ARUN S. TRIPATHI, MUMBAI V. PR.CIT-16, MUMBAI

ITA 2560/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5655 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Share purchase agreement; Opportunity of being heard; Corroborative evidences; Scheme of amalgamation; Set aside; Capital Gains
• Section: 143(3); 142(1); 201; 263; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 2560 /M/ 20 1 8 ( ASSESSMENT YEAR : 2014 - 15 ) ARUN S. TRIPATHI SHIRDI BUNGALOW, PLOT NO. 54, SECTOR - 28, VASHI, NAVI MUMBAI - 400703 . VS. PR. CIT - 16 MUMBAI ROOM NO. 442, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : ABGPT 9629 R ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 05 . 0 9 .2018 DATE OF PRONOUNCEMENT : 2 8. 11 . 201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 16 . 03 .201 8 PASSED BY THE COMMIS S IONER OF INCOME TAX IN VIEW OF PROVISION U/S 263 OF THE I.T. ACT, 1961 RELEVANT TO THE ASSESSMENT YEAR 20 14 - 15 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 THE LEARNED PR. CIT ERRED IN HOLDING THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 143 (3) OF THE I. TAX ACT ON 29.11.2016 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCORDINGLY THE ASSUMPTION OF JURISDICTION BY THE PR. CIT U/S 263 OF THE IT ACT 196 1 WAS NOT VALID AND JUSTIFIED. ASSESSEE BY: SHRI SUBODH RATNAPARKHI (AR) DEPARTMENT BY: SHRI R.P. MEENA (DR) ITA. NO.2560/M/2018 A.Y.2014 - 15 2 2. THE LEARNED PR. CIT ERRED IN SETTING ASIDE TO THE FILE OF THE ASSESSING OFFICER, THE ISSUE OF LONG TERM CAPITAL GAINS AMOUNTING TO RS. 5,74,25,508 / - ARISING ON SALE OF EQUITY SHARES OF M/S. SUNRISE ASIAN LTD. HOLDING THE ASSESSING OFFICER TO HAVE FAI LED TO ENQUIRE INTO THE DETAILS REGARDING THE SAID TR ANSACTION SUBMITTED DURING PROCEEDINGS, PASSING THE ASSESSMENT ORDER WITHOUT APPLICATION OF MIND AND THEREBY NOT REACHING THE RIGHT CONCLUSION, NOT APPRECIATING THAT THE ASSESSING OFFICER HAD ACTUALL Y VERIFIED THE ENTIRE TRANSACTION AND HAD ACCEPTED THE SAME ONLY AFTER DUE ENQUIRY AND VERIFICATION OF DETAILS SUBMITTED AND THEREFORE THE ORDER U/S 263 SETTING ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WAS NOT JUSTIFIED, 3. THE LEARNED PR, CIT ERRED IN SETTING ASIDE TO THE FILE OF THE ASSESSING OFFICER THE ASSESSMENT FRAMED BY THE ASSESSI NG OFFICER U/S 143 (3) OF THE I. TAX ACT, 1961 ON 29. 11.2016 UNDER THE PROVISIONS OF SEC, 263 OF THE 1. TAX ACT, 1961, WHICH ACTION IS NOT APPROPRIATE AS PER LAW AND FACTS AND THEREF ORE THE ORDER U/S 263 DT. 16.03. 2018 BE HELD TO BE INVALID AND BAD - IN - LAW, 4. THE APPELLANT CRAVES LEAVE TO ADD. ALTER, AMEND AND/OR VARY ANY OF THE GROUNDS AT ANY TIME BEFORE THE DECISION OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 BY VIRTUE OF ORDER DATED 29.11.2016 BY INCOME TAX OFFICER 16(2)(2), MUMBAI. THE ASSESSEE HAS SHOWN THE LONG TERM CAPITAL GAIN ON SALE OF SHARES TO THE TUNE OF RS.5,74,25,508/ - . THIS LONG TERM CAPITAL GAIN WAS ON ACCOUNT OF SALE PROCEEDS OF THE SHARES OF SUNRISE ASIAN LTD., WHICH WAS MARKED IN THE LIST OF PENNY STOCK COMPANY. AS P ER CIT, W HILE PASSING THE ASSESSMENT O RDER U/S 143(3) OF THE I.T. ACT, ASSESSING OFFICER DID NOT CONSIDER THE SALES OF SHARES OF SUNRISE ASIAN LTD., AS A PENNY ITA. NO.2560/M/2018 A.Y.2014 - 15 3 STOCK. A SHOW CASE NOTICE DATED 01.01.2018 WAS ISSUED TO THE ASSESSEE ASKING HIM TO SHOW CAUSE A S TO WHY THE ASSESSMENT ORDER DATED 29.11.2016 SHOULD NOT BE REVISED U/S 263 OF THE I.T. ACT, 1961. THE NOTICE WAS GIVEN . T HE REPLY WAS ALSO FILED AND AFTER THE REPLY , THE ASSESSMENT ORDER DATED 29.11.2016 U/S 143(3) OF THE ACT WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, THE SAID ASSESSMENT WAS CANCELLED AND THE AO WAS ASKED TO PASS ORDER AFRESH AFTER EXAMINING THE ISSUES A FTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FEELING AGGRIEVED, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4 . ALL THE ISSUES ARE IN CONNECTION WITH THE CHALLENGING THE VALIDITY OF THE ORDER DATED 16.03.2018 PASSED U/S 263 OF THE I.T. ACT, 19 61. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE CONTENTS OF THE SHOW - CAUSE NOTICE ON RECORD : - FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE AO SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER: - (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIR ECTION OR INSTRUCTION ISSUED BY THE BOARD U/S 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE RENDERED BY THE JURISDICTIONAL ITA. NO.2560/M/2018 A.Y.2014 - 15 4 HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. 5. ON APPRAISA L OF THE ABOVE MENTIONED NOTICE , WE FIND THAT THE ASSESSMENT OF THE ASSESSEE WAS TAKEN FOR REVISION ON THE BASIS OF TH E FACT THAT THE ASSESSEE HAS SHOWN THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AT RS.5,74,25,508/ - . THE SAID LONG TERM CAPITAL GAIN WAS ON ACCOUNT OF SALE PROCEEDS OF THE SHARES OF SUNRISE ASIAN LTD., WHICH WAS MARKED IN THE LIST OF PENNY STOCK COMPANY. THE CIT WAS OF THE VIEW THAT T HE AO NOWHERE RAISED THE QUERY NOR DISCU SSED THE MATTER IN THE ASSESSMENT ORDER. THE CIT WAS ALSO OF THE VIEW THAT T HE ASSESSMENT ORDER WAS PASSED WITHOUT MAKING PROPER ENQUIRY AND VERIFICATION. IT IS TO BE SEEN WHETHER THE ASSESSMEN T ORDER DATED 19.11.2016 IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE OR NOT. THE CONTENTION OF THE LD. REPRESENTATIVE OF THE ASSESSEE IS THAT THE ISSUE HAS PROPERLY BEEN EXAMINED BY THE AO AND ONE OF THE POSSIBLE LEGALLY TENABLE VIEW HAS BEEN TAKEN, THEREFORE, THE PROCEEDING U/S 263 OF THE ACT I S BAD IN LAW. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE AO WHILE ISSUING THE NOTICE U/S 142(1 ) DATED 13 .10.2016 HAS ASKED ABOUT THE QUERY IN QUESTION AND THE ASSESSEE HAD ALSO REPLIED THE SAME BY VIRTUE OF LETTER DATED 15.11.2016, 21.11.20 16 & 29.11.2016, THEREFORE, IN THE SAID CIRCUMSTANCES, ONE POSSIBLE VIEW HAS BEEN TAKEN BY THE AO , THEREFORE, THE CIT HAS NO GROUND TO INVOKE THE PROVISION U/S 263 OF THE ACT. IT IS ALSO SPECIFIC ALLY ARGUED T HAT THE COPY OF D EMAT ACCOUNT AND OTHER ITA. NO.2560/M/2018 A.Y.2014 - 15 5 RELEVANT DOCUMENTS RELATED TO TRANSACTION HAS ALSO BEEN FURNISHED BEFORE THE AO. HOWEVER, THE DOCUMENTS WERE NOT DISCUSSED IN THE ASSESSMENT ORDER BUT IN THE SAID CIRCUMSTANCES ALSO THE COMMISSIONER HAS NO GROUND TO INVOKE THE PROVISION U/S 263 OF THE ACT IN ACCOR DANCE WITH LAW IN SO FAR AS ALL THE RELEVANT DOCUMENTS WERE VERY MUCH IN THE FOLDER OF AO AND IN THE NOTE SHEET OF ASSESSMENT FILE AND SAME HAVE BEEN PROPERLY CONSIDERED BY AO WHILE REACHING TO HIS CONCLUSION . IN SUPPORT OF THESE CONTENTIONS, THE LD. REPRE SENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN (I) MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC), (II) CIT VS. MAX INDIA LTD., 295 ITR 282 (SC), CIT VS. GABRIAL INDIA LTD, 203 ITR 108 (BOM) (1993), CIT VS. RELIANCE COMMUNICATIO N LTD. 296 ITR 217 (BOM) (2017), CIT VS. RELIANCE COMMUNICATION LTD., 76 TAXMANN.COM 226 (SC)(2016) & MOIL LIMITED VS. CIT, 396 ITR 244 (BOM)(2017). IT IS ALSO ARGUED THAT THE COMMISSIONER HAS NOWHERE HELD THAT THE ORDER SO PASSED BY AO WAS ERRONEOUS AND O NLY INVOKED THE POWER BY REASON THAT THE ENQUIRY WAS INADEQUATE, T HEREFORE, IN THE SAID CIRCUMSTANCES, THE COMMISSIONER HAS NO POWER TO INVOKE THE PROVISION U/S 263 OF THE ACT IN VIEW OF THE LAW SETTLED IN (I) CIT VS. NIRAV MODI, 390 ITR 292 (BOM ) (2017), CIT VS. NIRAV MODI, 77 TAXMANN.COM 15 (SC) (2017), CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DELHI) (2010), SHRI NARAYAN RANE VS. ITO 70 TAXMANN.COM 227 (MUMBAI - TRIB.) (2016) & SHREE BHAGAWATI ENTERPRISES VS. PR. CIT ITA. NO. 525/M/2016. ITA. NO.2560/M/2018 A.Y.2014 - 15 6 6. ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION AND ARGUED THAT THE AO NOWHERE CONDUCTED THE ENQUIRY AFTER FURNISHING THE DOCUMENTS AND THE DOCUMENTS NOWHERE SATISFIED THE QUERY, THEREFORE, THE CIT(A) HAS RI GHTLY INVOK ED THE POWER IN VIEW OF THE PROVISION U/S 263 OF THE ACT AND IN SUPPORT OF THE CONTENTION THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS RELIED UPON THE LAW SETTLED IN JEEVAN INVESTMENT &FINANCE (P.) LTD. VS. CIT (2017 88 TAXMANN.COM 552(BOM). 7. TAKING INT O ACCOUNT, ALL THE SUBMISSIONS MADE BY LD . REPRESENT ATIVE OF THE PARTIES IN THE FACTUAL MATRIX OF THE CASE IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS AND AFTER PERUSING THE RECORD, W E NOTICED THAT THE SCRUTINY ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143( 3) OF THE I.T. ACT, 1961 ON 29.11.2016 . A T THE TIME OF PROCEEDING, TH E AO ISSUED THE NOTICE U /S 143(1 ) OF THE ACT, 1961 DATED 13.10.2016 . THE NOTICE CONTAINED BY ANNEXURE IN WHICH VARIOUS QUERIES WERE RAISED AND AT THE COLUMN NO. 8, THE AO ASKED THE SPECIFIC QUESTION REGARDING THE TRANSACTION WHICH IS HEREBY REPRODUCED BELOW : - AN INDIVIDUAL TRANSACTION STATEMENT FOR THE F.Y. 2013 - 14 RELATING TO THE A.Y. 2014 - 15 IS ENCLOSED HEREWITH, REQUESTED TO RECONCILE THE SAME WITH THE SUPPORTING EVIDENCE. 8 . THE ASSESSEE REPLIED TO THE SAID QUERY BY VIRTUE OF LETTER DATED 21.11.2016 .T HE DETAIL IS HEREBY REPRODUCED BELOW: - DATE: 21.11.2016 ITA. NO.2560/M/2018 A.Y.2014 - 15 7 TO OFFICE OF THE INCOME TAX OFFICER 16(2)(2), ROOM NO. 443, 4 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI - 400020 DEAR SIR, RE: SHRI ARUN S. TRIPATHI PAN NO:ABGPT9629R A.Y.2014 - 15 SUB: SCRUTINY ASSESSMENT PROCEEDINGS IN CONTINUATION OF OUR EARLIER SUBMISSION, PLEASE FIND ENCLOSED HEREWITH FOLLOWING DETAILS AS DESIRED BY YOUR GOOD SELVES: - 1. DETAILS OF BANK A/ C AS PER FORMAT ALONG WITH BANK STATEMENTS AND BANK SUMMARY IS ENCLOSED HEREWITH. 2. DETAILS OF PROFESSIONAL FEES RECEIVED AS PER AIR DULY MARKED IS ENCLOSED HEREWITH. 3. DETAILED WORKING OF LTCG OF RS.5,74,25,508/ - DURING THE YEAR UNDER REVIEW, ALONGWITH SUPPORTING DOCUMENTS. TAX LIABILITY ON INCOME FROM LONG TERM CAPITAL GAIN ON SALE OF SHARES IS NIL AS SAME IS SOLD THROUGH RECOGNIZED STOCK EXCHANGE AND SECURITY TRANSACTION TAX IS PAID ON THE SAME . 4. COPY OF LEDGER ACCOUNT OF MEENA SECURITIES PVT. LTD. D ULY SIGNED IS ENCLOSED HEREWITH AND NO INTEREST PAID DURING THE YEAR. 5. THERE WERE NO INVESTMENTS MADE IN DURING THE YEAR. THANKING YOU, YOURS FAITHFULLY, FOR JAYES SHETH & CO CHARTERED ACCOUNTANT JAYES SHETH (PROPRIETOR) ENCLOSED: AS ABOVE 9 . THE ASSESSEE HAS ALSO FURNISHED THE EVIDENCES IN SUPPORT OF THE CLAIM WHICH IS HEREBY REPRODUCED BELOW: - SR. NO. NATURE OF DOCUMENT ITA. NO.2560/M/2018 A.Y.2014 - 15 8 1 NOTICE U/S 142(1) DT. 13.10.2016 WITH ANNEXURE INCLUDING ITS/AIR STATEMENT 1 WHICH LIES AT PAGE NO 1 TO 7 OF THE PAPER BOOK 2 LETTER TO ITO DT. 15.11.2016 2 WHICH LIES AT PAGE NO. 8 OF THE PAPER BOOK 3 LETTER TO ITO DT. 21.11.2016 3 WHICH LIES AT PAGE NO. 9 OF THE PAPER BOOK 4 LETTER TO ITO DT. 29.11.2016 4 WHICH LIES AT PAGE NO. 10 OF THE PAPER BOOK EVIDENCES WITH REGARDS TO CAPITAL GAINS ON SALE OF SHARES FURNISHED TO THE LD. AO. (I ) SHARE APPLICATION FORM OF M/S. SANTOSHIMAA LEASE FINANCE & INVESTMENT INDIA LTD. WITH PHOTOCOPY OF CHEQUE AND BANK STATEMENT OF ANDRA BANK FRO M WHICH RS.50,00,000/ - HAVE BEEN INVESTED. (II) DEBIT NOTE OF M/S. SANJTOSHIMAA TRADE LINKS LTD. FOR GRANT OF 125000 SHARES OF M/S CONART TRADERS LTD. ALONGWITH SHARE APPLICATION FORM, PHOTOCOPY OF SHARE CERTIFICATE. (III ) DOCUMENTS RECORDING SCHEME OF AMALGAMATION OF M/S. CONART TRADERS LTD. WITH M/S. SUNRISE ASIAN LTD. (IV) PRINTOUT OF DEPOSITORY PARTICIPANT HDFC BANK LTD. REFLECTING DEMAT OF 125000 OF M/S. CONART TRADERS LTD. (V) TRANSACTION STATEMENT OF DEPOSITORY PART ICIPANT - HDFC BANK LTD. DT 31.3.2014 REFLECTING DEMATERIALIZATION OF SHARES OF M/S. CONART TRADERS LTD. AND THEREAFTER ON AMALGAMATION THE SHARES OF M/S. SUNRISE ASIAN LTD. AND SUBSEQUENT SALE IN F.Y. 2013 - 14. (VI) LEDGER ACCOUNT OF M/S. ATLANTA SHARE SHOP EE LTD - BROKER REFLECTING MY ACCOUNT ALONG WITH CONTRACT NOTES FOR SALE OF SHARES. (VII) STATEMENT SHOW I NG RECEIPT OF SALE CONSIDERATION FROM THE BROKER M/S. ATLANTA SHARE SHOPEE LTD. WITH PHOTOCOPIES OF CHEQUES. 5 6 7 8 9 10 11 WHICH LIES AT PAGE NO 11 TO 14 OF THE PAPER BOOK WHICH LIES AT PAGE NO 15 TO 31 OF THE PAPER BOOK WHICH LIES AT PAGE NO 32 TO 95 OF THE PAPER BOOK WHICH LIES AT PAGE NO 96 OF THE PAPER BOOK WHICH LIES AT PAGE NO 97 TO 99 OF THE PAPER BOOK WHICH LIES AT PAGE NO 100 TO 1 01 OF THE PAPER BOOK WHICH LIES AT PAGE NO 125 TO 137 OF THE PAPER BOOK 10. WE HAD CAREFULLY GONE THROUGH THE EVIDENCES WITH REGARDS TO THE SALE TRANSACTION AS PRODUCED BEFORE THE AO / PR. CIT 16, MUMBAI ARE AS UNDER: ITA. NO.2560/M/2018 A.Y.2014 - 15 9 (I) SHARE APPLICATION FORM OF M/S. SANTOSHIMA LEASE FINANCE & INVESTMENT INDIA LTD. WITH PHOTOCOPY OF CHEQUE AND BANK STATEMENT OF ANDHRA BANK (II) DEBIT NOTE OF M/S. SANTOSHIMA TRADE LINKS LTD. FOR GRANT OF 125000 SHARES OF M/S. CONART TRADERS LTD. ALONGWITH SHARE APPLICATION FORM, PHOTOCOPY OF SHARE CERTIFICATE. (III) DOCUMENTS RECORDING SCHEME OF AMALGAMATION OF M/S. CONART TRADERS LTD. 48 TO 111 WITH M/S. SUNRISE ASIAN LTD. (IV) PRINTOUT OF DEPOSITOR)' PARTICIPANT HDFC BANK LTD. REFLECTING DEMAT OF 125000 OF M/S. CONART TRADERS LTD. (V) TRANSACTION STATEMENT OF DEPOSITOR) PARTICIPANT - HDFC BANK LTD. 113 TO 115 DT. 31.03.2014 REFLECTING DEMATERIALIZATION OF SHARES OF M/S. CONART TRADERS LTD. AND THEREAFTER ON AMALGAMATION THE SHARE O F M/S. SUNRISE ASIAN LTD. (VI) LEDGER ACCOUNT OF M/S. ATLANTA SHARE SHOPEE LTD. ALONGWITH CONTRACT 116 TO 140 NOTES FOR SALE OF SHARES. (VII) STATEMENT SHOWING RECEIPT OF SALE CONSIDERATION FROM THE BROKER 141 TO 153 M/S. ATLANTA SHARE SHOPEE LTD. WITH PHOTOCOPIES OF CHEQUES. 11. THE PR. CIT HAS NO REASON OR EVIDENCE TO DOUBT THE TRANSACTION OF PURCHASE AND SALE OF SHARES OF M/S. SUNRISE ASIAN LTD.. EXCEPT FOR STATING THAT THE SHARES ARE LISTED IN PENNY STOCK LIST OF SHARES. NEEDLESS TO SAY, THE PR. CIT 16, MUMBAI HAS HIMSELF NOT CAUSED ANY ENQUIRIES ITA. NO.2560/M/2018 A.Y.2014 - 15 10 TO BE CARRIED OUT TO ARRIVE AT THE CONCLUSION THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE. 12. T HE ORDER U/S 263, SETTING ASIDE THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) IS NOT JUSTIFIED WITHOUT FIRST HOLDING THE ASSESSMENT TO BE ERRONEOUS. THE PR. CIT HAS NOT ESTABLISHED IN ANY MANNER THAT THE ASST ORDER PASSED U/S 143(3) IS ERRONEOUS. SIMILARLY, ORDER U/S 263 CANNOT BE FOR THE REASON THAT THE AO HAS MADE ENQUIRIES BUT SUCH ENQUIRIES ARE INADEQUATE. ACCORDINGLY, ASSUMPTION OF JURISDICTION BY THE PR. CIT U/S.263 OF THE I.T. ACT 1961 IS NOT JUSTIFIED. IN SUP PORT, THE ASSESSEE RELIED UPON THE UNDER MENTIONED DECISIONS: - (I) CIT VS - NIRAV MODI. 390 ITR 292 (BOM) (2017) (II) CIT - VS - NIRAV MODI, TAXMANN.COM 15 (SC) (2017) (III) CIT - VS - SUNBEAM AUTO LTD, 332 ITR 167 (DELHI} (2010) (IV) SHRI. NARAYAN RANE - VS - ITO 70 TAXMANN.C OM 22 SHREE BHAGAIVATI ENTERPRISES - VS - PR. CIT ITA NO.525/MUM/2016 HON. MEMBERS 'E' BENCH ITAT MUMBAI DTD. 07/07/2017 13. FURTHERMORE, RE - COURSE TO SEC.263 IS NOT PERMISSIBLE WHERE THE VIEW TAKEN BY THE AO IS A POSSIBLE VIEW OF THE MATTER. IN SUPPORT, RELIANCE IS PLACED UPON THE UNDER MENTIONED DECISIONS: - (I) MALABOR INDUSTRIAL CO. LTD - VS - CIT. 243 ITR 83 (SC) (II) CIT - VS - MAX INDIA LTD. , 295 ITR 282 (SC) (III) CIT - VS - GABRIAL INDIA LTD, 203 ITR 108 (BOM) (1993) ITA. NO.2560/M/2018 A.Y.2014 - 15 11 (IV) C I T - VS - RELIANCE COMMUNICATION LTD 396 ITR 217 ( BOM) (2017) (V) C I T - VS - RELIANCE COMMUNICATION LTD, 76 TAXMANN.COM 226 (SC) (2016) (VI) MOIL LIMITED - VS - CIT , 396 ITR 244 (BOM) (201 7) 14 . UNDOUBTEDLY, THE AO RAISED THE SPECIFIC QUERY WHICH WAS REPLIED SPECIFICALLY ALONGWITH RELEVANT DOCUMENTS BY THE ASSESSEE. THE AO BEING SATISFIED WITH THE QUERY SO RAISED AND THE DOCUMENTS SO FILED IN SUPPORT OF VARIOUS CONTENTIONS DID NOT MAKE ANY ADVERSE OBSERVATION IN THE ASSESSMENT ORDER. MERELY NON DISCUSSION OF THE ISSUE IN THE ORDER NOWHERE MAKE THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN RESPONSE TO THE ENQUIRY DURING ASST. PROCEEDINGS, THE ASSESSEE VIDE LETTER DT. 21.11.2016 SUBMITTED THE DETAILS OF WORKING OF LONG TERM CAPITAL GAINS ALONGWITH RELEVANT S UPPORTING DOCUMENTS AND EXPLAINED THAT THE SALE OF EQUITY SHARES WAS THROUGH RECOGNIZED STOCK EXCHANGE AND STT WAS ALSO PAID ON THE SAID SALE. THE AO THEREAFTER RAISED A QUERY WITH REGARDS TO DIFFERENCE IN SALE CONSIDERATION, AS REPORTED IN ITS STATEMENT A ND AS PER THE BROKERS LEDGER ACCOUNT SUBMITTED BY THE ASSESSEE . THE ASSESSEE SUB MITTED EXPLANATION FOR THE SAME VIDE LETTER DT. 29.1.1.2016 AND RECONCILED THE APPARENT DIFFERENCE OF RS. 1,80,480/ - TO BE ON ACCOUNT OF STT, SERVICE TAX AND .OTHER CHARGES. T HE ASSESSEE VIDE THE SAID LETTER ALSO E XPLAINED THE TRANSACTION OF LONG TERM CAPITAL GAIN AS WELL AS SUBMITTED FURTHER EVIDENCES ABOUT CHANGE ITA. NO.2560/M/2018 A.Y.2014 - 15 12 OF NAME OF COMPAN Y AS SOUGHT BY THE AO. THE AO EXAMINED THE EXHAUSTIVE RECORD WITH REGARDS TO THE TRANSACTION OF PURCHASE OF SALE OF SHARES AND FINDING THE SAME TO BE IN ORDER, ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE LONG TERM CAPITAL GAINS ARISING ON SALE OF 125000 EQUITY SHARES OF M/S. SUNRISE ASIAN LTD. WAS NOT LIABLE TO TAX AS PER THE PROVISIONS OF SECTION 1 0(38) OF THE I.T.ACT 1961. ONCE IT IS FOUND THAT THE AO HAD MADE PROPER INQUIRY OF ISSUE UNDER CONSIDERATION. MOREOVER, ON APPRAISAL OF THE NOTICE, WE NOTICED THAT THE COMMISSION ER HAS TAKEN COGNIZANCE ON ACCOUNT OF THIS FACT THAT THE SUNRISE ASIAN LTD. H AS BEEN MARKED IN THE LIST OF PENNY STOCK COMPANY BUT NOWHERE HAS PROVED OR DISCUSSED THAT THE TRANSACTION WITH THE PENNY STOCK COMPANY IS AGAINST LAW AND FACTS . THE LAW RELIED UPON THE LD. REPRESENTATIVE OF THE DR SPEAKS ABOUT THE SUBMISSIONS OF EVIDENCE WHICH WERE NOT SUFFICIENT TO MEET OUT THE QUERY RAISE BY AO BUT IN THE INSTANT CASE SUFFICIENT EVIDENCE S HA VE BEEN SUBMITTED BY THE ASSESSEE BEFORE THE AO . T HERE IS NOTHING ON RECORD IN WHICH CIRCUMSTANCES, THE ORDER DATED 29.11.2016 CAN BE BRANDED AS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS MANDATORY ON THE PART OF THE COMMISSIONER TO ARRIVE AT THIS CONCLUSION THAT THE ORDER DATED 29.11.2016 AS PASSED BY AO IS ERRONEOUS , WHICH HE DID NOT HOLD . IN THI S REGARD, WE ALSO FIND SUPPORT OF LAW IN CIT VS. NIRAV MODI (SUPRA) WHICH HAS BEEN CONFIRMED BY HONBLE SUPREME COURT AND REPORTED AT 77 TAXMANN.COM 15(SC) 2017 . FURTHER, IT IS APPARENT ON RECORD THAT THE AO HAS ASKED THE QUERY WHICH WAS ITA. NO.2560/M/2018 A.Y.2014 - 15 13 PROPERLY REPLIED BY ASSESSEE ALONG WITH NECESSARY D OCUMENTS, THEREFORE, AFTER HIS SATISFACTION , THE AO NO WHERE MADE AN ADVERSE REMARK IN THE ORDER BUT A LEGALLY TENABLE VIEW HAS BEEN TAKEN SO THE COMMISSIONER HAS NO POWER TO INVOKE THE PROVISION U/S 263 OF THE ACT IN VIEW OF THE LAW SETTLED IN MALABAR INDU STRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC), (II) CIT VS. MAX INDIA LTD., 295 ITR 282 (SC), CIT VS. GABRIAL INDIA LTD, 203 ITR 108 (BOM) (1993) . AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE AUDITED ACCOUNT FOR THE A.YS. 2012 - 13 & 2013 - 14 PLACED ON RECORD IN WHICH THE TRANSACTION HAS DULY BEEN DISCLOSED AND ACCEPTED BY THE REVENUE AUTHORITIES . TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT IN QUESTION DATED 16.03.2018 IS WRONG AGAINST LAW AND FACTS AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. ACCORDINGLY, WE SET ASIDE THE SAME AND ALLOWED THE APPEAL OF THE ASSESSEE. 15 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 28. 1 1 .2 018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 28. 11 . 2018 VIJAY ITA. NO.2560/M/2018 A.Y.2014 - 15 14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI