Pooja Mittal, Delhi V. Pr.CIT- 13, New Delhi

ITA 3755/DEL/2018

AI Insights

The case involves Pooja Mittal, the appellant, who contested a revisional order by the Pr. CIT-13, New Delhi, concerning the assessment year 2014-15. The original assessment accepted the income returned by the appellant, which included income from business, capital gains, and other sources. The Pr. CIT later issued a show cause notice under Section 263, alleging that the original assessment was erroneous and prejudicial to the interests of the revenue, particularly concerning unverified long-term capital gains and suspicious transactions. The ITAT, after reviewing the submissions and evidence, concluded that the original assessment was thorough and no substantial error or inadequacy in inquiry justified the revisional action taken by the Pr. CIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121639 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2018
• Other Referred Cases: Sm t. Sudha Eashwar vs. IT O in ITA No. 2342/ Chny /2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 143(3); 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.3755/DEL/2018 Assessment Year 2014-15 Pooja Mittal, H. No. 18, Pocket-4 & 5, Sector-23, Rohini, Delhi. Vs. Pr.CIT-13, New Delhi TAN/PAN: AGCPM9510H (Appellant) (Respondent) Appellant by: Shri Mayank Patwari, CA Shri Kalrav Mehrotra, Adv. Respondent by: Shri T. Kipgen, CIT-DR Date of hearing: 21 02 2023 Date of pronouncement: 12 05 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he ca pti oned a ppeal has been file d at t he i ns tance o f the assessee agains t the re vi sional ord er of the l d. Pr. C IT , D elhi- 13 (‘Pr. C IT ’ in sho rt ) dat ed 28. 02. 2018 wher ei n or der p assed b y t he Assessi ng Of ficer (AO ) u nder Secti on 143( 3) of t he I nco me Tax Act , 1961 (t he Act ) dat ed 14. 03. 2016 concerni ng A Y 201 4- 15 was hel d t o be err one ous i n s o f ar a s preju dicial to t he i nterest of t he revenue wit hin t he mea ning of Sect ion 263 of the Act . 2. Br ie fl y sta te d, t he assessee, a n indi vi dual fi led ret urn of inco me a t Rs. 5, 5 6, 730/ - fo r Assess ment Year 2014- 15 in q ues ti on. The assessee i nter ali a decla red i nc ome unde r t he head ‘bus in ess inco me ’, ‘C apt ial G ains ’ a nd ‘I nco me from O the r S ources’ et c. A scr ut iny ass ess me nt w as ca rri ed out unde r Sect ion 143(3) of the I.T.A. No.3755/Del/2018 2 A ct for A Y 2014-15 i n ques t ion w her eb y the t otal i nco me w as als o assessed at Rs. 5, 56, 730/- as returned by the asses see. 3. T he assess ment c arri ed ou t b y t he A ssessing O fficer w as, how e ver sought t o be re vis ed b y the Pr. CIT . A show ca use not ice dated 19.1 2. 2017 w as issued to t his effec t. “ S h o w c a u s e n o t i c e u n d e r S e c t i o n 2 6 3 o f t h e In c o m e T a x A c t f o r A . Y . 2 0 1 4 -1 5 - r e g . * * * * * * * * * * * * * * T h e A s s e s s m e n t f o r t h e A . Y . 2 0 1 4 - 1 5 i n y o u r c a s e w as c o m p l e t e d o n 1 4 . 0 3 .2 0 1 6 u / s . 1 4 3 (3 ) o f I . T . A c t a c c e p t i n g t h e re t u r n i n c o m e o f R s . 5 , 5 6 , 7 3 0 / - . I t i s s e e n f r o m t h e r e c o r d s t h a t t h e A O d i d n o t m a k e p ro p e r e n q u i r i e s , n o r d i d i n v e s t i g a t e / v e r i f y v a r i o us d e t a i l s f i l e d a n d e v e n o m i t t e d i s s u e s e s p e c i a l l y w i t h r e s p e c t s u sp i c i o u s t r a n s a c t i o n s r e l a t i n g t o L o n g T e r m C a p i t a l G a i n o n sh a r e s , r e n d e r i n g t h e a s s e s sm e n t s o m a d e t o b e e r ro n e o u s , so f a r a s i t i s p r e j u d i c i a l t o t h e i n t e r e s t o f r e v e n u e . I t h e r e f o r e i n t e n d t o r e v i s e t h e o rd e r p a s s e d o n 1 4 . 0 3 .2 0 1 6 u / s . 1 4 3 ( 3 ) o f t h e I. T . A c t f o r A . Y . 2 0 1 4 - 1 5 . Y o u m a y a t t e n d o n 2 8 . 1 2 . 2 0 1 7 a t 4 : 0 0 P M , i n p e r so n o r t h r o u g h y o u r A u t h o r i z e d R e p r e s e n t a t i v e a n d s h o w c a u s e w h y th e o rd e r u / s . 1 4 3 (3 ) o f t h e I T . A c t d a t e d 1 4 . 0 3 .2 0 1 6 f o r A Y 2 0 1 4 -1 5 s h o u l d n o t b e r e v i s e d . Y o u r s f a i t h f u l l y , P r . C o m m i s s i o n e r o f I n c o m e T a x - 1 3 , N e w D e l h i . ” 4. T he Pr. C IT ev ent uall y se t aside the assess ment orde r fra me d under Secti on 143 (3) a nd di recte d t he A ssess ing Of fi cer to re do the ass ess ment i n t erms of observat ions ma de in revisi onal orde r. 5. A gg rieve d by the re visi onal o rde r, t he a ssesse e pre fe rre d appea l before t he IT A T seeking to challenge the revis ional orde r. 6. When the matter w as calle d fo r hearin g, the ld. couns el for the asses see ad verted t o t he s oli ta ry sh ow ca use not ice and submit ted tha t t he show c aus e noti ce broadl y alle ges fa i lu re o f the A ssessi ng O fficer to invest i gate/ ver if y detai ls f iled in resp ect of I.T.A. No.3755/Del/2018 3 suspicious transac ti ons r ela ting to Long Te rm C ap ital G ain on sha res rende ring t he assess ment so made to be e rr one ous in so fa r as it is prej udic ial to t he interest o f the reve nue. 6. 1 In this re ga rd, the ld. couns el for the assessee submi t te d t hat the cas e w as sel ecte d f or scrutin y mainl y on the grounds of suspicious t ransac tions of L ong T er m C apital G a ins . The l d. counse l adv er te d to the re plies and submi t te d t ha t th e spec ific re pl ies w er e p la ced before t he AO w ith regard t o the Lo ng T er m Capit al G ai ns of R s.47, 97, 00 0/ - e ar ne d by the A ssessee. The assessee inter al ia file d the proof of a cquis it i on of sha re s, cop y of sha re ce rti fica tes, demateri al iza ti on request for m e tc and als o the re le vant c ontract note s tow ar ds sale of s ha res. Copy of stat ement of D emat account and co py of ledge r account were a ls o submi t ted be fore the Ass essing O ffice r to vindicat e the bona f ides of the trans ac tions of shares. T he re for e, the a ssessee, on it s part, has pro vi ded all ma teri al fa cts to the Assessi ng Of ficer as c all ed up on by the A O i n the cou rse of t he ass ess ment proceedings and he nce, the on us placed upon the a ssesse e s tood d isc ha rge d and AO did not se e any perc ept i ble reas on whic h ma y cal l for extende d enquir y. T he i nco me w as assessed a ccordingly. O n the other hand, the Pr. C IT in t he s uper vi so r y proce edi ngs, has attempt ed to p lace impossi ble burden on t he assess ee t o sati sf y the s uspi cio n of the Pr. CIT reflect ed in t he revis io nal orde r by a ve ry generic obs erva tio ns wit hout pointi ng ou t any s ubstantive erro r in the ma teri al pl ace d. T he obse rvati ons of the Pr. C IT about n on pro duc tion o f de mat ac count is c ont ra ry t o t he c onte nts of re pl y place d be fore t he A ssess ing O ffi cer. T he ld. couns el next contend ed that the all egat ion of s us pic ious transacti on i n pen ny sto ck is t ot all y u nfou nde d. A s submi tted, the t erm ‘Penn y St ock’ I.T.A. No.3755/Del/2018 4 has not bee n defined under an y e nact ment cu rre ntl y in fo rce. There is no j ust i fi able reason to att ribute m ala f ides on the assessee me re l y because t he Pr. C IT considers a tr ansaction i n pa rt ic ul ar s t ock to be penn y st ock. A s fur th er s tated, the trans ac tions ha ve bee n ca rried out t hro ugh the platf orm of the Stock E xchange a nd that to o i n 15000 number shares onl y. The sha res w ere tr ansa cte d thr ough t he i nter me diarie s / St ock B r oke rs dul y r egist ered w it h the SEB I. Th e Pr.C IT has giv en undue consi derati ons t o t he s o c al led abnormal incr ease in the pr ice b y w rong ly invoking the pr inci pl es of pr eponde ra nce of p robabi liti es. It is t rite tha t t he deg ree or s tan dar d of pro of requi re d to es tabl is h a fact cannot be de fi ne d preci sely. T he d rastic i ncreas e or decrea se in t he pri ce of la rge n umber of s hares in a given yea r is an ordinar y phenome non i n t he stock market w here price dis co ver y ha ppe ns depe nding on host of u ncerta in factors both inte rn al and e xt ern al. Th e SE B I is t he w a tchd og fo r a ny ma ni pulat ive ac tions in t he st oc k ma rket. T he assessee has entered into meager transa cti ons o f sale of me re 15000 sha res hel d b y it and no a dve rse SE BI re port is avai lable implicati ng the assesse e for an y co ncerte d or man ipulat iv e acti on w hic h ma y gi ve ris e t o an y kind of s uspicion of an y fict io ns gains. A s further as serted, the A O i n its own w isdom has taken a plausi ble vi ew i n discha rge of his q uas i -j udic ial func ti on ba sed on facts avai lable to hi m. Th e view taken by t he A ssessi ng O ff ic er thus can not be out ri ghtl y rejec te d a nd bran ded as err oneous per s e wi thin t he sw eep of supervisor y j uris di cti on b y invoking doct ri ne of preponde ra nce of pro bab ili ti es. 6. 2 T he l d. coun sel t hus c ontended t hat the Assess ing O f fice r has tak en a fai r view in the tota l it y of ci rc umstances whic h is not I.T.A. No.3755/Del/2018 5 capa ble of cas ual displace ment b y a s et as ide act ion i n t he a bse nce of an y c ogent mate ri al in t he poss ess ion of t he P r.CI T. The P r. CIT has s ough t to disl od ge a quas i-j udic ial action i n a cas ual ma nne r simpl y becaus e in his opin ion a greater inqui ry in the issue was neede d. T he ld. counse l s u bmi tte d tha t expecting an Assessi ng O fficer t o e xami ne each a nd eve r y i te m of inc ome or e xpenditure or ot he r t ransacti ons to the hilt is f ra ught w i th se rious const ra ints and is neit he r feas ible nor des irab le. It w as finall y contend ed t hat qua si -j udi cia l act ion o f Assess ing O ffice r ca nnot be lightl y s t ruck dow n wit hout show ing an y de fi nit e erro r r esult ing in prejudice t o the re ve nue. The A ssessi ng O ffi cer has conclu ded t he is s ue having re ga rd t o the t ot alit y of facts and thus cannot be br an ded as er roneou s in t he name o f al leged inadequac y of i nqui ry. 6. 3 T he ld. c ounsel further conte nds t ha t while t he s how cause noti ce does not make an y reference to t he i nt roducti on of capi tal of R s. 53,0 0, 961/- and rec ei pt of gi ft of R s. 5 la kh from his brothe r, no prel iminar y inquir ies were made by th e Pr. C IT himsel f eve n at the re vis i onal procee di ngs. The assessee was having no opportunit y t o de al w ith the obs ervations of P r. CI T tow a rds inde pen den t ve ri fi cat ion of tw o ite ms. N otwit hs tanding a total lac k of o pportunit y t o a ddr ess the issue be for e Pr.C IT, the iss ue w as not ove rl ooked b ut a r eas onable in qui ry was made by th e A ssessi ng O fficer in th is re ga rd t oo. In res ponse to que ri es raise d, in t he cou rs e of the assess me nt pr ocee dings, the Assessee had fi led al l materia l partic ul ars in res pect of s uch int rod uct i on of capit al and gi ft. T he ledge r of the a ssessee p laced a t pag e n o. 78 show s t hat the i ntroduct ion of cap ital ma inl y compri ses of the capit al gai n aris i ng on the sale of s ha res a lr ea dy i n d isc ussi on. Likew ise, t he gi ft w as rec eive d f rom bro ther. Therefor e, exe rci se I.T.A. No.3755/Del/2018 6 of su per vis ory j ur isd ic tio n is whol ly unj us tif ia bl e on the issue w ithout maki ng re fe re nce to ci rcu mstances w hic h w arrant s nece ssit y of ve ri fi cations. T he ld. c ounsel th us urg ed for sett ing asi de th e re vi si ona l or der of t he P r.C IT i n que st ion and res torat ion of t he ass ess ment orde r. 7. T he l d. D R for t he Revenue, on the ot he r hand, re lied up on the re visi onal or de r and con tende d t hat t he Assess ing O ffice r has not exe rcise d t he due di ligence expected of him w hile exa mi ning the iss ues involv ed w hic h the A ssessing O ff icer has fai led t o pe rfo rm. It w as sub mi tte d that t he A O has me rel y accep te d th e doc uments placed before hi m wi thout re quis ite e nqu iry thereon. The ld. D R re fer re d t o a nd relie d up on t he dec isi on of the Trib una l i n the c ase of Sm t. Sud ha E ash war vs. IT O in ITA No. 2342/ Chny /2019 or der dated 02. 01. 2020. T he ld. D R accordi ngl y submi tted tha t the rev isi onal c ommiss i one r has ac te d w ithi n four c orner s of law and cons equen tl y revisi ona l ac tion on the ass ess ment or der does not ca ll fo r an y inte rference. 8. We have ca re ful l y c onsi de re d t he rival s ub mi ss ion s and pe rus ed the revisi ona l order passed by the P r. C IT under S ect i on 263 of the Act as well as other mate ri als refer red to and rel ie d upon b y t he respec ti ve pa rties an d ca se laws cit ed. 8. 1 Super viso ry j uris di cti on ve ste d unde r Sect io n 263 of t he A ct enabl es t he concerned P r. C IT/ C IT t o review the r ecord s of a n y proceed ings a nd order passe d therei n by t he A O . It e mpowe rs the Revis ional C ommi ssioner c oncer ned to call f or and exa mi ne the reco rds of anothe r pr oceeding under the A ct an d if he cons i de rs that an y order pass ed there in by t he A O is erro neous in so far a s it is pr ej ud ic ial to t he in te res t of the Reven ue, t he n he ma y (afte r I.T.A. No.3755/Del/2018 7 gi vi ng the assess ee a n op port un it y o f be ing hea rd and afte r ma ki ng or c aus ing t o be made suc h i nqu ir y a s he deems nece ssar y), pass s uch orde r ther eon as the c ircums ta nces o f the case jus ti f y, in cl uding the order enh anci ng o r modif yi ng the assess me nt or ca ncell ing the asse ssme nt and di re cting afresh assess me nt. T hus , the revis iona l powe rs confe rred on the Pr. CIT /C IT u nde r s. 263 of the Act are of wi de ampl it ude w ith a view t o ad dress the revenue ris ks which a re obj ec tive l y justi fi able. 8. 2 In the i nst an t cas e, the s ubs ta nt ive issue t hat e merges f or adju dicati on is w hether t he P r. CIT under t he umb re ll a of re vis ionar y pow e rs is en ti t led t o up set the finali ty of assess ment proceed ings bef ore the A sse ssi ng O fficer w he re the Assessi ng O fficer has a l le ge dl y c ommi tte d err or i n p assi ng asses s me nt o rde r w ithout pr oper ver if ic ation of t he p ropr ie t y of LT CG tra nsacti ons, introduct io n of c apita l and gi ft re ceive d from br other during the ye ar. Implici t i n the ques tion, i n the contex t of facts and ci rc ums ta nces of t he case, is thus scope of pow ers of revis io nal co mmiss i one r in the e ve nt o f alleged i na de qua cy o f inqui r y i nto va ri ous aspects o f an iss ue. 8. 3 O n perusa l of the show ca use notice (SCN ) is sued by the Revisional C o mmi ssione r p ropos ing to set aside t he assess ment order pa ssed by t he A ssessin g O ffice r unde r Sec tion 143(3 ) o f th e A ct, w e not ic e that t he P r. CIT is es s ent iall y diss atis fi e d w it h the degree of enquir y made i n res pect of L ong Te rm Ca pita l Gain (L TCG ) ar isi ng to th e ass essee on sale of s hares of T ur botech Engin ee ri ng L t d. w hich is a llege d t o be a pe nn y stoc k. N o que st ions a re alleged t o have b een raise d b y the Pr. CIT i n the cours e of revis io nal proce ed in gs t ow ards ve raci t y of capi tal incr eased or gif t r ecei ve d e it he r by wa y o f initia l SC N or in the I.T.A. No.3755/Del/2018 8 cours e of s ubsequent revis io nal pr oce edi ngs. 8. 4 T o a pprecia te t he iss ues in pers pective, w e notice that speci fi c que ries w ere r ais ed b y t he AO on both counts namel y LT CG arisi ng on sal e o f sha re of Tu rbotech a s w ell as introduct io n of c apital a nd gi ft rece iv ed b y t he ass essee dur in g the ye ar. The assess ee in co mpl iance of the inqui ri es so made b y the A ssessi ng Of fi ce r is sta ted to have file d t he de tail s and the evidence s such a s th e proof o f acqu is it ion of sha res, sh ar e cert ifica tes, contract note t ow a rds sale of sha re s a nd the demat account sh ow ing trans fe r of shares et c. giving rise to L T CG . It is als o t he cas e of the a ssesse e that s hares w ere t ra ns fe rred on the plat fo rm of t he s tock exchan ge t hrou gh authorize d brok ers a nd no adverse r ep ort of t he SEB I w as conf ronted to t he asse ssee either be fore th e Assessi ng Of fice r or by the P r. C IT i n the revis io nal proceed ings. Th e A ssessi ng O fficer did not find an y reas on t o doubt suc h docu ments to l au nc h fu rthe r v eri fi cati ons whic h the Pr. CIT thinks, ought to have been done. Perti ne ntl y, th e law does not ne cessar il y requi re to s tret ch e nquir ies and verif icat ions t o the extent w hich ma y, a t ti mes, t an ta mount t o oppre ssion a nd ha rassment of a t ax p ayer. T he A sse ssing O fficer, in the ins tant case, has ar ri ve d at a concl us ion after collect ing requisi te evidence s of exter nal nat ure an d in the absenc e of a ny adverse ma teri al per se, ca me t o a conc lusion w hic h is pl aus ible f or a reas o nab le perso n ins truc ted in la w. The obj ect of revis io nal pow e r is not to im pi nge upon th e pow ers o f t he Assess in g O ffice r to f ra me the ass ess me nt and i nte rfe re therew ith in a ll ca ses mer el y on acc oun t of some inade quac y i n ma nne r and ex te nt of enquir y. 8. 5 A s rega rds intr oductio n of capi tal an d gi ft f rom brothers, the case of asses see are two fo lds (i ) N o oppor tunit y was given to I.T.A. No.3755/Del/2018 9 A ssessee in cl ear viola ti on o f natural justi ce express l y prov ided in Sect ion 263 an d thus revis i on al acti on c oul d not be taken at fi rst place (ii ) the intr oduc t ion of capi tal w as pre- dominantl y b y w a y of LT CG of Rs. 47. 50 lakh a nd revers al of s ome expenses entries. T he fact of g ift fro m brothe r R s. 5 lakh w as als o ma de avai lable t o A ssessi ng O ffice r and is ot he rw ise exe mp t from tax under Sect ion 56( 2). T he assess e e conten ds t ha t pri mar y det ai ls are a vaila bl e on the reco rds of A ssessi ng O ffi cer a nd such i nfo rmat io n o nl y has caus ed revis io nal acti on. 8. 6 In the absence o f any pe rc ep ti bl e error in the action of the A ssessi ng O ff ice r pointe d out i n the revisi onal order, the explana tio n o ffe re d on be hal f of t he assessee appe ars p lausi bl e. The A ssess ing O ffic er, in the in sta nt ca se, has s pec ific al l y examined all the is sues r ais ed b y th e Pr. CIT al beit not probabl y i n the manne r in w hi ch the Pr. C IT w ould have li ke d b ut this ca nnot be the s acr osanc t grou nd for as sumpt io n of j ur isdi cti on unde r Sect ion 26 3 o f t he A ct. T he A ss essing O ffic er d id rais e the que st ions on poi nts in iss ue and t he re appears to be ac tive appl icati on of mi nd b y t he A ss essing O ffic er a lt ho ugh, d id not meet t he expec ta tion of t he Pr. C IT . 8. 7 U nder the c ircu ms tances, one ca nnot poss i bl y say t hat the A ssessi ng O ffice r ha d s leepw a lked on t he iss ues i nvolve d. N oticea bl y, t he Pr . CIT himself has no t e ntered into a ny mi nimal inqui ry on t he iss ues hi mse lf, if so cons id ered e xpedient and there is not ev en pr im a fac ie d emonst ra tion of fa lla c y i n t he ac ti on of the A ssessi ng Of fice r w hi ch render ed t he order e rr oneous a nd w hich al so s imul taneous l y caus ed prejud ice t o t he revenu e. Merel y becaus e the expectat io ns of the Re vis io nal Co mmis si oner are pur porte dl y no t met, i t shoul d not, in our opinion, nece ssaril y I.T.A. No.3755/Del/2018 10 trigge r revis i ona l act ion under Secti on 263 of t he A c t in e ve r y case. 8. 7 O n a broade r reck oning of the pec ul iar facts of the cas e, we concu r w it h the ple a raised o n behal f of the ass essee that all eg at ions in t he revi si onal or der a re not j ust ifie d and t he re is no s yst emat ic e ffor t on t he part of the Pr. CIT to support the all eg at ions. A reference made on behal f of the Reven ue in the case of Su dha E ashwar (s upr a) is go ve rne d by its ow n s et of fa cts. T he appl icabil it y of Section 263 w as not the subj ect matte r of cont rove rs y therein. The order of c o-o rdi na te Bench do es not tend to remove the fet t ers pla ced on t he scope o f Sec tion 26 3 u nder consi derati on i n th e prese nt case. Some inadeq uac y w i ll not rende r each and eve r y orde r e rrone ous o n t he to uchsto ne of S ect ion 263 of t he A ct w here t he e xtent of inqui ry has bee n quest i oned b y the Revisional Com mi ssio ner. The iss ue requi res to b e looked in the context and s et ting of fa cts i n eac h cas e. We do not f ind an y ove rr iding reas ons subs is ti ng in th e facts of present cas e. We thus fi nd that the foundati on i n the exercis e of revi si onal j urisdiction is mi ssi ng i n the pres ent ca se. 9. Resul tant l y, t he i mpugne d or der of the P r.C IT passed unde r Sect ion 263 of t he A ct is set asi de a nd canc el led and t he o rde r of the A ssess ing O f fi cer under Section 143(3 ) is r est ore d. 10. In the res ul t, the appeal of t he asses see is allow e d. Order pronounced in the open Court on 12/05/2023. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /05/2023