Shri. Surendra Kedia, Bangalore V. Principal Commissioner Of Income Tax, Bengaluru

ITA 2183/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7102 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-09-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Assessment record; Capital Gains
• Section: 68; 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2183/BANG/2019 ASSESSMENT YEAR : 201516 SHRI SURENDRA KEDIA, NO.143, C-5 HOSUR ROAD, HEBBAGODI, BOMMASANDRA INDUSTRIAL AREA, BENGALURU-560 099. PAN AEGPK 2874 N VS. THE PR. COMMISSIONER OF INCOME TAX, BENGALURU-5, BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI AJAY ROTTI, C.A RESPONDENT BY : SHRI PRADEEP KUMAR, CIT (DR) DATE OF HEARING : 0 3 - 0 9 - 2020 DATE OF PRONOUNCEMENT : 08 - 0 9 - 2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 06/08/2019 PASSED BY LD.PR.CIT-5 UNDER SECTION 263 OF THE ACT FOR ASSESSMENT YEAR 2015-16 ON FOLLOWING GROUNDS OF APP EAL: PAGE 2 OF 8 ITA NO. 2183/BANG/2019 1.THE ORDER PASSED BY THE LEARNED PRINCIPAL COMMIS SIONER OF INCOME-TAX, BANGALORE - 5 [PCIT'], PARTLY SETTING ASIDE THE ORD ER DATED DECEMBER 12, 2017, PASSED UNDER SECTION 143(3) OF THE ACT, FOR D E NOVO FRESH ASSESSMENT OF INCOME, BE STRUCK DOWN AS INVALID, AS THE ORDER IS BAD IN LAW AND ON FACTS. 2. THE LD. PCIT HAS ERRED IN LAW AND ON IN FACTS IN ASSUMING REVISION ON THE ISSUES WHICH ARE THE SUBJECT MATTER OF THE IMPU GNED ORDER, DESPITE THE AO HAVING EXAMINED THE ISSUES AND NOT MADE ANY ADJU STMENTS IN HIS ASSESSMENT ORDER. THE LD. PCIT HAS ERRED IN IGNORIN G THAT REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT ARE NOT PE RMISSIBLE IF RELEVANT MATERIAL HAS BEEN PLACED ON RECORD BEFORE THE AO. H ENCE, ASSESSMENT ORDER PASSED AFTER CONSIDERING ALL THE FACTS AND INFORMAT ION CANNOT BE REVISED UNDER SECTION 263 OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. PCIT HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER FRAMED BY THE ASS ESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE BY CONCLUDING: - THAT THE APPELLANT WAS NOT ABLE TO LEAD ENOUGH EV IDENCE TO SHOW THAT ANY INQUIRY WAS MADE BY THE ASSESSING OFFICER. - AO HAS PASSED AN ORDER BASED ON INCORRECT ASSUMPT ION OF FACTS, INCORRECT APPLICATION OF LAW, WITHOUT APPLICATION OF MIND AND WITHOUT MAKING REQUISITE INQUIRIES. 4. ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE L D. PCIT HAS ERRED IN CONCLUDING THAT WITH RESPECT TO THE SALE OF SHARES OF MANJUSHREE TECHNOPACK, THE ASSESSING OFFICER HAS OBTAINED ONLY A COPY OF THE DEMAT ACCOUNT AND IGNORING THE FACT THAT THE AO HAS PERUS ED ALL THE DETAILS WITH RESPECT TO LONG TERM CAPITAL GAIN AND THE SAME HAS BEEN CAPTURED IN THE ASSESSMENT ORDER. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. PCIT HAS ERRED IN CONCLUDING THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY INTO THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS AND IGNORING THE FACT THAT REQUISITE D ETAILS ARE SUBMITTED TO THE AO. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. PCIT HAS ERRED IN CONCLUDING THAT THE AO HAS NOT ENQUIRED THE SOURCES OF INVESTMENTS OF INR 7,86,78,181 IN MUTUAL FUNDS/BONDS AND HAS ALSO NOT ENQUIRED INTO TAXABILITY OF CAPITAL GAINS AMOUNTING TO INR 28,05, 14,905 ON ACCOUNT OF SUCH INVESTMENTS AND IGNORING THE FACT THAT REQUISITE DE TAILS WERE SUBMITTED TO THE AO 7. THE APPELLANT PRAYS THAT DIRECTIONS BE GIVEN TO GRANT ALL SUCH RELIEF ARISING FROM THE PRECEDING GROUNDS AS ALSO ALL RELI EFS CONSEQUENTIAL THERETO. THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER, BY D ELETION, SUBSTITUTION OR OTHERWISE, ANY OR ALL OF THE ABOVE GROUNDS OF APPEA L, AT ANY TIME BEFORE OR DURING THE HEARING OF THE APPEAL. PAGE 3 OF 8 ITA NO. 2183/BANG/2019 BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSME NT YEAR 2015- 16 ON 03/02/2016, DECLARING TOTAL INCOME OF RS.2,75 ,11,840/-. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICE S WERE ISSUED TO ASSESSEE. IN RESPONSE TO STATUTORY NOTICES, ASSESSE E APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS/DOCUMENTS. 3. LD.AO OBSERVED FROM DETAILS THAT, IN PREVIOUS Y EAR ASSESSEE SOLD 3 LAKH SHARES OF M/S PS IT INFRASTRUCTURE AND SERVICES LTD., AGAINST WHICH, CAPITAL GAINS AT RS.1,96,96,398/- WA S COMPUTED AND CLAIMED EXEMPT UNDER SECTION 10(38) OF THE ACT. LD. AO WHILE PASSING ASSESSMENT ORDER, DISALLOWED CAPITAL GAINS UNDER SECTION 68 BY HOLDING IT TO BE A PENNY STOCK. 4. AGAINST ADDITION MADE BY LD.AO, ASSESSEE PREFERR ED APPEAL BEFORE LD.CIT(A) WHO UPHELD OBSERVATIONS OF LD.AO. 5. ASSESSEE PREFERRED APPEAL BEFORE THIS TRIBUNAL AGAINST ORDER PASSED BY LD.CIT(A). AS THE APPEAL WAS PENDING BEFO RE THIS TRIBUNAL, ASSESSEE PREFERRED TO SETTLE THE ISSUE IN VIVAD SE VISHVAS SCHEME 2020. ASSESSEE ACCORDINGLY WITHDREW APPEAL F ILED BY ASSESSEE BEFORE THIS TRIBUNAL . 6. BE THAT AS IT MAY, LD.PR.CIT INITIATED PROCEEDIN GS UNDER SECTION 263 OF THE ACT, ON 03/08/2018 FOR FOLLOWING REASONS: YOUR ASSESSMENT FOR ASSESSMENT YEAR 2015-16 HAS BE EN COMPLETED BY DCIT, CIRCLE-5(3)(1) VIDE ORDER DATED 31. 12.2017 U /S 143(3) OF THE I T ACT, 1961. THE ASSESSMENT RECORDS WERE CALLED FOR AND EX AMINED BY THIS OFFICE. ON SUCH EXAMINATION, FOLLOWING DISCREPANCIES WERE N OTICED WHICH EVIDENCE THAT THE ASSESSING OFFICER, HAS COMPLETED THE ASSES SMENT WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MO DE PAGE 4 OF 8 ITA NO. 2183/BANG/2019 1. THOUGH THE ASSESSMENT WAS 'COMPLETE SCRUTINY', T HE ASSESSING OFFICER HAS NOT EXAMINED ANY OTHER ISSUES IN DETAIL, OTHER THAN EXEMPTION CLAIMED FOR LONG TERM CAPITAL GAINS ON PENNY STOCK, VIZ. MIS PS IT INFRASTRUCTURE & SERVICES LIMITED. 2. MORE PARTICULARLY, THE ASSESSING OFFICER HAS FAI LED TO MAKE ANY INQUIRY 7 REGARDING THE CLAIM OF EXEMPTED LONG TERM CAPITAL G AIN ON ACCOUNT OF SALE OF SHARES OF MANJUSHREE TECHNOPACK LTD. AMOUNTING TO R S.24,82,05,2711-. THERE IS ADDITION TO DEPOSITS & ADVANCES OF RS.9,35 ,72,0001-. IN THIS ALSO, THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY. FUR THER, YOU HAVE PAID INTEREST ON SUCH DEPOSITS AND ADVANCES, BUT HAVE NO T CHARGED INTEREST ON ADVANCES GIVEN TO FAMILY MEMBERS. THIS ASPECT HAS B EEN TOTALLY IGNORED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS. 4. THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY I NTO THE SOURCES OF INVESTMENTS OF RS.7,86,78,1811- IN MUTUAL FUNDS / B ONDS AND HAS ALSO NOT INQUIRED INTO TAXABILITY OF CAPITAL GAIN OF RS.28,0 5, 14,905/- ON ACCOUNT OF SUCH INVESTMENTS. 5. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT IN ITIATED THE PENALTY PROCEEDINGS ON ANY SPECIFIC GROUND, BUT THE SOME HA S BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THUS, IT IS EVIDENT THAT THE ASSESSMENT ORDER IS ER RONEOUS IN SO FOR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER SHOULD NOT BE CANCELLED AND DIRECTION FOR FRESH ASSESSMENT SHOULD NOT BE ISSUED AS PER TH E PROVISIONS OF SECTION 263 OF THE I T ACT, 1961. FOR THIS PURPOSE, YOU CAN APPEAR FOR A PERSONAL HEARING ON 10.08.2018 AT 11.00 A.M, IN THIS OFFICE OR MAY BE REPRESENTED BY AN AUTHORISED REPRESENTATIVE ON THAT DAY.' 7. LD.AR SUBMITTED THAT, ASSESSEE FILED ALL DETAILS DURING ASSESSMENT PROCEEDINGS, WHICH HAS BEEN ADMITTED AND RECORDED BY LD.PR.CIT IN PARA 6 OF IMPUGNED ORDER. HE SUBMITTED THAT, LD.PR.CIT IS NOW SEEKING TO REVIEW ORDER PASSED BY LD.AO. HE PLACED RELIANCE ON DECISION OF HONBLE KOLKOTA TRIBUNAL IN CASE OF PRICE WATER HOUSE VS ACIT REPORTED IN (2018) 92 TAXMANN.COM 278. 8. ON THE CONTRARY, LD.CIT.DR SUBMITTED THAT, LD.AO DURING ASSESSMENT PROCEEDINGS ONLY CHOSE TO ENQUIRE ABOUT LONG-TERM PAGE 5 OF 8 ITA NO. 2183/BANG/2019 CAPITAL GAIN EARNED BY ASSESSEE ON SALE OF PENNY ST OCK VIZ., M/S.PS IT INFRASTRUCTURE AND SERVICES LTD., HE SUBMITTED T HAT, THERE ARE 3 MORE ISSUES WHICH LD.AO DID NOT ENQUIRE AND INVES TIGATE. LD.CIT.DR REFERRED TO AND RELIED ON OBSERVATIONS RE CORDED IN IMPUGNED ORDER AT PAGE 20, WHEREIN LD.PR.CIT CATEGO RICALLY MENTIONS THAT CLAIM OF DETAILS WERE SUBMITTED BEFOR E LD.AO, IS FACTUALLY WRONG, AND THAT, ALL DETAILS WERE SUBMITT ED FOR FIRST TIME DURING PROCEEDINGS UNDER SECTION 263. HE ALSO RECOR DED THAT, BEFORE LD.AO, DEMAT STATEMENT OF CHART SHOWING DATES AND V ALUE OF PURCHASE AND SALE HAVE ONLY BEEN SUBMITTED BY ASSES SEE. 9. HE THUS STRONGLY SUPPORTED THE ORDER PASSED BY L D. PR.CIT . 10. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 10.1 UNDER PROVISIONS OF SECTION 263 OF THE ACT, LD .PR.CIT IS EMPOWERED TO REVISE ASSESSMENT ORDER, WHERE ASSESSM ENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IT IS NECESSARY TO EXAMINE AND CALL FOR RELEVANT ASSESSMENT RECORDS AND TO ASCERTAIN EITHER THERE WAS NO ENQUIRY, OR THERE IS INSUFFICIENT OR INADEQUATE ENQUIRY BY LD.AO ON PARTICULAR ISSUES. I N THE PRESENT FACTS OF CASE, IT IS DISCERNIBLE FROM ASSESSMENT OR DER PASSED THAT, LD.AO ENQUIRED ABOUT LONG-TERM CAPITAL GAINS ON PEN NY STOCK VIZ., M/S PS IT INFRASTRUCTURE AND SERVICES LTD. FURTHER IT IS NOT DISCERNIBLE FROM ASSESSMENT ORDER THAT, ASSESSEE F ILED ALL RELEVANT DETAILS IN RESPECT OF OTHER ISSUES ALLEGED BY LD.PR .CIT IN IMPUGNED ORDER. IN PAPER BOOK FILED BEFORE US ASSESSEE HAS P LACED NOTICES PAGE 6 OF 8 ITA NO. 2183/BANG/2019 ISSUED BY LD.AO DATED 4/10/2017 PLACED AT PAGE 68-6 9 THAT CATEGORICALLY CALLS FOR DETAILS PERTAINING TO M/S P S IT INFRASTRUCTURE. 10.2 LD. AO HAS NOT ENQUIRED/VERIFIED ANY OTHER ISS UES FROM DETAILS, EVEN ASSUMING THAT DOCUMENTS/EVIDENCES WE RE FILED BY ASSESSEE AS HAS BEEN SUBMITTED BY LD.AR. TO THAT EX TENT THE ASSESSMENT ORDER PASSED BY LD. AO DATED 29/12/2017 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ALSO T HAT LD.AR COULD NOT FILE BEFORE US ANY EVIDENCE IN FORM OF ACKNOWLE DGMENT TO PROVE THAT ANY DETAILS RELATING TO ISSUES ALLEGED BY LD.P R.CIT WERE FILED BEFORE LD.AO. 10.3. ADMITTEDLY, ASSESSEE HAS SETTLED CLAIM OF CAP ITAL GAINS ARISING OUT OF PENNY STOCK VIZ., M/S. PS IT INFRASTRUCTURE AND SERVICES LTD IN VSVS 2020. WE ARE THEREFORE OF OPINION THAT LD. AO SHOULD NOT CONSIDER CAPITAL GAINS ARISING OUT OF PENNY STOCK VIZ., M/S. PS IT INFRASTRUCTURE AND SERVICES LTD., WHILE PASSING ORD ER GIVING EFFECT TO ORDER UNDER SECTION 263. LD.AO SHOULD RESTRICT HIS ENQUIRIES IN RESPECT OF FOLLOWING ISSUES NAMELY; 2. MORE PARTICULARLY, THE ASSESSING OFFICER HAS FA ILED TO MAKE ANY INQUIRY 7 REGARDING THE CLAIM OF EXEMPTED LONG TERM CAPITAL G AIN ON ACCOUNT OF SALE OF SHARES OF MANJUSHREE TECHNOPACK LTD. AMOUNTING TO R S.24,82,05,2711-. 3.THERE IS ADDITION TO DEPOSITS & ADVANCES OF RS.9, 35,72,0001-. IN THIS ALSO, THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY. FUR THER, YOU HAVE PAID INTEREST ON SUCH DEPOSITS AND ADVANCES, BUT HAVE NO T CHARGED INTEREST ON ADVANCES GIVEN TO FAMILY MEMBERS. THIS ASPECT HAS B EEN TOTALLY IGNORED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS. 4. THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY I NTO THE SOURCES OF INVESTMENTS OF RS.7,86,78,1811- IN MUTUAL FUNDS / B ONDS AND HAS ALSO NOT INQUIRED INTO TAXABILITY OF CAPITAL GAIN OF RS.28,0 5, 14,905/- ON ACCOUNT OF SUCH INVESTMENTS. PAGE 7 OF 8 ITA NO. 2183/BANG/2019 10.4. LD.AO IS DIRECTED TO PASS A REASONED ORDER AF TER CONSIDERING EVIDENCES/DOCUMENTS FILED BY ASSESSEE. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEING HEARD SHOULD BE GRANTED TO ASS ESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY GROUNDS RAISED BY ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPT, 2020. SD/- SD/- (CHANDRA POOJARI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 8 TH SEPT, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE. PAGE 8 OF 8 ITA NO. 2183/BANG/2019 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR - 0 9 - 2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER - 0 9 - 2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. - 0 9 - 2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS - 0 9 - 2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON - 0 9 - 2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE - 0 9 - 2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON - 09 - 2020 SR.PS 9. FILE SENT TO THE BENCH CLERK - 0 9 - 2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS