDER REFERENCE A NEW BUTTO N 'PENNY STOCK' HAS BEEN ADDED ON INDIVIDUAL TRANSACTION SCREEN (ITS) TO DISPLAY INFO RMATION RELATED TO PENNY STOCK, NOW ENABLED ON THE SCREEN OF THE ASSESSING OFFICERS (AOS). AVAI LABLE INFORMATION REGARDING THE MANIPULATIVE TRANSACTIONS HAS BEEN CAPTURED IN THE FUNCTIONALITY , INCLUDING THE INVESTIGATION REPORT OF THE KOLKAIA INVESTIGATION DIRECTORATE. THE FUNCTIONALIT Y ALSO CONTAINS A GUIDANCE NOTE FOR THE ASSESSING OFFICERS. SUCH DETAILS ARE VISIBLE TO THE AOS OF THOSE ASSESSEES WHOSE PARTICULARS HAVE EMANATED OUT OF THE INVESTIGATION REPORT OF KOLKATA INVESTIGATION DIRECTORATE AND WHOSE CASES HAVE BEEN CONSIDERED ACTIONABLE, AT THIS STAGE. THE DETAILS ARE ALSO VISIBLE TO SUPERVISORY OFFICERS OF SUCH AOS. 4. IN CASE OF ANY DIFFICULTY IN VIEWING THE INFORMA TION ON ITS, SHRI VIPUL AGARWAL, JDIT (SYS) 2(1) COULD BE CONTACTED ON 0120-2770052 OR EMAIL AT [e-mail] 5. THE UNDERSIGNED IS DIRECTED TO REQUEST THAT NECE SSARY DIRECTIONS MAY KINDLY BE ISSUED TO THE OFFICERS WORKING UNDER YOUR JURISDICTION TO ACCESS THIS FUNCTIONALITY AND ENSURE THAT INFORMATION AVAILABLE IN THE 'PENNY STOCK' FUNCTIONALITY WHICH MAY BE USEFUL FOR THE PURPOSE OF CASES PRESENTLY UNDER SCRUTINY, IS EXAMINED AND CONSIDERE D WHILE FINALIZING ASSESSMENTS AND CONSIDERING REOPENING OF CASES UNDER SECTION 148 OF THE IT ACT, 1961.(EMPHASIS SUPPLIED) 6. THIS ISSUES WITH THE APPROVAL OF MEMBER (INV), C BDT . 15. ON PERUSAL OF THE ABOVE INSTRUCTION, IT IS NOTE D THAT THE CBDT HAD ONLY INFORMED THE FIELD OFFICERS THAT A BUTTON 'PENNY STOCK' HAS BEEN ADDED ON THEIR INDIVIDUAL TRANSACTION 12 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 SCREEN TO DISPLAY INFORMATION RELATED TO PENNY STOC K, INCLUDING THE INVESTIGATION REPORT OF THE KOLKATA INVESTIGATION DIRECTORATE. ACCORDINGLY THE CBDT HAD ISSUED DIRECTIONS TO CITS TO ENSURE THAT THE OFFICERS WORKING UNDER THEIR RES PECTIVE JURISDICTIONS SHOULD ACCESS THIS FUNCTIONALITY. WE DO NOT FIND THAT THE CBDT INSTRUC TION REFERRED TO BY THE PCIT IN HIS SCN, ANY WAY OUT LINED THE MODE OR THE MANNER OF THE ENQ UIRY TO BE CONDUCTED BY THE ASSESSING OFFICERS CONCERNING SUCH SUSPICIOUS TRANSACTIONS IN TER ALIA INCLUDING PURCHASE& SALE OF PENNY STOCK SHARES. UPON BEING ENQUIRED AS TO WHETH ER THE CBDT HAS LAID DOWN ANY SPECIFIC GUIDELINES FOR THE FIELD OFFICERS, PURSUAN T TO THE ABOVE INSTRUCTION FOR INVESTIGATION INTO THE SUSPICIOUS TRANSACTIONS IN SHARES, THE LD. CIT, DR WAS UNABLE TO BRING TO OUR NOTICE THE SO-CALLED SPECIFIC LINE OF ENQUIRY WHICH THE CB DT HAD MANDATED THE AOS TO ABIDE BY. WE THEREFORE FIND THAT VERY PREMISE VIZ., VIOLATION OF THE DIRECTIONS CONTAINED IN CBDT INSTRUCTION NO.287/30/2014-IT(INV II)VOL. III, BASED ON WHICH THE LD. PR.CIT INITIATED THE PROCEEDINGS U/S 263 FOR ALLEGED LACK OF ENQUIRY BY THE AO INTO THE APPELLANTS CLAIM OF SHORT TERM CAPITAL LOSS, IS FOUND TO BE FACTUALLY UNTENAB LE. 16. WE FURTHER NOTE THAT AT PARA 4 OF THE IMPUGNED ORDER, THE LD. PR. CIT STATED THAT THE AO OUGHT TO HAVE ENQUIRED ABOUT THE NATURE OF SCRIP , SOURCE OF INVESTMENT, TIME OF INVESTMENT, DETAILS OF OTHER BUSINESS, ITS PROFIT, PERFORMANCE OF SHARE, WHAT MOTIVATED THE COMPANY TO INVEST, WHETHER THE COMPANY DOES BUSINES S LIKE THIS IN OTHER SHARES AS WELL ETC. IT IS FOR THE NON-ENQUIRY INTO THESE ASPECTS THAT T HE LD. PR.CIT HELD THE ORDER TO ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FROM T HE MATERIAL PLACED BEFORE US AND IN VIEW OF THE DISCUSSIONS IN THE EARLIER PARAS., WE NOTE H OW THE AO ENQUIRED ABOUT THE CLAIM OF STCL AS AN INVESTIGATOR AS WELL AS ACCEPTED THE CL AIM BY DISCHARGING THE ROLE OF AN ADJUDICATOR. IN SUCH A SCENARIO, IF THE LD. PR. CI T IS NOT SATISFIED WITH THE LINE OF INVESTIGATION OR IF HE IS OF THE OPINION THAT AO MI SDIRECTED HIMSELF FROM THE REAL ISSUE OR IF THE INVESTIGATION WAS NOT CARRIED OUT AS PER HIS ST ANDARDS/DEPTH AS SUGGESTED (SUPRA), THEN HE OUGHT TO HAVE CONDUCTED ENQUIRY AND RECORDED A FACT UAL FINDING TO SHOW THAT THE AOS INVESTIGATION WAS ERRONEOUS. WITHOUT DOING SO, IN OUR OPINION, THE LD. PR. CIT CANNOT HOLD THE ASSESSMENT ORDER TO BE ERRONEOUS FOR THE REASON THAT AOS INVESTIGATION WAS INADEQUATE. WHEN THE AO HAS INVESTIGATED AS IN THE PRESENT CASE , THEN THE LD. PR. CIT WITHOUT RECORDING A FACTUAL FINDING AFTER ENQUIRY CANNOT UPSET THE DE CISION OF AO AS ERRONEOUS WHEN HE HAS NOT 13 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 HIMSELF CONDUCTED ANY ENQUIRY. THE REVISIONAL JURI SDICTION OF LD. PR. CIT U/S. 263 CANNOT BE USED TO CONDUCT ROVING ENQUIRIES TIME AND AGAIN OR THERE WILL BE NO FINALITY OF THE ASSESSMENT PROCEEDING AND THE PARLIAMENT WOULD NOT HAVE STIPULATED THE CONDITION PRECEDENTS IN SEC. 263 OF THE ACT TO INVOKE THE SAM E. WE FIND THAT BEFORE THE ORDER OF ASSESSMENT WAS PASSED, THE AO HAD REQUIRED THE ASSE SSEE TO FURNISH TRANSACTIONAL DOCUMENTS PROVING THE PURCHASE AND SALE OF ALL SHARES HELD AS INVESTMENT DURING THE YEAR. ON EXAMINATION OF THE MATERIAL PLACED BEFORE HIM BY TH E APPELLANT, THE AO WAS SATISFIED THAT THE SHORT TERM CAPITAL LOSS WAS INCURRED BY THE APP ELLANT ON SALE OF SHARES LISTED ON THE BOMBAY STOCK EXCHANGE. THE APPELLANT HAD FILED BEFO RE THE AO THE RELEVANT DETAILS AND ALSO PRODUCED THE TIME STAMPED CONTRACT NOTES ISSUE D BY ITS BROKER. ALL THE TRANSACTIONS WERE MADE THROUGH REGISTERED SHARE BROKER AT RATES PREVA ILING ON THE STOCK EXCHANGE ON THE RELEVANT DATES. THE PAYMENT FOR ACQUISITION OF SHAR ES AND THE SUBSEQUENT SALE PROCEEDS WERE ALSO TRANSACTED THROUGH THE APPELLANTS REGULAR BAN K ACCOUNT. IT IS NOTED THAT THE LISTED SHARES WERE SOLD WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF ACQUISITION AND THEREFORE THE GAIN/LOSS WAS SHORT TERM IN NATURE. IN THE FACTS AND CIRCUMST ANCES AS DISCUSSED ABOVE THEREFORE WE FIND THAT THE AO HAD DISCHARGED HIS DUTIES AS AN IN VESTIGATOR AS WELL AS THAT OF AN ADJUDICATOR AND APPLIED HIS MIND ON THE ISSUE BEFORE HIM AND TA KING INTO CONSIDERATION THE EXPLANATION RENDERED BY THE APPELLANT, THE AO HAD TAKEN A PLAUS IBLE DECISION TO ALLOW THE CLAIM OF SHORT TERM CAPITAL LOSS AS MADE BY THE APPELLANT IN THE R ETURN OF INCOME IN CONSONANCE WITH JUDICIAL DECISIONS AS UNDER: 17. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S. BLB CABLES AND CONDUCTORS ; ITAT NO.78 OF 2017, GA NO.747 OF 2017; DT. 19 JUNE, 2018, HAD UPHELD THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS:- '4. WE HAVE HEARD BOTH THE SIDE AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE LD. AR SUBMITTED TWO PAPERS BOOKS. FIRST BOOK IS RUNNING I N PAGES NO. 1 TO 88 AND 2ND PAPER BOOK IS RUNNING IN PAGES 1 TO 34. BEFORE US THE LD. AR SUBM ITTED THAT THE ORDER OF THE AO IS SILENT ABOUT THE DATE FROM WHICH THE BROKER WAS EXPELLED. THERE IS NO LAW THAT THE OFF MARKET TRANSACTIONS SH OULD BE INFORMED TO STOCK EXCHANGE. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE ACCOUNTS OF B OTH THE PARTIES AND SUPPORTED WITH THE ACCOUNT PAYEE CHEQUES. THE LD. AR HAS ALSO SUBMITTE D THE IT RETURN, LEDGER COPY, LETTER TO AO LAND PAN OF THE BROKER IN SUPPORT OF HIS CLAIM WHIC H IS PLACED AT PAGES 72 TO 75 OF THE PAPER BOOK. THE LD. AR PRODUCED THE PURCHASE & SALE CONTR ACTS NOTES WHICH ARE PLACED ON PAGES 28 14 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 TO 69 OF THE PAPER BOOK. THE PURCHASE AND SALES REG ISTERS WERE ALSO SUBMITTED IN THE FORM OF THE PAPER BOOK WHICH IS PLACED AT PAGES 76 TO 87. T HE BOARD RESOLUTION PASSED BY THE COMPANY FOR THE TRANSACTIONS IN COMMODITY WAS PLACE D AT PAGE 88 OF THE PAPER BOOK. ON THE OTHER HAND THE LD. DR RELIED IN THE ORDER OF THE LO WER AUTHORITIES. 4.1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS INCURRED LOSSES FROM THE OFF MARKET COMMODITY TRANSACTIONS AND THE AO HELD SUCH LOSS A S BOGUS AND INADMISSIBLE IN THE EYES OF THE LAW. THE SAME LOSS WAS ALSO CONFIRMED B Y THE LD. CIT(A). HOWEVER WE FIND THAT ALL THE TRANSACTIONS THROUGH THE BROKER WERE DULY RECOR DED IN THE BOOKS OF THE ASSESSEE. THE BROKER HAS ALSO DECLARED IN ITS BOOKS OF ACCOUNTS A ND OFFERED FOR TAXATION. IN OUR VIEW TO HOLD A TRANSACTION AS BOGUS, THERE HAS TO BE SOME CONCRE TE EVIDENCE WHERE THE TRANSACTIONS CANNOT BE PROVED WITH THE SUPPORTIVE EVIDENCE . 18. WE NOTE THAT IN ORDER TO CREATE A TAX LIABILITY IN A CASE OF THIS NATURE, THE AO HAS TO PROVE AND ESTABLISH THE CASH TRAIL AND THE ALLEGATI ONS, PARTICULARLY IN RESPECT OF THE APPELLANT, WHICH IS YET TO BE PROVED IN THE INSTANT CASE. SIMI LAR VIEW HAS BEEN PRONOUNCED BY HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS JATIN IN VESTMENT (P) LTD. WHEREIN IT WAS OBSERVED 'A TRANSACTION CANNOT BE TREATED AS FRAUDULENT IF T HE APPELLANT HAS FURNISHED THE DOCUMENTARY PROOF AND PROVED THE IDENTITY OF THE PURCHASER AND NO DISCREPANCY IS FOUND. THE AO HAS TO EXERCISE HIS POWERS U/S 131 & 133(6) OF THE ACT TO VERIFY THE GE NUINENESS OF THE CLAIM AND CANNOT PROCEED ON SURMIS ES. THE AO MUST ESTABLISH THAT CASH HAS CHANGED HANDS. THERE IS NO MATERIAL OR EVIDENCE EVEN TO SUGGEST TH AT THE CHEQUES DIRECTLY OR INDIRECTLY EMANATED FROM TH E APPELLANT SO THAT IT COULD BE SAID THAT THE APPEL LANTS' OWN MONEY WAS BROUGHT BACK IN THE GUISE OF SALE PRO CEEDS. 19. IN THE CASE OF CIT VS. LAVANYA LAND PVT LTD. TH E HONBLE BOMBAY HIGH COURT RULED THAT THE ALLEGATIONS MADE BY THE AUTHORITIES HAVE T O BE SUPPORTED BY ACTUAL CASH PASSING HANDS OR ACTUALLY HAS CHANGED HANDS. 20. IN THE CASE OF DOLARRAI HEMANI VS. ITO, THIS TR IBUNAL HELD THAT THE FACT THAT THE STOCK IS THINLY TRADED & THERE IS UNUSUALLY HIGH GA IN, IS NOT SUFFICIENT TO TREAT THE LTCG AS BOGUS WHEN ALL THE PAPERWORK IS IN ORDER. THE REVEN UE HAS TO BRING MATERIAL ON RECORD TO SUPPORT IT'S FINDINGS THAT THERE HAS BEEN COLLUSION /CONNIVANCE BETWEEN THE BROKER & THE APPELLANT FOR THE INTRODUCTION OF UNACCOUNTED MONEY . 21. IN THE CASE OF DCIT VS. SUNITA KHEMKA, ITAT KOL KATA RULED THAT THE AO CANNOT TREAT A TRANSACTION AS BOGUS ONLY THE BASIS OF SUSP ICION OR SURMISES. HE HAS TO BRING MATERIAL 15 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 ON RECORD TO SUPPORT HIS FINDINGS THAT THERE HAS BE EN A COLLUSION/CONNIVANCE BETWEEN THE BROKER AND THE APPELLANT FOR THE INTRODUCTION OF IT S UNACCOUNTED MONEY. A TRANSACTION OF PURCHASE AND SALE OF SHARES, SUPPORTED BY CONTRACT NOTES AND D-MAT STATEMENTS AND ACCOUNT PAYEE CHEQUES CANNOT BE TREATED AS BOGUS. 22. IN THE CASE OF KAMALA DEVI S DOSHI VS. ITO ITAT MUMBAI, VIDE IT'S ORDER DATED 22.5.2017 HELD THAT STATEMENT U/S 131 OF THE ACT IMPLICATING APPELLANT IS NOT SUFFICIENT TO DRAW ADVERSE INFERENCE WHERE DOCUMENT S IN THE FORM OF CONTRACT NOTES, BANK STATEMENTS, STT PAYMENT ETC. PROVES THE GENUINENESS OF PURCHASE AND SALE OF PENNY STOCK. FAILURE TO PROVIDE CROSS EXAMINATION IS A FATAL ERR OR. 23. THE DECISION OF HONBLE BOMBAY HIGH COURT, NAGP UR BENCH IN CIT VS. SMT. JAMNADEVI AGRAWAL & ORS. DATED 23RD SEPTEMBER, 2010 REPORTED IN (2010) 328 ITR 656 WHEREIN IT WAS HELD THAT: 'THE FACT THAT THE ASSESSEES IN THE GROUP HAVE PURC HASED AND SOLD SHARES OF SIMILAR COMPANIES THROUGH THE SAME BROKER CANNOT BE A GROUND TO HOLD THAT THE TRANSACTIONS ARE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY ITA NOS. 93 TO 99/RPR/2 014 & C.O. NOS. 12 TO 18/RPR/2014 . A.Y. 2004-05 10 PRODUCED TO ESTABLISH THE GENUINENE SS OF THE CLAIM. FROM THE DOCUMENTS PRODUCED, IT IS SEEN THAT THE SHARES IN QUESTION WE RE IN FACT PURCHASED BY THE ASSESSEES ON THE RESPECTIVE DATES AND THE COMPANY HAS CONFIRMED TO H AVE HANDED OVER THE SHARES PURCHASED BY THE ASSESSEES. SIMILARLY, THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT IS TRUE THAT SOM E OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER, THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RATES PREVAILING ON T HE RESPECTIVE DATES AS IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEES. THEREFORE, TH E FACT THAT SOME OF THE TRANSACTIONS WERE OFF- MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. THE STATEMENT OF THE BROKER P THAT THE TRANSACTIONS WIT H THE H GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY E VIDENCE TO THE EFFECT THAT THE SHARES SOLD BY THE ASSESSEES WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE, THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE FINDI NGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUMENTARY EVIDENCE ON RECORD. THE TRIBUNAL HA S FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE,BANK ACCOUNTS OF SOME OF TH E BUYERS OF SHARES CANNOT BE LINKED TO THE ASSESSEES. MOREOVER, YN THE LIGHT OF THE DOCUMENTAR Y EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORM ITY WITH THE MARKET PRICE, THE TRIBUNAL RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS' BANK ACCOUNTS CANNOT BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE AB OVE FINDING RECORDED BY THE TRIBUNAL. THEREFORE, THE DECISION OF THE TRIBUNAL IS BASED ON FINDING OF FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL.ASSTT. C IT VS. KAMAL KUMAR S. AGRAWAL (INDL.) & ORS. (2010) 41 DTR (NAG) (TRIB) 105: (2010) 133 TTJ (NAG) 818 AFFIRMED; SUMATI DAYAL VS. CIT (1995) 125 CTR (SC) 124: (1995) 80 TAXMAN 89 (S C) DISTINGUISHED. 16 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 12. THE HON'BLE HIGH COURT OF RAJASTHAN IN CIT VS. SMT. PUSHPA MALPANI - REPORTED IN (2011) 242 CTR (RAJ.) 559; (2011) 49 DTR 312 DISMISSED THE APPEAL OF DEPARTMENT OBSERVING 'WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIP T OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME O F TRANSACTIONS, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHAR E CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALAN CE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS, OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. THEREFORE, 'TH E PRESENT APPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 24. THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF ANUPAM KAPOOR 299 ITR 0179 HAS HELD AS UNDER:- THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SATES, DISTINCTIVE NUMBERS OF SHARES PURCH ASED AND SOLD, COPY OF SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DATE OF PURCHASE AND SALE WERE SUFFICIENT MATERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSAC TION. THE PURCHASE OF SHARES WAS MADE ON 28TH APRIL, 1993 I.E.. ASST. YR. 1993-94 AND THAT A SSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLENGE TO THE PURCHASE OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE THE RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IN THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOL DING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLA CE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE AO MERELY ON SURM ISES AND CONJECTURES. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLA CED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN I NVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. --THEREFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLE D LAW THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUE STION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATION. C. VASANTLAL & CO . VS. CIT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (.1958) 34 ITR 501 (KER)) AND MU KAND SINGH VS. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB) RELIED ON; UMACHARAN SHAW &BRO S. VS. CIT (1959) 37 ITR 271 (SC) APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR (P & H ) 624 DISTINGUISHED 25. M/S CLASSIC GROWERS LTD. VS. CIT [ITA NO. 129 OF 20 12] (CAL HC) IN THIS CASE THE LD AO FOUND THAT THE FORMAL EVIDEN CES PRODUCED BY THE ASSESSEE TO SUPPORT HUGE LOSSES CLAIMED IN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE STAGE MANAGED. THE HONBLE HIGH COURT HELD THAT THE OPINION OF THE AO THAT THE ASSESSEE GENERATED A SIZEABLE AMOUNT OF LOSS OUT OF PREARRANGED TRANSACTIONS SO A S TO REDUCE THE QUANTUM OF INCOME LIABLE FOR TAX MIGHT HAVE BEEN THE VIEW EXPRESSED BY THE LD A O BUT HE MISERABLY FAILED TO SUBSTANTIATE THAT. THE HIGH COURT HELD THAT THE TRANSACTIONS WER E AT THE PREVAILING PRICE AND THEREFORE THE SUSPICION OF THE AO WAS MISPLACED AND NOT SUBSTANTI ATED. 17 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 26. CIT V. LAKSHMANGARH ESTATE & TRADING CO. LIMITED [2 013] 40 TAXMANN.COM 439 (CAL) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD THAT ON THE BASIS OF A SUSPICION HOWSOEVER STRONG IT IS NOT POSSIBLE TO RECORD ANY FINDING OF FACT. AS A MATTER OF FACT SUSPICION CAN NEVER TAKE THE PLACE OF PROOF. IT WAS FURTHER HELD THAT I N ABSENCE OF ANY EVIDENCE ON RECORD, IT IS DIFFICULT IF NOT IMPOSSIBLE, TO HOLD THAT THE TRANS ACTIONS OF BUYING OR SELLING OF SHARES WERE COLOURABLE TRANSACTIONS OR WERE RESORTED TO WITH UL TERIOR MOTIVE. 27. CIT V. SHREYASHI GANGULI [ITA NO. 196 OF 2012] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT HELD T HAT THE ASSESSING OFFICER DOUBTED THE TRANSACTIONS SINCE THE SELLING BROKER WAS SUBJECTED TO SEBIS ACTION. HOWEVER THE TRANSACTIONS WERE AS PER NORMS AND SUFFERED STT, BROKERAGE, SERV ICE TAX, AND CESS. THERE IS NO IOTA OF EVIDENCE OVER THE TRANSACTIONS AS IT WERE REFLECTED IN DEMAT ACCOUNT. THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 28. CIT V. RUNGTA PROPERTIES PRIVATE LIMITED [ITA NO. 1 05 OF 2016] (CAL HC) IN THIS CASE THE HONBLE CALCUTTA HIGH COURT AFFIRM ED THE DECISION OF THIS TRIBUNAL , WHEREIN, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE WHERE T HE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF HIS TRANSACTIONS IN ALLEGED PENNY STOCKS. THE TRIBUNAL FOUND THAT THE AO DISALLOWED THE LOSS ON TRADING OF PENNY STOCK ON TH E BASIS OF SOME INFORMATION RECEIVED BY HIM. HOWEVER, IT WAS ALSO FOUND THAT THE AO DID NOT DOUB T THE GENUINENESS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THE TRIBUNAL HELD THAT T HE AOS CONCLUSIONS ARE MERELY BASED ON THE INFORMATION RECEIVED BY HIM. THE APPEAL FILED BY TH E REVENUE WAS DISMISSED. 29. CIT V. BHAGWATI PRASAD AGARWAL [2009- TMI-34738 (C AL HC) IN ITA NO. 22 OF 2009 DATED 29.4.2009] IN THIS CASE THE ASSESSEE CLAIMED EXEMPTION OF INCO ME FROM LONG TERM CAPITAL GAINS. HOWEVER, THE AO, BASED ON THE INFORMATION RECEIVED BY HIM FROM CALCUTTA STOCK EXCHANGE FOUND THAT THE TRANSACTIONS WERE NOT RECORDED THERE AT. HE THEREFORE HELD THAT THE TRANSACTIONS WERE BOGUS. THE HONBLE JURISDICTIONAL HIGH COURT, AFFIRMED THE DECISION OF THE TRIBUNAL WHEREIN IT WAS FOUND THAT THE CHAIN OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE HAVE BEEN PROVED, ACCOUNTED FOR, DOCUMENTED AND SUPPORTED BY EVIDENCE. IT WAS ALSO FOUND THAT THE ASSESSEE PRODUCED THE CONTRACT NOTES, DETAILS OF DE MAT ACCOUNTS AND PRODUCED DOCUMENTS SHOWING ALL PAYMENTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKS. ON THESE FACTS, THE APPEAL OF THE REVENUE WAS SUMMARILY DISMISSED BY HIGH COUR T. 30. IN THE AFORESAID FACTUAL BACKGROUND DISCUSSED AND CASE LAWS CITED, WE ARE OF THE CONSIDERED OPINION THAT WHILE PASSING THE ASSESSMEN T ORDER, THE AO DID NOT FOLLOW A VIEW WHICH CAN BE SAID TO BE UNSUSTAINABLE IN LAW RATH ER WE WOULD SAY THAT IT WAS A PLAUSIBLE VIEW TAKEN BY AO AFTER INQUIRY IN LINE WITH THE JUD ICIAL PRECEDENTS CITED SUPRA. IN THE CIRCUMSTANCES THEREFORE, THE JURISDICTIONAL FACTS A S WELL AS LAW FOR USURPING THE JURISDICTION, 18 ITA NO. 1614/KOL/2019 M/S. PATRON VINIMY PVT. LTD., AY: 2014-15 BEING ABSENT, WE HOLD THAT THE ACTION OF LD. PR. CI T WAS WITHOUT JURISDICTION AND, THEREFORE, ALL SUBSEQUENT ACTIONS ARE 'NULL' IN THE EYES OF LA W. WE THEREFORE QUASH THE ORDER OF LD. PR. CIT IMPUGNED BEFORE US. 31. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST D ECEMBER, 2019 SD/- SD/- (P.M. JAGTAP) (ABY. T. VARKEY) VICE-PRESIDENT JUDICIAL MEMBER DATED : 31ST DECEMBER, 2019 JD. (SR. P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. PATRON VINIMAY PVT. LTD.GB-35, CHANDRIMA APARTMENT, NARAYANTALA, WEST FLAT-A/B, BAGUIHATI, KOLKATA-700 059. 2 RESPONDENT ITO, WARD-10(4), KOLKATA. 3. CIT KOLKATA 4. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA