Piyush Kumar Gogad, Pai (Marwar) V. Pr. CIT, Central, Jodhpur

ITA 27/JODH/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9110 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 14-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANCHITA KUMAR
• Assessee Lawyers: ABHINAV KOTHARI
• Keywords: Revision of order; Prejudicial to interest; Set aside; Capital Gains
• Section: 263; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 27/JODH/2021 Assessment Year:2014-15 Piyush Kumar Gogad, G-13-14, 2 nd Phase Industrial Area, Pali Marwar (Raj). Vs. Pr.CIT, Central, Jodhpur. PAN No. AAYPG 2232 J Assessee by Shri Amit Kothari, CA& Shri Abhinav Kothari, CA Revenue by Smt. Sanchita Kumar, CIT-DR Date of Hearing 11/08/2021 Date of Pronouncement 08/11/2021 O R D E R PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. Pr.CIT, Central, Jodhpur dated 27/03/2021 for A.Y. 2014-15 passed u/s 263 of the Income Tax Act, 1961 (in short, the Act) wherein following grounds have been raised : “1. The ld. PCIT has erred in invoking Section 263 against the order passed U/s 153(A) r.w.s. 143(3), opn certain issues which is bad in law and bad on facts. The order made U/s 153(A) r.w.s. 143(3) cannot be said to be erroneous or prejudicial to interest of revenue. 2. (a) The order passed U/s 153(A) r.w.s. 143(3) was made after duly examining the issue relating to capital gains and the income offered in the return and 2 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT such order cannot be said to be erroneous or prejudicial to the interest of revenue. (b) The ld. PCIT has erred in observing that the income on account of capital gains which was claimed to be exempt u/s 10(38) amounting to Rs. 66,205/- was liable to be taxed as income. (c) Long Term capital gain on transfer of share of ACI Infcom, which is still traded on the stock exchange cannot be treated as penny stock liable to tax. (d) The order of PCIT in relation to above issues is bad in law and bad on facts and the order cannot be said to be erroneous or prejudicial to the interest of revenue. 3. The appellant pray for suitable costs. 4. The appellant crave leave to add, alter, amend and modify any grounds of appeal on or before the date of hearing.” 2. The facts of the case are that the assessee filed his return of income u/s 139(1) of the Act on 19.7.2014 declaring total income of Rs. 61,26,470/-. Pursuant to search in the case of the assessee, proceeding u/s 153A were initiated and the assessment u/s 143(3)/153A was completed in which the returned income of Rs. 61,26,470/- was accepted. 3. The ld. Pr. CIT observed that during the year, the assessee had claimed exemption of long term capital gains u/s 10(38 for Rs. 66,205/- on sale of certain shares of ACI Infocom Ltd. which according to department was a penny stock and such claim therefore accepted in the assessment without proper enquiry and therefore the assessment was set aside to examine this issue. 3 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT 4. The contention of the assessee had been that the assessment proceedings in the case of the assessee was originally completed u/s 143(3)/153A of the Act vide order dated 13 th December, 2017, after detailed verification and all the details were submitted. The present assessment being made u/s 153A had to be confined to material found as a consequence of search, and no material was found to suggest that the long term capital gain was not genuine. 5. The ld. AR appearing on behalf of the assessee has submitted that in the computation of total income submitted with return complete details of long term capital gains arising on sale of shares of ACI Infocom Ltd. was submitted which is also placed at paper book page 7-9. During the course of assessment proceedings, the complete details of such long term capital gain was asked for and submitted vide letter dated 10.11.2017 which is placed at paper book page No.4. Alongwith said letter details of long term capital gain, ledger extracts of investments, copy of broker note for purchase as well as for sale of shares, bank statement indicating payment for investment in shares and receipt of sale consideration was also submitted. These documents which were submitted during the assessment were also placed in the paper book at pages 4 to 16. On the basis of these details and information submitted, after verification the long term capital gains shown the same was accepted. There is no other material found during the search to suggest that the long term gain is not correct. The appellant 4 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT submitted that even today the shares of ACI are being listed at the stock exchange and lot of trading at the stock exchange in such shares is being done and present status was filed in the paper book at pages 17 to 19. 6. The assessee further submitted that 1,00,000 Equity Shares of ACI Infocom were purchased on 27.12.2010, and payment was through banking channel by cheque on 27.12.2010 for Rs. 27,00,000/-. The appellant sold 10,000 shares on 24.02.2014 for Rs. 74,336/- and further 4001 shares on 25.2.2014 for Rs. 29,927/- at Bombay Stock Exchange. The brokers’ note of Suresh Rathi Securities Private Limited, for sale of such sale of such shares giving complete details of sale was also submitted during the assessment. 7. In these facts the contention of the appellant is that the proceedings initiated u/s 263 was not justified as due enquiry was duly made during the assessment and such order cannot be said to be erroneous or prejudicial to the interest of revenue, and as such the proceedings deserves to be quashed. The appellant also relied upon certain judicial decisions in this regard. 8. On the other hand, the ld CIT-DR has vehemently supported the order of the ld. Pr.CIT. 9. We have considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we notice that the sole 5 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT issue that arises for our adjudication in facts of instant case is as to whether the ld. Principal CIT has rightly exercised his revision jurisdiction vested under s. 263 or not. There is no dispute that the AO accepted the assessee's LTCG and details were submitted during the assessment proceedings. Suffice to say, the same fact very much emerges not only from assessee's paper book. In Malabar Industrial Co. Ltd reported in 243 ITR 83 (SC), the Supreme Court held that a bare reading of s. 263 makes it clear that the prerequisite for the exercise of jurisdiction by the CIT suo motu under it, is the order of the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue. The CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to s. 263(1) of the Act. It was also held that the phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. When AO adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the 6 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT ITO is unsustainable in law. In Max India Ltd reported in 295 ITR 282 (SC) reiterated the view in Malabar Industrial Co. Ltd. and observed that every loss of Revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO is unsustainable in law. In the present case, it cannot be said due enquiry was not made. After making enquiry the decision has been taken, which also cannot be said to be erroneous or prejudicial to the interest of revenue. Further even in the order of 263, nothing material has been indicated to show that the order was erroneous. The assessment order is not required to give a detailed reason in respect of each and every item of exemption or deduction, etc and that if there was an inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under s. 263 merely because he has a different opinion in the matter. In Gabriel India Ltd.203 ITR 108 (Bom) it was held that a consideration of the CIT as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the CIT acting in a reasonable manner could have come to such a 7 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. To invoke suo motu revisional powers to reopen a concluded assessment under s. 263, the CIT must give reasons; that a bare reiteration by him that the order of the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the ITO was not only erroneous but was prejudicial to the interests of the Revenue. The CIT cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded. 10. In the present case, complete details of purchase of shares and sale of shares is verifiable form the bank statement, and also from the borkers note. The shares are held for long period of time, and there is no material to suggest that such gain is not genuine. There is only a suspicion, and on the basis of such facts, the revisional proceedings initiated are not justified. Hence, we quash the proceedings initiated U/s 263 of the Act. 11. In the result, the appeal of the assessee is allowed. Sd/- Sd/- (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Jodhpur Dated 08/11/2021 *Ranjan 8 ITA 27/Jodh/2021 Piyush Kumar Gogad Vs PCIT Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT (A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench