Sarita Kanodia, Kolkata V. CIT, IX, KOLKATA, Kolkata

ITA 705/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87631 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Revision of order; Fair market value; Assessment record
• Section: 143(3); 142(1); 56(2); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI N. K. SAINI, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 7 0 5 /KOL/201 4 ASSESSMENT YEAR : 200 9 - 1 0 SARITA KANODIA VS. COMMISSIONER OF INCOME - TAX, KOL - IX, (PAN: AESPK4149N) KOLKATA ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 2 1 .01.2015 DATE OF PRONOUNCEMENT: 30 .01.2015 FOR THE APPELLANT: SHRI MIRAJ D. SHAH, ADVOCATE FOR THE RESPONDENT: SHRI VARINDER MEHTA , CIT, DR ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT - IX , KOLKATA IN M NO. CIT - IX/KOL/S.263 PROCEEDING/2013 - 14/3255 - 57 DATED 2 1 . 0 3 .201 4 . ASSESSMENT W AS FRAMED BY ITO, WARD - 25(1) , KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY 200 9 - 10 VIDE HIS ORDER DATED 16 . 05 .20 11 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT - IX, KOLKATA PASSING REVISION ORDER U/S. 263 OF THE ACT ON THE FOLLOWING FOUR POINTS: I) TO VERIFY THE GENUINENESS OF TRANSACTION OF SHARES PARTICULARLY IN THE CONTEXT OF EXISTENCE OF SUCH COMPANY (VIZ. STB CONSULTANTS PVT. LTD.) (HEREINAFTER REFERRED TO AS STB ), IT S N ET WORTH, BOOK VALUE OF EACH SHARE ETC. II) THE AO HAS NOT EXAMINED THE LOAN TAKEN FROM M/S. DAYMARK & SONS (HUF) AMOUNTING TO RS. 3 LACS. III) THE AO HAS NOT EXAMINED THE SQUARED UP TRANSACTION OF LOAN OF RS. 2 LACS FROM SHRI VIKASH CHOUDHURY AND IV) THE AO HAS NOT OBTAINED THE CASH FLOW STATEM ENT TO VERIFY THE CASH INVESTMENTS MADE BY ASSESSEE. TO CHALLENGE THIS, ASSESSEE HAS RAISED FOLLOWING ELEVEN GROUNDS: 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED 2 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TAX ACT 1961 FAILED TO CONSIDER THAT IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD EXAMINED THE ISSUE RELATING TO SALE OF SHARES AND LONG TERM CAPITAL GAINS AND HENCE THE ORDER PASSED BY THE CIT DESERVES TO BE QUASHED. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S. 263 OF THE INCOME TAX ACT 1961 FAILED TO CONSIDER THAT IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD EXAMINED THE ISSUE RELATING TO LOAN FROM DAYMARK & SONS HUF AND HENCE THE ORDER PASSED BY THE CIT DESERVES TO BE QUASHED. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U /S. 263 OF THE INCOME TAX ACT 1961 FAILED TO CONSIDER THAT IN THE AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD EXAMINED THE ISSUE RELATING TO LOAN FROM VIKASH CHOUDHARY AND HENCE THE ORDER PASSED BY THE CIT DESERVES TO BE QUASHED. 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED C OMMISSIONER OF INCOME TAX U /S. 263 OF THE INCOME TAX ACT 1961 FAILED TO CONSIDER THAT IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD EXAMINED THE ISSUE RELATING TO SOURCE OF CASH DEPOSIT IN PUBLIC PROVIDENT FUND ACCOUNT (WRONGLY MENTIONED BY CIT A S RS.70, 00,000/ - ACTUALLY IS RS.70, 000/ - ) AND HENCE THE ORDER PASSED BY THE CIT DESERVES TO BE QUASHED. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE NOTICE U/S. 263 OF THE INCOME TAX ACT 1961 ISSUED BY THE LEARNED COMMISSIONER OF INCOME TAX WAS WITHOUT JURISDICTION AND THE ORDER PASSED ON THE BASIS OF SUCH NOTICE WAS BAD IN LAW HENCE THE SAME BE QUASHED AND / OR ANNULLED. 6. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE ASS ESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IN THE CASE OF THE APPELLANT WITH INADEQUATE INQUIRY AND HENCE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY SETTING ASIDE THE SAID ASSESSMENT ORDER U/S 263 OF THE INCOME TAX ACT 1961 . 7. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IN THE CASE OF THE APPELLANT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE AND THEREBY SETTING ASIDE THE SAID ASSESSMENT ORDER U/S 263 OF THE INCOME TAX ACT 1961. 8. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER WAS NOT ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE AND AS SUCH THE LEARNED COMMISSIONER OF INCOME TAX HAD NO JURISDICTION TO INTERFERE WITH THE SAID ASSESSMENT ORDER. 3 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 9. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISS IONER OF INCOME TAX U/S 263 OF THE INCOME TAX ACT 1961 IS BASED ON WRONG APPRECIATION OF FACTS OF THE CASE AND IS BAD IN LAW. 10. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DIRECTIONS CONTAINED IN THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TAX ACT 1961 ARE BEYOND JURISDICTION AND HENCE THE SAME BE STRUCK DOWN OR QUASHED. 11. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX U/S 263 OF THE INCOME TAX ACT 1961 IS WITHOUT ANY BASIS AND HENCE THE SAME BE QUASHED. 3 . BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FOR THE RELEVANT AY 2009 - 10 FILED HER RETURN OF INCOME ON 01.07.2009 AND THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT ON 22.02.2011. SUBSEQUENTLY, ASSESSEE S CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT BY CASS. ACCORDINGLY, NOTICES U/S. 143(2) AND 142(1) O F THE ACT WERE ISSUED, SERVED AND RESPONDED. ASSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT BY ITO, WARD - 25(1), KOLKATA VIDE ORDER DATED 16.05.2011. SUBSEQUENTLY, CIT - IX, KOLKATA ISSUED SHOW CAUSE NOTICE VIDE NO. PROCEEDING U/S. 263/2013 - 14/1197 DATED 30.0 8.2013 (WHICH IS GIVEN AT PAGE 30 OF ASSESSEE S PAPER BOOK ) RAISING FOLLOWING FOUR ISSUES FOR THAT THE ASSESSMENT FRAMED BY AO U/S. 143(3) OF THE ACT DATED 16.05.2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE: 1. DURING THE RELEVANT ACCOUNT ING YEAR YOU HAD MADE AN INVESTMENT OF RS.25,00,000/ - IN REC BONDS. IT WAS SOURCED FROM THE PROCEEDS OF RS.24,68,655/ - ARISING FROM SALE OF 71,400 SHARES OF A PRIVATE LIMITED COMPANY NAMELY, M/S. STB CONSULTANT PVT. LTD. THE IMPUGNED SHARES WERE CLAIMED T O HAVE BEEN PURCHASED IN THE YEAR 2004 - 05 @ RS.2/ - PER SHARE FOR A CONSIDERATION OF RS.1,42,800/ - AND THE SAME WERE SOLD @ RS.38/ - PER SHARE. THE A.O. HAS FAILED TO EXAMINE THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE AND SALE OF SHARE PARTICULARLY IN THE CONTEXT OF THE VERY EXISTENCE OF SUCH COMPANY, ITS NET WORTH, BOOK VALUE OF EACH SHARE ETC. THE PERUSAL OF THE ASSESSMENT RECORDS REVEALS THAT THE A.O. HAS FAILED TO EXAMINE AND INVESTIGATE THIS ISSUE AND HE PROCEEDED TO COMPLETE THE ASSESSMENT I N A RO UTINE MANNER. 2. THE VERIFICATION OF THE RELEVANT ASSESSMENT RECORDS ALSO REVEALS THAT A LOAN OF RS.3,00,000/ - HAS BEEN TAKEN FROM M/S. DAYMARK & SONS, HUF, WHICH APPEARS TO HAVE BEEN SQUARED UP DURING THE YEAR. SOURCE THEREOF HAS NOT BEEN EXAMINED BY THE A.O. 3. THE BANK STATEMENT FILED BY YOU REVEALS SQUARED UP TRANSACTIONS OF RS.2,00,000/ - WITH ONE SHRI BIKASH CHOWDHURY. GENUINENESS OF THE SAID TRANSACTION WAS OMITTED TO BE EXAMINED BY THE A.O. 4. IT APPEARS FROM THE RELEVANT ASSESSMENT RECORDS THAT THE CASH FLOW STATEMENT 4 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 OF THE ASSESSEE HAS NOT BEEN OBTAINED BY THE A.O. IN ABSENCE THEREOF THE SOURCE OF MANY CASH INVESTMENTS BY THE ASSESSEE IS NOT ASCERTAINABLE. IN VIEW OF THE AFORESAID OMISSIONS THE ASSESSMENT ORDER PASSED BY THE A.O. IS DEEMED TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE EXPLAINED ALL THE QUERIES BUT CIT WAS NOT SATISFIED WITH THE EXPLANATION AND PASSED REVISION ORDER REVISING THE ASSESSMENT U/S. 263 OF THE ACT ON THE ABOVE FOUR ISSUES. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SHRI MIRAJ D. SHAH, ADVOCATE FIRST NARRATED FACTS IN RESPECT TO FIRST POINT THAT DU R ING FY 2008 - 09 RELEVANT TO THIS ASSESSMENT YEAR, A LONG TERM CAPITAL GAIN OF RS.24,68,655/ - AROSE OUT OF SALE OF 71,400 SHARES OF SBT AMOUNTING TO RS.26,41,800/ - (WRONGLY MENTIONED IN THE SHOW CAUSE NOTICE AS RS.24,68,655/ - ). ACCORDING TO LD. COUNSEL, OUT OF THIS SALE PROCEED, ASSESSEE INVESTED A SUM OF RS. 25 LACS IN REC BOND AND CLAIMED EXEMPTION U/S. 54EC OF THE ACT. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 2 OF ASSESSEE S PAPER BOOK WHERE COPY OF COMPUTATION OF TOTAL INCOME FOR THE RELE VANT YEAR IS ENCLOSED, WHEREIN THE INCOME FROM CAPITAL GAIN IS DECLARED AT RS.24,68,655/ - ON ACCOUNT OF SALE OF SHARES AND CLAIMED EXEMPTION U/S. 54EC OF THE ACT AS THE SAME WAS INVESTED IN REC BONDS. HE FURTHER DREW OUR ATTENTION TO PAGES 3 AND 4 OF ASSE SSEE S PAPER BOOK WHEREIN IN COME & EXPENDITURE ACCOUNT AND COPY OF ACCOUNT OF ASSESSEE ARE ENCLOSED AND THE DETAILS OF PROFIT ON SALE OF SHARES , DETAILS OF NO. OF SHARES, YEAR OF ACQUISITION AND SALE, COST AND SALE PRICE ARE DISCLOSED. ACCORDING TO LD. COU NSEL, THESE DOCUMENTS WERE FILED ALONG WITH THE RETURN OF INCOME. HE FURTHER TOOK US TO PAGES 17 & 18 OF ASSESSEE S PAPER BOOK, WHICH IS COPY OF NOTICE U/S. 142(1) OF THE ACT AND PARTICULARS/DETAILS ASKED BY THE AO FOR COMPLETING THE ASSESSMENT. HE PARTIC ULARLY DREW OUR ATTENTION TO ITEM NOS. 3, 8 AND 13 OF THE QUESTIONNAIRE ISSUED BY AO , WHICH READS AS UNDER: 3. DETAILS OF INVESTMENT IN SHARE, MUTUAL FUND, BONDS IF ANY IN THE FOLLOWING PERFORMA OPENING BALANCE PURCHASED DURING FY 2007 - 08 INTEREST EARNED DURING 07 - 08 WHETHER EXEMPTED FROM TAX MATURITY DURING FY 2007 - 08 CLOSING BALANCE 8. CASH FLOW STATEMENT. 5 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 13. DETAILS OF CAPITAL GAIN IF ANY. LD. COUNSEL FURTHER TOOK US TO PAGES 19 AND 20 OF ASSESSEE S PAPER BOOK WHEREIN COPIES OF ORDER SHEET OF ASSESSMENT PROCEEDINGS ARE ENCLOSED AND HE DREW SPECIFIC ATTENTION TO THE ENTRIES DATED 20.01.2011 AND 04.03.2011, WHICH READS AS UNDER: 20. 01.11 SHRI SANJAY KUMAR DAS A/R OF THE ASSESSEE APPEARS. HE SUBMITTED PAPERS/DOCUMENTS AS ASKED FOR SUCH AS ITR V, FORM 16 (ORIGINAL), COMPUTATION OF INCOME, BALANCE SHEET, TWO BANK STATEMENTS. HE HAS ASKED TO SUBMIT SOURCE OF PURCHASE OF SUCH BOND NARRATED AT BANK. THE CASE IS FIXED FOR HEARING ON 04.03.2011. 04.03.2011 SHRI SANJAY KUMAR DAS A/R OF THE ASSESSEE APPEARS . HE HAS SUBMITTED PAPERS REGARDING SOURCE OF PURCHASE OF BONDS. HE HAS ASKED TO SUBMIT CLARIFICATION REGARDING INTEREST ON SECURITY RS.32,00 0/ - OF HDFC BANK. THE CASE IS DISCUSSED. THE CASE IS FIXED FOR HEARING ON 10.05.2011. LD. COUNSEL FOR THE ASSESSEE ALSO DREW OUR ATTENTION TO PAGES 65 AND 66 OF ASSESSEE S PAPER BOOK, WHICH WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEF ORE THE AO, WHICH ARE COPIES OF BILLS ISSUED BY BROKER ON ACCOUNT OF SALE OF SHARES AND THE DETAILS ARE AS UNDER: SL. NO. BILL DATED NO. OF SHARES HELD RATE PARTIES NAME AND ADDRESS AMOUNT 1. 04.04.2008 35000 37/ - PUSHKAR INFRACON (P) LTD., 24B, SARAT BANERJEE ROAD, KOLKATA - 700 029. 12,95,000/ - 2. 04.04.2008 36400 37/ - SHIVAM REALCON ()P) LTD., 8, SIDDHESWARI ROAD, KOLKATA - 700 029 13,46,800/ - TOTAL 71400 26,41,800/ - IN VIEW OF THESE DETAILS LD. COUNSEL FOR THE ASSESSEE STATED THAT THE COMPLETE DETAIL IN RESPECT TO SALE AND PURCHASE OF THE SHARES ARE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS EVIDENT FROM THE ABOVE DETAILS. 5. IN RESPE CT TO SECOND POINT, LD. COUNSEL FOR THE ASSESSEE STATED THAT SHE TOOK THE LOAN OF RS. 3 LACS FROM M/S. DAYMARK & SONS (HUF) WAS A BROUGHT FORWARD LOAN FROM EARLIER YEAR AND HE DREW OUR ATTENTION TO THE BALANCE SHEET OF THE ASSESSEE FOR FY 2007 - 08 RELEVANT TO AY 2008 - 09 WHEREIN THIS UNSECURED LOAN OF RS.3 LACS IN THE NAME OF M/S DAYMARK & SONS (HUF) IS REFLECTED. IT MEANS THAT THIS IS AN OLD UNSECURED LOAN. THE ASSESSEE HAS ALSO ENCLOSED COPY OF CANARA BANK ACCOUNT WHEREIN ENTRY IN RESPECT TO THIS LOAN ON 2 8.03.2008 OF THIS AMOUNT OF RS.3 LACS 6 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 RECEIVED FROM M/S DAYMARK & SONS (HUF) IS REFLECTED . IN VIEW OF THESE FACTS, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SOURCE OF THIS ENTRY CAN BE ASKED ONLY IN EARLIER YEAR AND NOT IN THIS YEAR. HENCE, THIS CANNOT BE THE SUBJECT MATTER OF REVISION PROCEEDING U/S. 263 OF THE ACT. AS REGARDS TO THE THIRD ISSUE IN RESPECT TO SQUARED UP TRANSACTION OF RS.2 LACS FROM ONE SHRI V IKASH CHOWDHURY, LD. COUNSEL DREW OUR ATTENTION TO COPY OF CANARA BANK ACCOUNT STATEMENT MAIN TAINED WITH, COLLEGE STREET BRANCH, SAVING A/C. NO. 13183 FROM WHERE THIS AMOUNT OF RS.2 LAC IS RECEIVED ON 05.05.2008 AND RE PAID ON 27.06.2008. HE EXPLAINED THAT THE SOURCE OF THIS CREDIT IS EXPLAINED AND EVEN OTHERWISE THIS IS RETURNED BY ACCOUNT PAYEE C HEQUE IN THIS VERY YEAR AFTER TWO MONTHS. ACCORDING TO HIM, EVEN THIS ENTRY ON MERITS IS EXPLAINED AND ALSO THIS INFORMATION WAS AVAILABLE WITH AO. IN RESPECT TO FOURTH POINT, LD. COUNSEL STATED THAT AS FAR INVESTMENTS ARE CONCERNED , ONLY INVESTMENT MADE BY ASSESSEE IS DEPOSIT IN PPF A/C SUM OF RS.70,000/ - DURING THE YEAR AND THAT ALSO BY MAKING WITHDRAWAL FROM CANARA BANK ON 02.04.2008 AMOUNTING TO RS.70,000/ - VIDE CHEQUE NO. 237156. THE RELEVANT COPY OF BANK ACCOUNT IS ENCLOSED IN ASSESSEE S PAPER BOOK AT PAGE 37 AND THIS WAS AVAILABLE BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. 6 . IN VIEWS OF THESE ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS IS NOT A FIT CASE FOR REVISION. HE REFERRED TO THE REVISION ORDER WHEREIN THE ALLEGATION OF THE CIT WAS THAT THE ORDER OF THE AO IS CRYPTIC AND DOES NOT STATE THE FACTS IN RESPECT TO PURCHASE AND SALE OF SHARES OF SBT, LOAN OF M/S DAYMARK & SONS (HUF) AND SH V IKASH CHOWDHURY AND INVESTMENTS. LD. COUNSEL FOR THE ASSESSEE STATED THAT COMPLETE DETAILS WERE FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS BUT IT IS UP TO THE AO TO FRAME THE ASSESSMENT IN THE MANNER HE LIKES AND NOT ACCORDING TO THE LIKINGS OF THE ASSESSEE. HE REFERRED TO VARIOUS CASE LAWS . 7 . ON THE OTHER HAND, LD. CIT, DR SHRI V. MEHTA RELIED ON THE REVISION ORDER. 8 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE REVISION ORDER PASSED BY CIT WHEREIN HE HAS OBSERVED THAT THE AO WHILE COMPLETING ASSESSMENT PASSED ASSESSMENT ORDER IN VERY 7 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 ROUTINE AND PERFUNCTORY MANNER. THE RELEVANT FINDING OF THE CIT IS THAT ANYONE WITH ORDINARY PRUDENCE CAN INFER THAT THE AO PASSED THE ASSESSMENT ORDER IN A VERY ROUTINE AND PERFUNCTORY MANNER. IT IS OBSERVED THAT THE ASSESSEE S CASE WAS SELECTED FOR SCRUTINY UNDER THE CASS FOR VERIFICATION OF HER REPORTED INVESTMENT OF RS.25,00,000/ - IN THE REC BONDS. THE AO LONELY CONFINED HERSELF TO THE EXAMINATION/VERIFICATION OF THE SOURCE OF INVESTMENT IN THE REC BONDS BY THE ASSESSEE. FOR REASONS BEST KNOWN TO HER, THE AO CHOSE NOT TO EXAMINE AT ALL THE GENUINENESS OF THE SALE PROCEEDS OF THE SHARES WHICH CONSTITUTED THE SOURCE OF INVESTMENT IN THE BONDS. HAD SHE BEEN A LITTLE CAREFUL/VIGILANT, SHE COUL D HAVE EASILY GAUGED THAT THE POSSIBILITY OF THE SHARES OF A PRIVATE LIMITED COMPANY BEING SOLD AT A HIGH PRICE WAS VERY REMOTE, A FACT WHICH BY ITSELF SHOULD HAVE IGNITED HER INTUITION FOR HARBOURING A STRONG SUSPICION ABOUT THE SUBTLE MODALITIES OF THE T RANSACTION UNDERTAKEN BY THE ASSESSEE. IN THIS CASE A REVENUE OFFICER HAS BEEN HOODWINKED BY A FICTITIOUS/SHAM TRANSACTION REMAINING CAMOUFLAGED UNDER THE VEIL OF CAPITAL GAINS. FROM THIS FINDING, IT IS CLEAR THAT ALL THE INFORMATION ARE AVAILABLE BEFOR E THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HE HAS FORMED AN OPINION ON THE ISSUE OF LONG TERM CAPITAL GAINS AND HELD TO BE GENUINE. FROM THE FACTS NARRATED ABOVE BY LD. COUNSEL, IT IS CLEAR THAT THE SHARE PREMIUM CANNOT BE QUESTIONED UNDER T HE PROVISIONS OF THE ACT IN THE RELEVANT ASSESSMENT YEAR BUT THE AMENDMENT IN SECTION 56(2) OF THE ACT IN ACQUISITION OF SHARES AND SECURITIES AT BELOW THE FAIR MARKET VALUE IS BROUGHT IN W.E.F. 01.10.2009 BY THE FINANCE (NO.2) ACT, 2009. THE TRANSACTION OF THE ASSESSEE IS PRIOR TO 01.10.2009 AND THERE IS NO SCOPE FOR THE AO TO GO INTO FMV OF SALE OF SHARES. AS REGARDS THE ACQUISITION OF SHARES OF SBT CONSULTANTS PVT. LTD., THESE WERE ACQUIRED IN FY 2004 - 05 RELEVANT TO AY 2005 - 06 AND FOR THAT THE ENQUIRY IS TO BE CONDUCTED IN AY 2005 - 06, WHICH IS BEYOND THE SCOPE OF REVISION PROCEEDINGS UNDER CONSIDERATION. EVEN THE VERY BASIS OF SELECTION FOR SCRUTINY UNDER CASS WAS TO ENQUIRE INTO INVESTMENT IN REC BONDS AS DEMONSTRATED BY THE LD. COUNSEL BEFORE US FROM THE VERY FIRST NOTICE ISSUED FOR SCRUTINY ASSESSMENT THE SOURCE OF INVESTMENT OF RS.25,00,000/ - IN REC BONDS U/S. 54EC OF THE ACT BY THE ASSESSEE IS OUT OF THE SALE PROCEEDS OF SHARES OF SBT CONSULTANTS PVT. LTD. AT ENTIRE LONG TERM CAPITAL GAINS OF RS.24 ,68,655/ - WAS INVESTED. THE AO HAS EXAMINED THE 8 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 SALE VALUE OF THE ABOVE SHARES WITH REFERENCE TO THE BANK STATEMENT PRODUCED BEFORE HIM AND THE TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES TO PROVE THE GENUINENESS OF THE TRANSACTIONS. IN RESPECT TO SEC OND ISSUE OF LOAN RECEIVED BY ASSESSEE FROM M/S. DAYMARK & SONS (HUF) IS A CARRIED FORWARD LOAN AND THIS CANNOT BE QUESTIONED IN THIS AY I.E. 2009 - 10. IN RESPECT TO THE THIRD ISSUE OF LOAN FROM BIKASH CHOWDHURY OF RS.2 LACS THROUGH AN ACCOUNT PAYEE CHEQUE ON 05.05.2008, THE SAME WAS REFUNDED ON 27.06.2008 AND BOTH THE TRANSACTIONS ARE RECORDED IN ASSESSEE S CANARA BANK A/C. AND WHICH WAS EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN THE INVESTMENT OF RS./70000/ - BEING DEPOSIT IN PPF A/C. IS WITHDRAWAL OUT OF THE SAVING BANK ACCOUNT MAINTAINED WITH CANARA BANK. ALL THESE INFORMATION WERE MADE AVAILABLE TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HE HAS EXAMINED ALL THE ASPECTS OF THE CASE AND THE SAME IS EVIDENT FROM TH E ORDER SHEET ENTRIES OF THE ASSESSMENT PROCEEDINGS. 9. IN THE GIVEN FACTS AND CIRCUMSTANCES, WHETHER IT CAN BE SAID THAT THE AO HAS NOT APPLIED HIS MIND TO THE ISSUES IN HAND. THIS IS BASICALLY A QUESTION OF FACT AND WE HAVE EXAMINED THE ENTIRE ASSESS MENT RECORDS AND DETAILS FILED BEFORE THE AO BY THE ASSESSEE, WHICH CLEARLY PROVES THAT THE AO HAS APPLIED HIS MIND. THE RECORDS OF THE ASSESSMENT INCLUDING THE ORDER SHEET ENTRIES SHOW THAT THE AO HAS MADE APPROPRIATE ENQUIRY AFTER HEARING THE ASSESSEE F ROM TIME TO TIME. THIS ISSUE HAS BEEN ANSWERED BY HON'BLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. J . L. MORRISON INDIA LTD. (2014) 366 ITR 593 (CAL), WHEREIN THE ISSUE OF POSSIBLE VIEW WAS DISCUSSED AS UNDER: WHETHER THE ASSESSMENT ORDER DATED 28TH MA RCH, 2008 WAS PASSED WITHOUT APPLICATION OF MIND IS BASICALLY A QUESTION OF FACT. THE LEARNED TRIBUNAL HAS HELD THAT THE ASSESSMENT ORDER WAS NOT PASSED WITHOUT APPLICATION OF MIND. THE RECORDS OF THE ASSESSMENT INCLUDING THE ORDER SHEETS GO TO SHOW THAT A PPROPRIATE ENQUIRY WAS MADE AND THE ASSESSEE WAS HEARD FROM TIME TO TIME. IN DECIDING THE QUESTION COURT HAS TO BEAR IN MIND THE PRESUMPTION IN LAW LAID DOWN IN SECTION 114 CLAUSE - E OF THE EVIDENCE ACT: - THAT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULAR LY PERFORMED; THEREFORE, THE COURT HAS TO START WITH THE PRESUMPTION THAT THE ASSESSMENT ORDER DATED 28TH MARCH 2008 WAS REGULARLY PASSED. THERE IS EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO ANSWER 17 QUESTIONS AND TO FILE DO CUMENTS IN REGARD T HERETO. IT IS DIFFICULT TO PROCEED ON THE BASIS THAT THE 17 QUESTIONS RAISED BY HIM DID NOT REQUIRE APPLICATION OF MIND. WITHOUT APPLICATION OF MIND THE QUESTIONS RAISED BY HIM IN THE ANNEXURE TO NOTICE UNDER SECTION 142 (1) OF THE ACT C OULD NOT HAVE BEEN FORMULATED. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE RETURN 9 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 FILED BY THE ASSESSEE IN ORDER TO ASCERTAIN HIS INCOME AND TO LEVY APPROPRIATE TAX ON THAT BASIS. WHEN THE ASSESSING OFFICER WAS SATISFIED THAT THE RETURN, FILED BY THE ASSESSEE, WAS IN ACCORDANCE WITH LAW, HE WAS UNDER NO OBLIGATION TO JUSTIFY AS TO WHY WAS HE SATISFIED. ON THE TOP OF THAT THE ASSESSING OFFICER BY HIS ORDER DATED 28TH MARCH, 2008 DID NOT ADVERSELY AFFECT ANY RIGHT OF THE ASSESSEE NOR WAS ANY CIVIL RIGHT OF THE ASSESSEE PREJUDICED. HE WAS AS SUCH UNDER NO OBLIGATION IN LAW TO GIVE REASONS. THE FACT, THAT ALL REQUISITE PAPERS WERE SUMMONED AND THEREAFTER THE MATTER WAS HEARD FROM TIME TO TIME COUPLED WITH THE FACT THAT THE VIEW TAKEN BY HIM IS NOT SHOWN BY THE REVENUE TO BE ERRONEOUS AND WAS ALSO CONSIDERED BOTH BY THE TRIBUNAL AS ALSO BY US TO BE A POSSIBLE VIEW, STRENGTHENS THE PRESUMPTION UNDER CLAUSE (E) OF SECTION 114 OF THE EVIDENCE ACT. A PRIMA FACIE EVIDENCE, ON THE BASIS OF THE AFORESAID PRESUMPTIO N, IS THUS CONVERTED INTO A CONCLUSIVE PROOF OF THE FACT THE ORDER WAS PASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND. 10. FURTHER, HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) HAS CONSIDE RED THIS ISSUE AND OBSERVED THAT I N THE INSTANT CASE, ON APPRAISAL OF THE SAME RECORDS WHICH ARE ALREADY WITH THE ASSESSING OFFICER, THE CIT TOOK A DIFFERENT VIEW THAN THAT ADOPTED BY HIS SUBORDINATE ON THE SAME SET OF FACTS, IT IS NOT PERMISSIBLE TO ASSUME JURISDICTION U/S. 263 OF THE ACT . IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE ASSESSING OFFICER WAS ONE OF THE POSSIBLE VIEWS AND THE ASSESSMENT ORDER PASSED BY HIM COULD NOT BE CONSIDERED TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF REVENUE AND THE ACTION OF CIT OF ASSUMING JURISDICTION U/S. 263 OF THE ACT AND DIRECTING THE ASSESSING OFFICER TO REDO THE ASSESSMENT IS WHOLLY CONTRARY TO THE STATUTORY POSITION IN THIS RESPECT. 11. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF J. L. MORRISONS (INDIA) LTD., SUPRA, HAS AL SO DISCUSSED THE ISSUE THAT HOW THE AO IS NOT REQUIRED TO WRITE AN ELABORATE JUDGMENT AND FOR THIS HON'BLE HIGH COURT OBSERVED AS UNDER: UNLESS THE AFORESAID RECITAL IS FACTUALLY INCORRECT OR THE COMPUTATION IS LEGALLY WRONG, IT IS NOT POSSIBLE TO HOLD TH AT THE ASSESSMENT ORDER WAS PASSED WITHOUT APPLICATION OF MIND. ON THE TOP OF THAT WHEN THE ASSESSING OFFICER ACCEPTED THE CONTENTION OF THE ASSESSEE THERE WAS NO OCCASION FOR HIM TO MAKE ANY DISCUSSION IN HIS ORDER. IF THE ASSESSING OFFICER CANNOT BE SH OWN TO HAVE VIOLATED ANY FORM PRESCRIBED FOR WRITING AN ASSESSMENT ORDER, IT WOULD NOT BE CORRECT TO HOLD THAT SHE ACTED ILLEGALLY OR WITHOUT APPLYING HIS MIND. THE THIRD QUESTION IS, FOR THE REASONS DISCUSSED ABOVE, ANSWERED IN THE NEGATIVE. 10 ITA NO.705/K/2014 SARITA KANODIA, AY 2009 - 10 IN VIEW OF THE ABOVE FACTUAL POSITION AND PROPOSITION OF LAW LAID DOWN BY HON'BLE SUPREME COURT AND HON'BLE CALCUTTA HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT THE REVISION ORDER PASSED BY THE CIT IS WITHOUT ANY LEGAL AND FACTUAL BASIS AND HENCE, THE SAME IS QU ASHED. 12 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 13 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.01.2015 SD/ - SD/ - ( N. K. SAINI ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 30 TH JANUARY , 201 5 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT SM. SARITA KANODIA, C/O D. J. SHAH & CO., KALYAN BHAVAN, 2, ELGIN ROAD, KOLKATA - 700 020. 2 / RESPONDENT CIT, KOL - IX , KOLKATA . 3 . ( )/ THE CIT (A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .