VINOD KUMAR GOYEL HUF, MUMBAI V. A.C.I.T. 23(3), MUMBAI

ITA 1651/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75260 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Share purchase agreement; Opportunity of being heard; Difference of opinion; Change of opinion
• Section: 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI I.P.BANSAL & SHRI D.KARUNAKARA RAO, AM ITA NO. 165 1 / MUM/20 1 1 ( ASSESSMENT YEAR : 200 6 - 0 7 ) VINOD KUMAR GOEL HUF, 1503, EMERLAD, NIRMAL LIFESTYLES, LBS MARG, MULUND(W) , MUMBAI - 80 VS. CIT - 23, MUMBAI - 400 051 PAN/GIR NO. : A AAHV 8979 D ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. BHUPENDRA SHAH /REVENUE BY : MR . SANTOSH KUMAR DATE OF HEARING : 1 ST JANUARY , 201 4 DATE OF PRONOUNCEMENT : 8 TH JANUARY , 201 4 O R D E R PER I.P.BANSAL ( J .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER DATED 27 - 1 - 2011, PASSED BY THE LEARNED CIT - 23 , MUMBAI UNDER SECTION 263 OF THE IT ACT, 1961( THE ACT ) FOR THE ASSESSMENT YEAR 200 6 - 0 7 . 2 . THE GROUNDS OF APPEAL IN APPEAL OF THE ASSESSEE ARE AS UNDER: - 1 ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CLT ERRED IN INVOKING SECTION 263 TO THE CASE OF THE APPELLANT ONLY ON GUESS AND SURMISES, WITHOUT POINTING OUT ANY ERROR IN THE ORDER OF THE A.O. BY DISREGARDING DETAILED SUBMISSIONS MADE TO HER FROM TIME TO TIME . 2) ON THE FACTS OF THE CASE AND IN LAW, THE SHOW CAUSE NOTICE AND/ OR ORDER U / S 263 ALLEGING ERRORS AND PREJUDICE, ITSELF IS ERRONEOUS ON MANY COUNTS AS FOLLOWS. ITA NO. 165 1 /20 1 1 2 A) ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CLT HAS ERRED IN INVOKING THE PROVISION OF SECTION 263 MERELY BECAUSE SHE WANTS TO TAKE A VIEW DIFFERENT FROM THE ONE TAKEN BY THE ASSESSING OFFICER. B) ON THE FACTS OF THE CASE AND IN LAW, THE LEARNE D CLT HAS ERRED IN PRESUMING THAT THE ASSESSING OFFICER ACCEPTED LONG TERM CAPITAL GAIN ON SALE OF SHARES OF PRRANETA INDUSTRIES LTD. WITHOUT INQUIRY BY DISREGARDING THE FACT THAT ALL THE DETAILS LIKE STATEMENT OF PURCHASE & SALES, DEMAT ACCOUNT, BROKER LE DGER, INVESTMENT OF SALES P ROCEEDS, BANK STATEMENTS. DETAIL S OF LISTING. NO. OF SHARES PURCHASED AND SOLD, NAME; ADDRESS AND PA OF BROKERS, CONTRACT NOTES & FORM 10 DB WERE DULY FURNISHED TO THE ASSESSING OFFICER. C) ON THE FACTS OF THE CASE AND IN LAW. THE LEARNED CLT HAS ERRED IN PRESUMING THAT THE ASSESSING OFFICER ACCEPTED SHORT TERM CAPITAL GAIN ON SALE OF SHARES OF HIREN ORGOCHEM LTD. WITHOUT INQUIRY BY DISREGARDING THE FACT THAT ALL THE DETAILS LIKE STATEMENT OF PURCHASE & SALES, DEMAT ACCOUNT, BR OKER LEDGER, INVESTMENT OF SALES PROCEEDS, BANK STATEMENTS, DETAILS OF LISTING. NO. OF SHARES PURCHASED AND SOLD, NAME; ADDRESS AND PAN OF BROKERS, CONTRACT NOTES & FORM 10 DB WERE DULY FURNISHED TO THE ASSESSING OFFICER. D) ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CLT HAS ERRED IN DISREGARDING THE FACT THAT 26,000 SHARES OF PRRANETA INDUSTRIES LTD. WERE KEPT IN PHYSICAL FROM AT THE TIME OF PURCHASE AND THEREAFTER THEY WERE SPLIT INTO SHARE OF RE. 1 EACH AND THEREAFTER THE SHARES WERE DEMATERIALIZ ED. E) ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CLT HAS ERRED IN DISREGARDING THE FACT THAT 7,000 SHARES OF HIREN ORGOCHEM LTD. ONLY WERE PERTA INING TO THE APPELLANT AND DEM AT A / C CONFIRMED THE REVERSAL OF REMAINING 3,500 SHARES. F) ON THE FA CTS OF THE CASE AND IN LAW, THE LEARNED CLT HAS ERRED IN OVERLOOKING VARIOUS JUDGMENTS PRONOUNCED BY THE DIFFERENT COURTS . 3 . SECTION 263 HAS BEEN INVOKED BY LEARNED CIT ON TWO ISSUES, WHICH ARE AS UNDER : - I) REGARDING 26000 SHARES OF PRRANETA INDUSTR IES LTD. (PI) WHICH WAS SHOWN TO BE PURCHASED IN CASH FOR RS.35,095/ - ON 6 - 4 - 2004 AND KEPT IN PHYSICAL FORM. SUBSEQUENTLY, THESE SHARES WERE SPLIT OFF BY THE COMPANY FROM THE FACE VALUE OF RS.10/ - TO ITA NO. 165 1 /20 1 1 3 RE.1/ - . AS PER COPY OF DEMAT ACCOUNT WITH NSDL, ASSESSEE S DEMAT ACCOUNT WAS CREDITED WITH 2,60,000 SHARES OF PI ON 6 - 9 - 2005. THESE SHARES WERE SOLD ON DIFFERENT DATES IN SEPTEMBER, 2005 THROUGH NAMAN SECURITIES AND FINANCE PVT. LTD. FOR A TOTAL CONSIDERATION OF RS. 56,50,510/ - . II) REGARDING SHORT TERM CAPITAL GAIN ON TRANSFER OF SHARES OF HIREN ORGOCHEM, IT WAS NOTICED THAT THE DEMAT ACCOUNT OF THE ASSESSEE SHOWED PURCHASE AND SALE OF 10500 SHARES AS AGAINST 7000 SHARES SHOWN IN THE SHORT TERM CAPITAL GAIN. IT IS FURTHER NOTICED THAT 7000 SHARES OF HIREN ORGOC HEM WERE PURCHASED BY THE ASSESSEE ON 2 - 5 - 2005 FOR RS.2,45,944/ - AND WERE SOLD ON 30 TH /31 ST AUGUST, 2005 FOR A SUM OF RS. 14,28,287/ - . 3.1 THE MAIN OBJECTION OF THE LEARNED CIT IS THAT THESE TRANSACTIONS HAVE BEEN ENTERED INTO BY THE ASSESSEE WITH AN INT ENTION TO BUILD UP CAPITAL . THE AO DID NOT APPLY HIS MIND ON THE SE TRANSACTIONS. THE ASSESSEE DID NOT GIVE CONCRETE SATISFACTORY EVIDENCE REGARDING PURCHASE OF SHARES OF PRRANETA INDUSTRIES ON 6 - 4 - 2004. THESE SHARES HAVE NEVER APPEARED IN DEMAT ACCOUNT. TH ERE IS NO CONCLUSIVE PROOF OF CASH PAYMENT. SINCE ACCORDING TO THE CIT, THIS ISSUE REQUIRES THOROUGH EXAMINATION, THEREFORE, HE HA S SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO LOOK INTO THE WHOLE TRANSACTIONS AS A CAPITAL BUILD UP CASE AND ALSO T O EXAMINE THE CREDIBILITY OF M/S P RRANETA INDUSTRIES LTD. AS TO WHETHER THE SHARES OF THE SAID COMPANY WAS LISTED IN THE STOCK ITA NO. 165 1 /20 1 1 4 EXCHANGE AND HOW MANY SHARES WERE LISTED IN THE STOCK EXCHANGE FROM 2005 - 06 TO 2006 - 07. HE ALSO DIRECTED THE AO TO EXAMINE THE GE NUINENESS OF THE TRANSACTION WITH THE STOCK BROKER. 3.2 WITH REGARD TO SECOND TRANSACTION, WHICH RELATES TO HIREN ORGOCHE M, LEARNED CIT FOUND THAT THE SHARES HAVE BEEN APPRECIATED ALMOST 7 TIMES OVER THE PERIOD OF 4 MONTHS FOR RS. 14,28,297/ - AND DIRECTED THE AO TO EXAMINE THE TRANSACTIONS ON THE SIMILAR LINES AS PER DIRECTION S GIVEN WITH REGARD TO THE TRANSACTION S OF SHARES OF PRRANETA INDUSTRIES. 3.3 IN THIS MANNER, LEARNED CIT HAS TREATED THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICE TO THE INTERES T OF REVENUE AND DIRECTED THE AO TO REDO THE ASSESSMENT AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4 . LEARNED AR SUBMITTED THAT THE ASSESSMENT PROCEEDING IN THE PRESENT CASE WAS STARTED WITH NOTICE ISSUED BY THE AO FOR SCRUT I NY , WHICH IS DAT ED 20 - 7 - 2007 , COPY OF WHICH HAS BEEN PLACED AT PAGE 22 IN THE PAPER BOOK. VIDE LETTER DATED 3 - 9 - 2007, THE ASSESSEE REQUESTED TO ISSUE QUESTIONNAIRE , COPY OF WHICH HAS BEEN PLACED AT PAGE 23 OF THE PAPER BOOK. ACCORDINGLY, THE AO ISSUED NOTICE TO THE ASSESS EE, WHICH IS DATED 10 - 10 - 2007, COPY OF WHICH HAS BEEN PLACED AT PAGE 24 OF THE PAPER BOOK. THE ASSESSEE WAS REQUIRED TO FURNISH VARIOUS EXPLANATION AND SPECIFIC QUERIES WERE RAISED REGARDING SHARE TRANSACTION S OF THE ASSESSEE AND EARNING CAPITAL GAIN THERE FROM. LD. AR INVITED OUR ITA NO. 165 1 /20 1 1 5 ATTENTION TO THE QUERIES NO. 6 & 7 IN THE NOTICE ISSUED ON 10 - 10 - 2007, WHICH ARE AS UNDER : - X X X X X X X 6. DETAILS OF TRADING SALES AND PURCHASES WITH QUANTITY, VALUE AND RATES IN SHARES AND DEBENTURES (WITH COPIES OF BROKERS NO TE). NAME OF THE BROKERS AND WHO SOLD AND PURCHASED SHARES ON BEHALF OF YOU. A) PLEASE GIVE THE DETAILS OF SHARE TRANSACTIONS MADE BY YOU WITH BANK STATEMENT SHOWING THE PAYMENT RECEIVED AND PAID. B) PLEASE GIVE DATE WISE DETAILS OF PURCHASED AND SALE OF S HARE. C) DETAILS OF CAPITAL GAIN/LOSS D) DETAILS OF INVESTMENT MADE IN MOVABLE AND IMMOVABLE PROPERTIES DURING THE PREVIOUS YEAR. DETAILS OF TRADING SALES AND PURCHASES WITH QUANTITY VALUE AND RATES IN SHARES AND DEBENTURES (WITH COPIES OF BROKERS NOTE) - N AME OF THE BROKERS AND WHO SOLD AND PURCHASED SHARES ON BEHALF OF YOU. E) PLEASE GIVE THE DETAILS OF SHARE TRANSACTIONS MADE BY YOU WITH BANK STATEMENT SHOWING THE PAYMENT RECEIVED AND PAID. F) PLEASE GIVE DATE WISE DETAILS OF PURCHASED AND SALE OF SHARE. 7. DETAILS OF CAPITAL GAIN/LOSS. HE SUBMITTED THAT COMPLETE DETAILS WERE SUBMITTED BEFORE THE AO AND COPIES OF THESE CORRESPONDENCES ARE ALSO PLACED IN THE PAPER BOOK. REFERENCE WAS MADE TO THE FOLLOWING DOCUMENTS : - SL. NO DATE PARTICULARS PAGE IN PB 1 22 - 10 - 07 (I) DETAILS REGARDING BRIEF HISTORY OF THE ASSESSEE & SOURCE OF INCOME 26 (II) DETAILS OF FAMILY MEMBERS AND THEIR OCCUPATION WITH DETAILS OF DRAWING (III) DETAILS OF BANK WITH THEIR NAME AND ADDRESS. (IV) COPIES OF BANK STATEMENT (V ) BOOKS OF ACCOUNTS 2. 10 - 1 - 08 (I) DETAILS OF CAPITAL A/C & BALANCE SHEET OF THE COMPANY 29 (II) NAME OF THE BROKERS & BROKER NOTES (III) DETAILS OF SHARE TRANSACTIONS (IV) NAME & ADDRESS OF SISTER CONCERNS 3. 24 - 7 - 08 (I) C ONFIRMATION OF UN SECURED LOANS 30 (II) COPY OF DEMAND ACCOUNT SHOWING TRANSACTIONS IN SHARES DURING THE YEAR (III) COY OF BROKER NOTES FOR PURCHASE OF SHARES RELATING TO LONG - TERM CAPITAL GAIN. IT WAS ALSO MENTIONED THAT COPIES OF BROKER NOTES FOR SALE OF SHARES WERE SUBMITTED VIDE LETTER DTD.10 - 1 - 08 ITA NO. 165 1 /20 1 1 6 4. 7 - 8 - 08 (I) COPY OF ACCOUNT OF BROKER M/S DPS SHARE SECURITIES (P) LTD. FOR AY 2005 - 06. ANNX - 1 (II) PROOF OF PAYMENTS OF SHARE PURCHASED OF PRRANEET IND. ANNX - 2 (III) PROOF OF DELIVERY OF SHARE OF PRRANEET IND. I N DEMAT ACCOUNT ANNX - 3 (IV) COPY OF DEMAT ACCOUNT. ANNX - 4 5 . REFER RING TO THE AFOREMENTIONED CORRESPONDENCES SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS CONTENDED BY THE LEARNED AR THAT THE AO HAD REQUIRED THE ASSESSE E TO PRODUCE ALL THE DOCUMENTS WHICH WERE PRODUCED AND AFTER EXAMINING THOSE DOCUMENTS, THE AO ACCEPTED THE CLAIM OF THE ASSESSEE REGARDING LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN EARNED ON THE SHARE TRANSACTIONS . HE SUBMITTED THAT T HERE IS NO QUESTION OF NON - APPLICATION OF MIND BY THE AO AS THE AO REQUIRED THE ASSESSEE TO FURNISH THE INFORMATION FROM TIME TO TIME WHICH WAS DULY FURNISHED. HE FURTHER SUBMITTED THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE HAVE SUFFERED SECURITY TRANSAC TION TAX , T HEREFORE, THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON SHARES HAS NO TAX LIABILITY. SIMILARLY, FOR SHORT TERM CAPITAL GAIN, WHERE THE STT IS PAID THE ASSESSEE ENJOYED CONCESSIONAL TAX LIABILITY. TH US, LD. AR PLEADED THAT THERE IS NO PREJ UDICE TO THE INTEREST OF REVENUE. THEREFORE, IT WAS SUBMITTED THAT SECTION 263 HAS WRONGLY BEEN INVOKED BY THE LEARNED CIT. LEARNED AR RELIED UPON THE FOLLOWING DECISIONS TO SUPPORT HIS FOLLOWING CONTENTIONS : - A . TO INVOKE SECTION 263, THE ASSESSMENT ORD ER PASSED BY THE AO SHOULD BE ERRONEOUS AS WELL AS PREJUDICE TO ITA NO. 165 1 /20 1 1 7 THE INTEREST OF REVENUE AND BOTH THE CONDITIONS MUST CO - EXIST : I) 243 ITR 83 (SC) (MALABAR INDUSTRIAL CO. LTD. VS. CIT) ; II) 203 ITR 108 (93) (CIT VS. GABRIAL INDIA LTD.); III) 163 ITR 129(97) (VENKATA K RISHNA RICE CO. VS. CIT); B . IN A CASE WHERE THE AO HAD UNDERTAKEN THE REQUIRED INVESTIGATION IN ALLOWING THE CLAIM FOR DEDUCTION UNDER SECTION 80M AND THE ASSESSEE HAD PRODUCED MATERIAL TO SHOW THAT THE DIVIDEND IN QUESTION HAD SUFFERED DIVIDEND TAX WITH IN THE MEANING OF S.115 - O, THE CIT ERRED IN EXERCISING HIS REVISION POWERS TO REVERSE THE ORDER PASSED BY THE AO : I) 31 SOT 278 (2009) (NEELAM MERCANTILE (P) LTD. VS. ITO); II) 21 SOT 111(2008 ) (ECD ELECTRONICS & ELECTROLYSIS PVT. LTD. VS. CIT); III) 108 ITD 321 (2007) (HABIBULLAH KHANYARI VS DCIT); IV) 86 TTJ 1095 (MRS. KHATIZA S. OOMMERBHOY VS. ITO); V) 16 SOT 119 (GIRDHARI LAL B. ROHRA VS. CIT); VI) 50 TTJ 64 (DECOROUS INVESTMENT & TRADING CO. LTD. VS. ACIT) VII 125 TTJ 64 (RAJIV AGNIHOTRI VS . CIT) C . MERE NON DISCUSSION IN ASSESSMENT ORDER DOES NOT MEAN TO NON APPLICATION OF MIND : I) 177 TAXMANN 9(2009) (CIT VS. DESIGN & AUTOMATION ENGINEERS (BOMBAY) (P) LTD.) II) 180 TAXMANN 623 (CIT VS. ASHISH RAJPAL); III) 13 SOT 600 (2012) (BIRLA GLO BAL FINANCE LTD. VS. ACIT); IV) 54 SOT 7 (2012) (NARIMAN POINT BUILDING SERVICES & TRADING (P) LTD. VS. CIT); V) 34 SOT 245 ( RELIANCE COMMUNICATIONS INFRASTRUCTURE LTD. VS. CIT); ITA NO. 165 1 /20 1 1 8 VI) 88 ITD 118 (2004) (DHRUV N. SHAH VS. DCIT); VII) 22 SOT 68 (AHALYA TRADING (P) LTD. VS. CIT); & VIII) 18 SOT 1 (2007) (F.A.A. JASDANWALLA VS. CIT) PARTICULAR REFERENCE WAS MADE TO THE DECISION IN THE CASE OF DHRUV N. SHAH VS. DCIT, 88 ITD 118 (MUM) , WHEREIN IT HAS BEEN HELD THAT IF THE ORDER OF AO DOES NOT CONTAIN DETAI LED DISCUSSION AND THE ASSESSEE HAS OFFERED A DETAILED EXPLANATION ABOUT NON - CHARGEABILITY OF A PARTICULAR RECEIPT ON BEING REQUIRED BY THE AO AND THE AO HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER BEING SATISFIED WITH THE EXPLANATION, THE CIT CANNOT TERM THE ORDER OF AO AS ERRONEOUS SIMPLY BECAUSE THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. 6 . LD. AR SUBMITTED THAT AFTER EXAMINING THE DOCUMENTS OF THE ASSESSEE SUBMITTED BY THE ASSESSEE, THE AO HAS TAKEN A POSSIBLE VIEW AND CHANGE OF OPINION BY THE COMMISSIONER IS NOT PERMITTED U/S.263 . PARTICULAR REFERENCE IN THIS REGARD WAS MADE TO THE DECISION OF THE H O N BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. VS. CIT, 1 TAXMANN. COM 58 (2010) (BOM) , WHEREIN IT HAS BEEN HELD THAT WHEN A VIE W TAKEN BY THE AO CANNOT BE REGARDED AS UNSUSTAINABLE IN LAW, THEN THE CIT CANNOT RESORT TO SECTION 263 OF THE ACT. THUS, IT IS PLEADED BY THE LEARNED AR THAT SECTION 263 HAS WRONGLY BEEN INVOKED AND THE SAME DESERVES TO BE QUASHED. 7 . ON THE OTHER HAN D , LEARNED DR SUBMITTED THAT FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT THE AO DID NOT APPLY HIS MIND TO THE ISSUES REGARDING LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN OF ITA NO. 165 1 /20 1 1 9 THE SHA RES, WHICH WERE PURCHASED AND SOLD BY THE ASSESSEE. HE SUBMITTED THA T NON - APPLICATION OF MIND BY THE AO GIVES AUTHORITY TO CIT TO INVOKE SECTION 263 OF THE ACT. TH US, IT WAS PLEAD ED BY LEARNED DR THAT THE ORDER PASSED BY THE LEARNED CIT SHOULD BE UPHELD. 8 . WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFUL LY BEEN CONSIDERED. WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER IN WHICH THERE IS NO DISCUSSION REGARDING THE ISSUE RELATING TO SALE AND PURCHASE OF SHARES. HOWEVER, FROM THE LETTERS ISSUED BY THE AO, WHICH HAVE BEEN DISCUSSED IN THE ABOVE PART OF THIS ORDER, IT IS CLEAR THAT A DETAILED EXAMINATION HAS BEEN DONE BY THE AO REGARDING TRANSACTION S OF SALE & PURCHASE OF SHARES ENTERED INTO BY THE ASSESSEE. INVESTIGATION IN THIS REGARD WAS STARTED VIDE NOTICE DATED 10 - 10 - 2007. THEREAFTER , ON VARIOUS DAT ES, HE WAS REQUIRING THE ASSESSEE TO SUBMIT VARIOUS DETAILS. IN THE LETTERS SUBMITTED BY THE ASSESSEE TO THE AO, THE DETAILS ARE SUBMITTED AS PER REQUIREMENT OF THE AO. THE CORRESPONDENCES ENTERED INTO BETWEEN THE ASSESSEE AND THE AO, CLEARLY REVEAL THAT T HE AO REQUIRED THE ASSESSEE TO FILE VARIOUS DETAILS, WHICH WERE FILED BY THE ASSESSEE. SO FAR AS IT RELATES TO SHARE PURCHASED BY THE ASSESSEE FROM PRRANET A INDUSTRIES, THE ASSESSEE HAS FILED THE PROOF OF PURCHASES IN THE SHAPE OF LEDGER ACCOUNT IN THE NAM E OF DPS SHARES SECURITIES PVT. LTD. COPY OF THIS LEDGER ACCOUNT HAS BEEN PLACED AT PAGE 29 OF THE PAPER BOOK. THE ASSESSEE ALSO SUBMITTED COPY OF PHYSICAL SHARES OF PRRANETA LEASE AND FINANCE LIMITED , WHICH IS PLACED AT PAGES 68 TO 71 OF THE PAPER BOOK. A T PAGE ITA NO. 165 1 /20 1 1 10 68 OF THE PAPER BOOK, 8700 SHARES OF FACE VALUE OF RS.10/ - WERE REGISTERED IN THE NAME OF DARSHAN R VADALIA. THESE WERE TRANSFERRED IN THE NAME OF ASSESSEE ON 1 8 TH MAY, 2004 BY THE COMPANY. SIMILARLY, AT PAGE 69, 17300 SHARES OF FACE VALUE OF RS. 1 0/ - WERE ALLOTTED IN THE NAME OF NEETABEN NAVNEETBHAI VADALIA, WHICH WAS TRANSFERRED IN THE NAME OF ASSESSEE ON 18 TH MAY, 2004. AT PAGE 70, AFTER SPLIT , 87000 SHARES WERE ISSUED IN THE NAME OF ASSESSEE ON 20 - 4 - 2005, IN LIEU OF 8700 SHARES. AT PAGE 71, SHAR E CERTIFICATE OF 173000 SHARES ALLOTTED TO ASSESSEE ON 20 - 4 - 05 IN LIEU OF 173000 IS ATTACHED. THERE IS A CHANGE IN THE NAME OF THE COMPANY FROM PRRANETA LEASE AND FINANCE LTD. TO PRRANETA INDUSTRIES LTD. HOWEVER, R EGISTERED F OLIO N UMBER OF THE ASSESSEE RE MAINS SAME. THESE SHARE CERTIFICATES WERE GOT DEMAT BY THE ASSESSEE ON 6 - 9 - 2005, COPY OF THE DEM A T ACCOUNT IS FILED AT PAGE 72 OF THE PAPER BOOK. 8.1 THE OTHER REASONS STATED BY THE ASSESSEE FOR NOT PURCHASING THE SHARES OF PRRANETA INDUSTRIES IN DEMAT A CCOUNT IS THAT THE SHARE WHICH WERE PURCHASED BY THE ASSESSEE WERE IN PHYSICAL FORM AND THE COMPANY HAD TO SPLIT THE SAME. THEREFORE, AFTER SPLIT, THE SHARES WERE DEPOSITED IN THE ASSESSEES DEMAT ACCOUNT. THE SHARES WERE DULY TRANSFERRED BY THE COMPANY IN THE NAME OF THE ASSESSEE ON 18 TH MAY, 2004. 9 . SO FAR IT RELATES TO TRANSACTIONS OF THE ASSESSEE REGARDING SHARES OF HIREN ORGOCHEM LTD., IT IS POINTED OUT TO LEARNED CIT BY THE ASSESSEE THAT 3500 SHARES WERE WRONGLY CREDITED TO DEMAT ACCOUNT OF ITA NO. 165 1 /20 1 1 11 THE ASSE SSEE AND THE SAID ENTRY WAS REVERSED BACK. TO SUPPORT SUCH CONTENTIONS, ASSESSEE HAS SUBMITTED A COPY OF DEMAT ACCOUNT . ON THIS ISSUE, LEARNED CIT HAS NOT DOUBTED THE CONTENTION OF THE ASSESSEE AND HE HAS OBSERVED THAT ADEQUATE ENQUIRY HAS NOT BEEN MADE AB OUT THE GENUINENESS OF THE COMPANY AS 7000 SHARES OF RS.2,45,944/ - WERE PURCHASED ON 2 - 5 - 2005 AND APPRECIATED ALMOST 7 TIMES OVER THE PERIOD OF FOUR MONTHS FOR RS. 14,28,287/ - . ON THIS ISSUE WE HAVE FOUND THAT THESE SHARES WERE PURCHASED BY THE ASSESSEE ON 26 - 8 - 2005 AND THOSE WERE SOLD ON 30 TH /31 ST AUGUST, 2005 AND ITS TRANSACTIONS ARE ALSO FOUND IN THE DEMAT ACCOUNT OF THE ASSESSEE, COPY OF WHICH IS PLACED AT PATE 72 OF THE PAPER BOOK. THESE DOCUMENTS WERE PRODUCED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE, IT CANNOT BE SAID THAT EITHER THE AO DID NOT E N QUIRE ABOUT THE ISSUE OF CAPITAL GAIN ARISING OUT OF SALE & PURCHASE OF SHARES OR ASSESSEE DID NOT FURNISH REQUIRED INFORMATION. THE TRANSACTIONS ARE DULY SUPPORTED BY THE BILLS ISSUED BY THE BROKER AND ARE THROUGH STOCK EXCHANGE FOR WHICH APPROPRIATE EVIDENCES WERE SUBMITTED. 10 . IN VIEW OF THE ABOVE FACTS, IT CAN BE OBSERVED THAT SECTION 263 HAS BEEN INVOKED ONLY FOR THE REASON THAT THE AO DID NOT APPLY HIS MIND ON T HESE TRANSACTIONS. THIS FINDING OF THE LEARNED CIT IS AGAINST THE CORRESPONDENCE AND EVIDENCES WHICH ARE PLACED ON RECORD BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND COPY OF THESE DOCUMENTS ARE ALSO FILED BEFORE US. ITA NO. 165 1 /20 1 1 12 11 . LEARN ED CIT ALSO COULD NOT SPECIFY ANY DISCREPANCY EITHER IN THE RATES OF SHARES PURCHASED AND SOLD BY THE ASSESSEE OR ANY INCORRECTNESS IN THE CLAIM OF THE ASSESSEE REGARDING CAPITAL GAIN SHOWN BY THE ASSESSEE AS ALL THE FACTS WERE AGAIN PLACED BEFORE HIM. IN ABSENCE OF ANY MATERIAL TO SUGGEST THAT THESE TRANSACTIONS WERE NOT VALID/GENUINE TRANSACTIONS, IT WILL MERE BE A CASE OF A CHANGE OF OPINION BY THE LEARNED CIT. ON THE BASIS OF INFORMATION SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEED INGS, IF THE AO HAS FORMED AN OPINION, WHICH IS NOT UN SUSTAINABLE IN LAW, SECTION 263 CANNOT BE INVOKED JUST FOR THE REASON THAT THE COMMISSIONER HAS SOME DIFFERENT VIEW . THE CASE LAWS SUBMITTED BY THE LEARNED AR DULY SUPPORT THIS PROPOSITION. 12. SIMILA RLY, WHEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS SOUGHT EXPLANATION OF THE ASSESSEE ON SOME ISSUE BY REQUIRING THE ASSESSEE TO FURNISH EVIDENCE TO SUPPORT ITS CASE AND THE SAME ARE SHOWN TO BE FURNISHED BY THE ASSESSEE, THEN MERE NON - DISCUS SION OF THE SAID ISSUE BY THE AO IN THE ASSESSMENT ORDER, CANNOT LEAD TO A CONCLUSION THAT THE AO HAS NOT APPLIED HIS MIND ON THAT ISSUE AND SUCH PROPOSITION IS ALSO SUPPORTED BY THE CASE LAW RELIED UPON BY THE LEARNED AR. 13 . IN VIEW OF ABOVE DISCUSSIO N, WE HOLD THAT POWER UNDER SECTION 263 HAS NOT BEEN VALIDLY EXERCISED BY THE LEARNED CIT. HENCE, THE ORDER PASSED UNDER SECTION 263 IS HEREBY CANCELLED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 165 1 /20 1 1 13 1 4 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH JANUARY . 201 4 . 8 TH JAN,2014 SD/ - SD/ - ( ) ( D.KARUNAKARA RAO ) ( ) ( I.P.BANSAL ) / ACCOUNTANT MEMBER / JUDICIALMEMBER MUMBAI ; DATED 08 / 01/2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//