CARTIER LEAFIN P.LTD, MUMBAI V. ITO 1(1)(2), MUMBAI

ITA 2284/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3079 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2015
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Keywords: Revision of order; Principle of natural justice; Source of fund; Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.2284/MUM/2015 (ASSESSMENT YEAR: 2011-12) M/S CARTIER LEAFLIN PVT LTD FLAT NO.3105, SHIV KRUPA CHS LTD R.G. MARG, NEAR SHOBANA BLDG, ANDHERI (E), MUMBAI 93 VS ITO, WD.1(1)(2), MUMBAI PAN : AACCC0097Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SATISH R MODY RESPONDENT BY SHRI SANJAY SINGH, CIT-DR DATE OF HEARING : 07-09-2016 DATE OF PRONOUNCEMENT : 21 -09-2016 O R D E R PER ASHWANI TANEJA, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED U/S 263 BY THE PRINCIPAL COMMISSIONER OF INCOME-TAX-9, MUMBAI [HEREINAFTER CALLED LD. PCIT] DT 20-03-2015 FOR A.Y. 2011-12 ON THE FOLLOWING GROUNDS: YOUR APPELLANT CRAVES LEAVE TO RAISE FOLLOWING GROUNDS OF APPEAL WITHOUT PREJUDICE TO ONE ANOTHER & THEREFORE, YOUR APPELLANT PRAYS THAT THEY MAY BE DE CIDED INDEPENDENTLY. 1] ORDER U/S. 263 OF INCOME TAX ACT, 1961 ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW AN D IN THE INTEREST OF NATURAL JUSTICE, THE LEARNED PRCIT ERRED IN SETTING ASIDE U/ S. 263 OF THE INCOME TAX ACT THE ORDER PASSED BY LEARNED ASSE SSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 DAT ED 2 I.T.A. NO.2284/MUM/2015 28/03/2014. 2] ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW AND IN THE INTEREST OF NATURAL JUSTICE, THE LEARNED PRI. CIT F URTHER ERRED OF STATING REASONS IN THE ORDER THAT LEARNED ASSESSING OFFICER HAS PASSED ORDER WITHOUT MAKING , PROPER INQUIRY AND VERIFICATION OF VARIOUS FINANCIA L AND DOCUMENTARY EVIDENCE FURNISHED DURING ASSESSMEN T ASSESSMENT PROCEEDINGS BY THE APPELLANT. 3] PRAYERS (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMITS THAT THE ORDER PASSED BY THE LEARNED PRI. CIT IS BA D IN LAW AS THE SAID ORDER IS PASSED AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE BRIEF BACKGROUND IN THIS CASE IS THAT ORIGINAL ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER U/S 143(3) DT 28-03 -2014 MAKING FEW DISALLOWANCES / ADDITIONS AND ASSESSING THE INCOME AT RS.35,50,14,339/- AS AGAINST RETURN OF INCOME DECLARING LOSS OF RS.11, 29,98,987/-. SUBSEQUENTLY, THE LD. PCIT ISSUED A SHOW CAUSE NOTICE TO THE ASSE SSEE U/S 263. THE ASSESSEE FILED DETAILED REPLY TO THE SHOW CAUSE NOTICE, BUT THE LD. PCIT WAS NOT SATISFIED AND HE HELD THE ASSESSMENT AS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER IN TERMS OF THE DIRECTIONS GIVEN IN THE ORDER PASSED U /S 263. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 3. DURING THE COURSE OF HEARING, IT HAS BEEN SUBMITTED BY THE LD. COUNSEL THAT DETAILED ENQUIRIES WERE MADE BY THE ASSESSING OFFICER FOR WHICH EXHAUSTIVE REPLIES WERE SUBMITTED TO THE ASSESSING OFFICER FROM TIME TO TIME. IT APPEARS THAT LD. PCIT HAS NOT EXAMINED THE ASSES SMENT RECORD BEFORE ISSUING SHOW CAUSE NOTICE U/S 263. IT WAS SUBMITTED THAT T HE SHOW CAUSE NOTICE WAS ISSUED CHALLENGING THE ALLOWANCE OF OPERATIONAL EXP ENSES OF RS.8.79 CRORES AND INTEREST DEBITED IN THE PROFIT & LOSS ACCOUNT OF RS .3.96 CRORES BY THE ASSESSING OFFICER WITHOUT EXAMINING THESE CLAIMS. AFTER THE ASSESSEE FILED REPLY, LD. PCIT 3 I.T.A. NO.2284/MUM/2015 DROPPED ALLEGATION REGARDING INTEREST EXPENSES BUT HELD THE ASSESSMENT ORDER AS ERRONEOUS ON THE FIRST ISSUE RAISED IN THE SHOW CAUSE NOTICE. IT WAS SUBMITTED THAT IN THE SHOW CAUSE NOTICE VARIOUS ALL EGATIONS HAVE BEEN MADE WHICH ARE FACTUALLY INCORRECT AND PRIMA FACIE CONTR ARY TO THE DOCUMENTARY EVIDENCE HELD ON RECORD. IT WAS SUBMITTED THAT AT MANY PLACES IT HAS BEEN MENTIONED IN THE SHOW CAUSE NOTICE THAT NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER AND NO DETAILS WERE CALLED FOR WH EREAS THE FACT IS THAT DETAILED ENQUIRIES WERE MADE, REPLIES WERE SUBMITTE D AND DETAILS AND DOCUMENTARY EVIDENCES WERE SUBMITTED WHICH WERE DUL Y EXAMINED BY THE ASSESSING OFFICER BEFORE PASSING THE IMPUGNED ASSES SMENT ORDER. OUR ATTENTION HAS BEEN DRAWN ON THE EXHAUSTIVE PAPER BO OK FILED BY THE ASSESSEE CONTAINING VARIOUS DOCUMENTARY EVIDENCES SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE INDEED OMITTED TO BE EXAMINED BY THE LD. PCIT WHILE PASSING THE ORDER U/S 263. I T WAS LASTLY SUBMITTED THAT IN ANY CASE, BEFORE PASSING THE ORDER U/S 263 AND HOLD ING THE ASSESSMENT ORDER AS ERRONEOUS, LD. PCIT HAS NOWHERE GIVEN A FINDING THA T THE IMPUGNED OPERATIONAL LOSS OF RSA.8.79 CRORES WAS NOT ALLOWABLE. THEREFO RE, IT WAS REQUESTED THAT THE ORDER PASSED U/S 263 IS BAD IN LAW AND DESERVES TO BE QUASHED. 4. PER CONTRA, THE LD. CIT-DR SUPPORTED THE ORDER PASS ED BY THE LD. PCIT. HOWEVER, HE COULD NOT REBUT THE ARGUMENTS MADE BY T HE LD. COUNSEL OF THE ASSESSEE THAT VARIOUS EVIDENCES WERE ALREADY HELD O N THE RECORD WHICH APPEAR TO HAVE SKIPPED THE ATTENTION OF THE LD. PCIT WHILE ISSUING SHOW CAUSE NOTICE U/S 263. HE THUS CONCLUDED HIS ARGUMENTS BY SUPPOR TING THE ORDER OF LD. PCIT. 5. WE HAVE GONE THROUGH THE ORDER PASSED BY THE LD. PC IT AS WELL AS DETAILS AND DOCUMENTARY EVIDENCES SHOWN TO US BY BOTH PARTI ES. IT IS NOTED THAT SHOW CAUSE NOTICE U/S 263 WAS ISSUED ON TWO GROUNDS, ONE OF THE GROUNDS WAS WITH REGARD TO ALLOWING THE INTEREST EXPENSES OF RS.3.96 CRORES DEBITED IN THE P&L 4 I.T.A. NO.2284/MUM/2015 ACCOUNT ON THE GROUND THAT THE SAME WAS ALLOWED BY THE ASSESSING OFFICER WITHOUT ANY VERIFICATION OF THE LOANS / FUNDS ON WH ICH INTEREST WAS PAID WAS WHETHER UTILIZED ENTIRELY FOR THE PURPOSES OF BUSIN ESS OF THE ASSESSEE OR NOT. THE ASSESSEE SUBMITTED DETAILED REPLY WHICH WAS EXA MINED BY THE LD. PCIT AND HE ACCEPTED THE ARGUMENTS OF THE ASSESSEE AND DROPP ED THIS GROUND. BUT WITH RESPECT TO THE OTHER GROUND, I.E. CHALLENGING THE A LLOWABILITY OF OPERATIONAL LOSS OF RS.8.79 CRORES BY THE ASSESSING OFFICER WITHOUT MAKING PROPER VERIFICATION, THOUGH THE ASSESSEE MADE EXHAUSTIVE REPLY BEFORE TH E LD. PCIT DEMONSTRATING THAT OVERWHELMING DETAILS AND EVIDENCES WERE FURNIS HED BEFORE THE ASSESSING OFFICER AND ASSESSING OFFICER HAD DULY EXAMINED THE SAME AND APPLIED HIS MIND BEFORE ALLOWING THE SAME WHILE FRAMING THE ASSESSME NT ORDER, BUT THE LD. PCIT WAS NOT SATISFIED AND HE HELD THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BEFORE EXAMINING THE VARIOUS REASONINGS GIVEN BY THE LD. PCIT WE FIND IT APPROP RIATE TO REPRODUCE THE SHOW CAUSE NOTICE ISSUED U/S 263 DT 24-2-2014 TO THE ASS ESSEE BY THE LD. PCIT AS UNDER :- 'KINDLY REFER TO THE ASSESSMENT ORDER U/S 143(3) DA TED 28.3.2014 IN YOUR CASE PASSED BY THE ITO 1(1) (2), MUMBAI. ON PERUSAL THEREOF, IT IS NOTICED THAT THE AO HAS FAILED TO MA KE PROPER ENQUIRIES SO AS TO ASSESS THE CORRECT INCOME WITH R EGARD TO THE FOLLOWING POINTS: 2) THE COMPUTATION OF TOTAL INCOME FILED ALONG WITH THE RETURN OF INCOME YOU HAVE SHOWN NET LOSS FROM BUSINESS/PROFES SION OF RS. 11,21,87,728/- TAKEN FROM THE PROFIT AND LOSS ACCOU NT FOR THE RELEVANT ACCOUNTING YEAR. FURTHER, ON PERUSAL OF TH E PROFIT AND LOSS ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR TO AR RIVE AT THE SAID LOSS OF RS.11,21,87,728 YOU HAVE SHOWN OPERATI ONAL EXPENSES OF RS. 8,79,80,969/- (SCH.6) AND FURTHER PERUSAL OF THE SAID SCHEDULE THE SAME IS FOUND TO BE AS UNDER: 1) DEPOSITORY CHARGES RS. 534 2) OTHER OPERATIONAL LOSSES RS. 8,79,80,162 TOTAL RS. 8,79,80,696 5 I.T.A. NO.2284/MUM/2015 THIS FIGURE OF RS. 8,79,80,162/- SHOWN UNDER OTHER OPERATING LOSSES SEEMS TO BE A TRADING LOSS INCURRED BY THE C OMPANY OUT OF ITS BUSINESS OF FINANCIAL AND CAPITAL MARKET ACTIVITIES AS REPORTED BY THE TAX AUDITORS IN COL. NO.8 OF FORM 3 CD, BEING I TS MAIN BUSINESS ACTIVITY. HOWEVER, ON PERUSAL OF THE ASSESSMENT RECORDS IT IS NOTICED THAT NEITHER ANY DETAILS NOR ANY EXPLANA TION TO ARRIVE AT THE SAID LOSS OF RS. 8,79,80,162/- IS EITHER FILED BY THE ASSESSEE OR CALLED FOR BY THE ASSESSING OFFICER. NO EXAMINATION OF THE BOOKS OF ACCOUNT, TRANSACTION ACCOUNTS OF THE SHARE TRADING ACTIVITY CARRIED OUT BY THE ASSESSEE VIZ-A-VIZ THE D-MAT ACCOUNTS OF THE ASSESSEE IS CARRIED OUT BY THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. IN OTHER WORDS, THE ENTIRE OPERATING LOSS AS MENTIONED ABOVE IS ACCEPTED BY THE ASSESSING OFFICE R WITHOUT ANY VERIFICATION OR PROPER APPLICATION OF MIND. IT IS NOT KNOWN, HOW THE ASSESSEE HAS DEBITED THE NET OTHER OPERATING LO SS IN ITS P & L ACCOUNT WITHOUT SPECIFYING THE DETAILS OF OPENING S TOCK, PURCHASES, SALES AND CLOSING STOCK AND THE ASSESSIN G OFFICER HAS ACCEPTED THE SAME WITHOUT SEEKING ANY FURTHER DETAI LS AND MAKING ENQUIRES THEREOF. THEREFORE, TO THIS EXTENT THE ASS ESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS PRIMA- FADE APPE AR TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN T HE MEANING OF THE PROVISIONS OF SECTION 263 OF THE ACT. II) IT IS FURTHER NOTICED THAT YOU HAVE CLAIMED IN TEREST OR FINANCIAL EXPENSES OF RS. 3,96,78,563/- AS PER SCH. 8 OF THE PROFIT AND LOSS ACCOUNT WHICH IS ALSO ACCORDINGLY ALLOWED BY T HE ASSESSING OFFICER WITHOUT ANY VERIFICATION SO AS TO ASCERTAIN WHETHER THE LOAN / FUNDS RAISED ON WHICH INTEREST PAID IS UTILIZED ENT IRELY FOR THE PURPOSE OF BUSINESS OR NOT. 3. THEREFORE, IN VIEW OF THE ABOVE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT DAT ED 28.03.2014 IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE, AND THEREFORE YOU ARE HEREBY GIVEN AN OPPORTUNITY T O ATTEND BEFORE THE UNDERSIGNED ON 04.03.2015 AT 3.30 P.M. EITHER I N PERSON OR THROUGH A REPRESENTATIVE DULY AUTHORIZED IN WRITING IN THIS BEHALF. IF YOU DO NOT WISH TO AVAIL OF THIS OPPORTUNITY OF BEI NG HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE, YOU MA Y SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH W ILL BE CONSIDERED BEFORE ANY SUCH ORDER U/S. 263 OF THE ACT IS PASSED . (EMPHASIS SUPPLIED IN BOLD LETTERS) 6. THUS, FROM THE ABOVE, IT IS NOTED THAT THE LD. PCIT WAS PROMPTED TO 6 I.T.A. NO.2284/MUM/2015 ASSUME JURISDICTION U/S 263 BY ISSUING AFORESAID SH OW CAUSE NOTICE ON THE GROUND THAT WITH RESPECT TO LOSS OF RS.8.79 CRORES, NEITHER ANY DETAILS NOR ANY EXPLANATIONS WERE FURNISHED BY THE ASSESSEE. IT WA S ALSO ALLEGED THAT NO TRANSACTION ACCOUNTS OF TRADING ACTIVITY CARRIED OU T BY THE ASSESSEE VIZ--VIZ THE DEMAT ACCOUNTS OF THE ASSESSEE WERE EXAMINED BY THE ASSESSING OFFICER AND THUS ASSESSMENT ORDER WAS PASSED WITHOUT ANY VERIFI CATION OR APPLICATION OF MIND WITH RESPECT TO THE AFORESAID ISSUE. ON THE O THER HAND, THE LD. COUNSEL DEMONSTRATED BEFORE US THAT AFORESAID ALLEGATION IS PRIMA FACIE INCORRECT ON FACTS. OUR ATTENTION WAS DRAWN ON VARIOUS DETAILS AND EVIDENCES ENCLOSED IN THE PAPER BOOK WHICH WAS FURNISHED TO THE ASSESSING OFFICER. OUR ATTENTION WAS ALSO DRAWN UPON REPLY SUBMITTED TO THE ASSESSIN G OFFICER DT 11-11-2013 AND ITEM NO.9 OF THE SAID REPLY WHICH READS AS FOLL OWS: 9. POINT NO.18 PURCHASES AND SALES OF SHARES AND STOCK OF SHARES, REFER ANNEXURE-D. FOR EXPENSES, OPERATIVE EXPENSES [IT IS LOSS ON SALE OF SHARES] AND ADMINISTRATION EXPENSES, MONTHLY LEDGER COPIES ARE ENCLOSED HEREWITH PAN NO. WHERE APPLICABLE WILL BE GIVEN SHORTLY. REFER ANNEXURE E. 7. SIMILARLY, AT PAGE 66 OF THE PAPER BOOK, THE ASSESS EE HAS ENCLOSED QUANTITATIVE STOCK POSITION FOR THE PERIOD 01-04-20 10 TO 31-03-2011 OF ALL THE SHARES SHOWING SCRIP-WISE OPENING BALANCE, PURCHASE S, SALE, PROFIT / LOSS AND CLOSING BALANCE PROVIDING QUANTITATIVE AS WELL AS V ALUE. THE SAID TABLE CLEARLY DEPICTS THE AMOUNT OF LOSS ARRIVED AT RS.8.79 CRORE S. THE PAPER BOOK ALSO CONTAINS ITEM-WISE DETAILS OF ALL THE TRANSACTIONS CARRIED OUT IN DAY-TO-DAY MANNER PROVIDING SETTLEMENT NUMBER, PURCHASE DATE, NUMBER OF SHARES, RATE, AMOUNT AND RESULTANT PROFIT / LOSS ARISING ON EACH TRANSACTION INDIVIDUALLY. THE ASSESSEE VIDE ITS REPLY DATED 3-12-2013 PROVIDED FU RTHER EXPLANATION TO THE DOUBTS ARISING IN THE MIND OF THE ASSESSING OFFICER ; RELEVANT PART OF THE SAID 7 I.T.A. NO.2284/MUM/2015 REPLY IS REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: RESPECTED SIR, IN THE ABOVE MATTER, WE HAVE BEEN INSTRUCTED BY OUR CLIENT TO STATE AND WE ENCLOSED HEREIN FOLLOWING EVIDENCES , EXPLANATIONS AND SUBMISSIONS AS REQUIRED BY YOUR GO ODSELF. IN CONTINUATION OF TIME TO TIME SUBMISSION, WE STAT E AS UNDER: WE REQUEST YOUR HONOUR AS THE BROKER GAVE THE BROKE R / CONTRACT NOTE JUST TWO DAYS BACK AFTER MUCH REPRESE NTATION AND ON THE ASSURANCE OF SAME PAYMENT WE HAVE ATTACH ED ALL HE CONTRACT NOTES, TALLIED AND NUMBERED WITH BR OKERS LEDGER ACCOUNT BUT DUE TO LACK OF TIME (I.E. ONLY 2 DAYS). WE COULD NOT EARMARKED AND HIGHLIGHT EVERY TRANSACT IONS TO BE MATCHED WITH AIR DETAILS. (ALTHOUGH ALL DETAILS ARE FURNISHED AND THE RECORD CONSIDERING OF 3500 PLUS P AGES IN TOTAL 7 SETS). WE THEREFORE REQUEST YOU TO GIVE US OPPORTUNITY TO MARKED AND MATCHED WITH AIR DETAILS IN PERSON BEFORE YOUR GOODSELF OR OTHERWISE GIVE REASONABLE TIME TO RECON CILE ALL AIR DETAILS AT THE EARLIEST OPPORTUNITY. WE HOPE YOU WILL CONSIDER OUR ABOVE REQUEST BY AFFO RDING ONE MORE OPPORTUNITY BEFORE FINALIZING THE SAID ASSESSMENT. 8. FURTHER, VIDE ITS REPLY DATED 24-1-2014, THE ASSESS EE AGAIN ENCLOSED DETAILS OF PURCHASES OF SHARES INCLUDING A LL OPENING SPLIT SHARES WITH SOURCES OF FUNDS, BORROWED FUNDS, EQUIT Y SHARES AND DEMAT POSITION OF SHARES DURING THE YEAR. THE ASSE SSEE ALSO SUBMITTED DETAILED BREAK UP OF ALL THE SHARES AND C O-RELATING THE SAME WITH THE RESPECTIVE SOURCE OF FUNDING. FURTHE R, VIDE ITS REPLY DATED 24-1-2014 SUBMITTED TO THE ASSESSING OFFICER, THE ASSESSEE ALSO SUBMITTED QUANTITATIVE STOCK POSITION, DETAILS OF SALES ALONG WITH BROKERS LEDGER ACCOUNT WITH NSE AND BSE AND A LSO DEMAT SETTLEMENT ACCOUNT OF THE ASSESSEE HELD WITH THE BR OKER, VIZ. M/S 8 I.T.A. NO.2284/MUM/2015 FORTUNE EQUITY BROKERS INDIA LTD AND DEMAT SETTLEME NT ACCOUNT WITH M/S FORTUNE CREDIT CAPITAL LTD. IN ADDITION T O THAT, THE ASSESSEE ALSO PLACED ON RECORD BEFORE THE ASSESSING OFFICER ITS ACCOUNTS IN THE BOOKS OF M/S FORTUNE EQUITY BROKERS INDIA LTD (DEPOSITORY PARTICIPANT OF CENTRAL DEPOSITORY SERVI CES INDIA LTD) SHOWING EXCESSIVE DETAILS AND BREAK UP OF ALL THE T RANSACTIONS. FURTHER, ASSESSEE VIDE ITS LETTER DATED 15-3-2014 T O THE ASSESSING OFFICER SUBMITTED SCRIP-WISE STOCK OF SHARES. FURT HER, ASSESSEE SUBMITTED A LETTER DATED 31-1-2014 TO THE ADDL COMM ISSIONER OF INCOME-TAX, I.E. SUPERVISING AUTHORITY OF THE ASSES SING OFFICER WITH A COPY TO THE ASSESSING OFFICER WHEREIN THE ASSESSEE BROUGHT ON RECORD, IN SUMMARIZED MANNER, VARIOUS DETAILS AND D OCUMENTARY EVIDENCES THAT HAS BEEN SUBMITTED TO REMOVE / SURPA SS ALL THE DOUBTS OF THE ASSESSING OFFICER. WE FIND IT RELEVA NT TO REPRODUCE THE SAME BELOW, THE RELEVANT PART OF THE LETTER:- THE ABOVE ASSESSMENT PROCEEDINGS ARE UNDERTAKEN BY THE ITO-1(1)(2). THE FACTS OF THE CASE ARE AS UNDER: WE HAVE LAST SUBMITTED DETAILS BEFORE YOUR GOODSEL F ON 24-1-2014 AND REQUEST YOUR GOODSELF TO GRANT US TIME FOR TWO WEEKS IN ORDER PREPARE THE DETAILS REQUIRED BY YOUR GOODSELF AS PER YOUR QUESTIONNAIRE DT.27-12-2013. FOR YOUR INFORMATION WE HAVE SUBMITTED DETAILS OF PURCHASE AND SALES ON OUR PERSONAL APPEARANCE ON 20 -1- 2014 AND 24-1-2014 WITH DETAIL EXPLAINING THE OWNER SHIP OF SHARES, SOURCE OF FUNDS, DEMAT STATEMENT AND ALONG WITH COMPLETE SUPPORTING DOCUMENTS AND ON GOING THROUGH YOUR QUESTIONNAIRE WE HAVE TO RECONCILE PURCHASE AND SAL ES VALUE TO THE EXTENT OF 78-92 CRORE (REFER POINT NO. 6) OF YOUR QUESTIONNAIRE DT.27-12-2013, IN YOUR PRESENCE. WITH REFERENCE TO POINT O.7 OF YOUR QUESTIONNAIRE D T. 27-12-2013 WE HAVE GIVEN PURCHASE DETAILS WITH BILLS, LEDGER CONF IRMATION OF BROKER 9 I.T.A. NO.2284/MUM/2015 AND DEMAT CONFIRMATION STATEMENT OF OUR BROKERS AND LENDER WHICH WERE PERSONALLY SUBMITTED TO YOUR GOODSELF ON 20-1- 2014 WITH DETAIL EXPLAINING THE OWNERSHIP OF SHARES, SOURCE OF FUNDS , DEMAT STATEMENT AND ALONGWITH COMPLETE SUPPORTING DOCUMENTS AND SAL ES CONFIRMATION ALONG WITH QUANTITY AND VALUE, WITH BR OKERS CONFIRMATION, BORROWERS CONFIRMATION AND DEMAT STA TEMENT WITH DETAIL EXPLAINING THE OWNERSHIP OF SHARES, SOURCE O F FUNDS ALONG WITH COMPLETE SUPPORTING DOCUMENTS WERE SUBMITTED TO YOU R GOODSELF ON 24-1-2014 PERSONALLY WITH VALUE OF RAS.54=26 CRORE IN VALUE ALONG WITH THE DOCUMENTARY EVIDENCE. WITH REFERENCE TO YOUR POINT NO.10 AS PER YOUR QU ESTIONNAIRE DT.18-11-2013 IS ALREADY EXPLAIN AND RELEVANT DOCUM ENTS ARE SUBMITTED ON 11-11-2013. POINT NO.8 ALREADY EXPLAINED BY OUR LETTER DT.11- 11-2013. ACCORDING TO US WE HAVE TO COMPLY YOUR REQUIREMENT OF POINT NO.9 & POINT NO.11 WHICH IS UNDER VERIFICATION AND PREPARA TION STAGE THEREFORE WE REQUIRE 15 DAYS BY WHICH TIME WE ARE H OPEFUL TO COMPLETE AND COMPLY ALL YOUR REQUIREMENTS OF YOUR Q UESTIONNAIRE DT. 27-12-2013. A PERUSAL OF THE AFORESAID LETTER CLEARLY BRINGS OU T A FACT BEFORE US THAT THE ASSESSEE HAD SUBMITTED EXHAUSTIVE DETAILS AND DOCUM ENTARY EVIDENCES TO THE AO WITH A VIEW TO JUSTIFY ITS OPERATIONAL LOSS FROM SHARE TRADING. ALL THE DOCUMENTARY EVIDENCES AND DETAILS WERE ALSO IN THE KNOWLEDGE OF ADDL.CIT AND THUS, THESE WERE EXAMINED NOT ONLY BY THE AO BUT AL SO BY THE ADDL.CIT. UNDER THESE CIRCUMSTANCES, WE FAIL TO UNDERSTAND AS TO ON WHAT BASIS THE LD. PCIT MENTIONED IN SHOW CAUSE NOTICE THAT NO DETAILS AND DOCUMENTARY EVIDENCES WERE FURNISHED BEFORE THE AO AND THE AO PASSED THE ASSESSMENT ORDER WITHOUT VERIFYING THE SAME AND WITHOUT APPLICATION OF MIND. RATHER, IT APPEARS TO US THAT THE LD. PCIT HAD ISSUED THE SHOW CAUSE N OTICE U/S 263 EVEN WITHOUT EXAMINING THE ASSESSMENT RECORDS. SUCH TYPE OF PRA CTICE IS CONTRARY TO TRANSPARENT AND FAIR WORKING AND NOT APPRECIATED IN THE EYES OF LAW. THE 10 I.T.A. NO.2284/MUM/2015 ASSUMPTION OF JURISDICTION U/S 263 IS BASED UPON A VALID SHOW CAUSE NOTICE ISSUED U/S 263. THE ENTIRE PREMISE OF THE LD. PRIN CIPAL CIT IN ISSUING SHOW CAUSE NOTICE U/S 263 FOR HOLDING THE IMPUGNED ASSES SMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS B UILT UPON INCORRECT FACTS. FURTHER, NO PROPER ALLEGATION COULD BE MADE AGAINST THE ASSESSEE BY THE LD. PCIT WHILE FRAMING ORDER U/S 263. INSPITE OF EXHAUS TIVE EXERCISE DONE IN THE 263 PROCEEDINGS, THE LD. PCIT COULD NOT FIND ANYTHI NG TO HOLD THAT THE IMPUGNED LOSS WAS NOT ALLOWABLE AT ALL BY ANY STRET CH OF IMAGINATION UNDER THE LAW. WHEN EXHAUSTIVE DETAILS AND DOCUMENTARY EVIDE NCES WERE SUBMITTED BY THE ASSESSEE BEFORE THE AO AND THE ASSESSMENT ORDER WAS FRAMED AFTER EXAMINING THE EXHAUSTIVE DETAILS AND EVIDENCES, THE RECOURSE AVAILABLE FOR THE LD. PCIT FOR REVISION U/S 263 TO WAS TO HOLD THAT T HE LOSS HAS BEEN WRONGLY ALLOWED BY THE AO AND VIEW TAKEN BY THE AO WAS NOT AT ALL A PLAUSIBLE VIEW IN THE EYES OF LAW. UNLESS SUCH A FINDING IS RECORDED BY LD. PCIT, ESPE CIALLY WHERE EXHAUSTIVE EXERCISE HAS BEEN DONE BY THE AO, THE OR DER OF THE AO IN ALLOWING THE IMPUGNED LOSS COULD NOT HAVE BEEN HELD TO BE ER RONEOUS. SAME IS MISSING HERE, THUS, WE FIND THAT THE ORDER PASSED BY THE LD . PCIT IS WITHOUT APPLICATION OF PROPER MIND AND BEYOND THE PARAMETERS OF LAW AND WE FIND THE SAME TO BE NULLITY IN THE EYES OF LAW AND THE SAME IS, THEREFO RE, HEREBY QUASHED. 9. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS 21 ST DAY OF SEPTEMBER, 2016. SD/- SD/- (C.N. PRASAD) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 21 ST SEPTEMBER, 2016 PK/- 11 I.T.A. NO.2284/MUM/2015 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , -BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES