M/s. Shivam Enterprises, Kolkata V. ACIT, Circle - 29, Kolkata, Kolkata

ITA 834/KOL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7240 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2011
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: A K TULSYAN
• Keywords: Business income; Opportunity of being heard; Retrospective amendment; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 263

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B, KOL KATA [ . . . . . . . . , ,, , . .. . . .. . , , , , !' ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI C.D. RAO, ACCOUNTANT MEMBER # # # # / ITA NO. 834 (KOL) OF 2011 $%& '( / ASSESSMENT YEAR 2006-07 M/S. SHIVAM ENTERPRISES, KOLKATA. (PAN-ABDFS4089D) ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE-29, KOLKATA.. (+, / APPELLANT ) - % - - VERSUS -. (/0+,/ RESPONDENT ) +, 1 2 !/ FOR THE APPELLANT: / SRI A.K. TULSYAN /0+, 1 2 ! / FOR THE RESPONDENT: / SRI NIRAJ KUMAR !3 / ORDER ( . .. . . .. . ), !' (C.D. RAO), ACCOUNTANT MEMBER : THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29.03.2011 OF LD. C.I.T., KOLKATA-X PASSED U/S. 263 OF THE ACT FOR AS SESSMENT YEAR 2006-07. THE ASSESSEE HAS RAISED SEVERAL GROUNDS, WHICH ARE ALL DIRECTED AGAINST SETTING ASIDE THE ASSESSMENT ORDER DATED 22/12/2008 PASSED U/S. 143(3 ) OF THE ACT BY THE LD. C.I.T. BY INVOKING JURISDICTION U/S. 263 OF THE ACT WITH A DI RECTION TO MAKE A FRESH ASSESSMENT AS PER LAW AFTER MAKING PROPER ENQUIRIES ON THE ISSUES RAISED BY HIM. 2. THE BRIEF FACTS OF THE CASE ARE THAT ON PERUSAL/EXA MINATION OF THE ASSESSMENT RECORDS, THE LD. C.I.T. ISSUED NOTICE U/S. 263 OF T HE ACT STATING AS UNDER :- ASSESSMENT RECORD IN THE ABOVE CASE HAS BEEN EXAMI NED. IT IS SEEN THAT THE ASSESSMENT FOR THE A.Y 05-06 WAS ASSESSED U/S 143(3 ) ON 22/12/2008. THE A.0. DURING THE ACCEPTED THE RETURNED INCOME ON LTCG AND TAXED THE SAME@ 10%. THE AO ESSENTIALLY EXAMINED THE MATTER FROM THE POINT O F VIEW OF A PEENY STOCK CAPITAL FORMATION ANGLE. HOWEVER HE MISSED THE BASIC POINT THAT THIS WAS AT BEST CASE OF STCG, IF NOT OF BUSINESS INCOME, AS THE ENTIRE ARRA NGEMENT FOR ACQUIRING THE SHARES WAS A DEVICE TO OBTAIN A TAX ADVANTAGE BY ARTIFICIA LLY ACQUIRING THE SHARES AT COST PRICE OF 2003. THIS WILL BECOME EVIDENT FROM ENSUING NARR ATION OF FACTS. THE FIRM PURCHASED THE IMPUGNED SHARES ON 15/ 03/03 FOR RS.1,83,500/-. AS ON 31/03/05 THE FIRM HELD ONLY TWO ASSETS: THE AFORESA ID SHARES AT RS.1,83,500/- AND CASH/BANK BALANCE OF RS.17,147/-. AS ON 31/03/05 TH ERE WERE TWO PARTNERS SHRI NARSINGH MITTAL AND M/S. NIGOLLEE TRADING PVT. LTD. HAVING CAPITAL BALANCE OF RS. 2 9658/- AND RS.1,90,989/-. THESE FOUR ENTRIES ACCOUN TED FOR THE ENTIRE BALANCE SHEET TOTALS OF RS.2,00,647/-. ON 17-3-2006 BY A COMMON D EED OF ADMISSION-CUM- RETIREMENT, THE EXISTING PARTNERS RESIGNED AND 6 NE W PARTNERS JOINED THE FIRM (THIS ARRANGEMENT WAS DEEMED TO TAKE RETROSPECTIVE EFFECT FROM 01-04-2005). THE NEW PARTNERS BROUGHT IN A CAPITAL OF RS.2,16,000/-. M/S NIGOLICE TRADING PVT. LTD. WAS PAID OFF RS.1,90,989/- AND SHRI NARSHINGH MITTAL BE CAME A CREDITOR FOR RS.9658/- AS PER BALANCE SHEET AS ON 31-3-2006. THUS THE SHARES COSTING RS.1,83,500/- IN 2003 AND CASH OF RS.17,147/- BECAME THE PROPERTY OF THE NEW PARTNERS OF THE FIRM AT A COST OF RS.2,16,000/-. THESE VERY SHARES WERE SOLD ON 23-3- 2006 FOR RS.1,74,34,000/-. IS IT POSSIBLE THAT RETIRING PARTNERS JUST 6 DAYS EARLIER ON 17-3-2006 HAD AGREED TO TAMELY HAND OVER THESE VALUABLE ASSETS ONLY AT THEIR COST PRICE OF 2003. THESE ARE QUOTED SHARES AND BALANCE SHEET OF THE CONCERNED COMPANIES VIZ. DANTA VAYAPAR KENDRA LTD (FRANKROSS VINMAY LTD.) AND DEEVEE COMMERCIAL LTD. (CITI PAINTS LTD.) WHICH HAVE BEEN BROUGHT ON RECORD, CLEARLY SHOW THAT AS 31-3-2 006 THE BOOK VALUE OF THE SHARES STOOD AT RS. 82/- AND RS. 104/-. THE RATES AT WHICH THESE WERE SOLD. (THESE HAD BEEN PURCHASED ON 15-3-2003 @ RE.1/- PER SHARE). CLEARLY THIS WAS A COLLUSIVE ARRANGEMENT AND IN REALITY IT MUST BE UNDERSTOOD TO MEAN THAT THE PARTNERS OF THE NEW FIRM HAD IN FACT BECOME THE OWNER OF THESE SHARES O NLY ON 17-03-2006. BASED ON THIS APPRECIATION, THE PROFIT ON SALE SHOULD HAVE BEEN T AXED AS A STCG, IF NOT AS BUSINESS INCOME. THE AO HAS FAILED TO EXAMINE THE POINT ESPE CIALLY AS PARTNERSHIP WAS FOR BUSINESS (AND NOT FOR INVESTMENT) AS PER THE LANGUA GE OF THE PARTNERSHIP DEED. SECONDLY, THIS WAS IN FACT A CASE OF SUCCESSIO N RATHER THAN CHANGE OF CONSTITUTION. AS ADMISSION AND RETIREMENT TOOK PLACE SIMULTANEOUS LY BY THE DEED EXECUTED ON 17- 3-2006, THERE WAS NEVER ANY COMMON PARTNER BETWEEN THE OLD AND THE NEW FIRM. THEREFORE, THE NEW FIRM CAME INTO EXISTENCE ONLY ON 17-3-2006 AND IN FACT ACQUIRED THE SHARES ON 17-03-2006. THE SUBSEQUENT SALE AGAI N COULD ONLY RESULT IN STCG/BUSINESS INCOME. THE AO HAD FAILED TO EXAMINE THIS POINT. THUS EITHER WAY BOTH IN FACT AND IN LAW, THE NEW FIRM ACQUIRED THE SHARES ONLY ON 17-3-2006 AND SOLD THEM 5 DAYS LATER ON 23-3-06. THUS THERE WAS A FAILURE ON THE PART OF THE A SSESSING OFFICER IN APPRECIATING THE FACTS AND ISSUES INVOLVED IN THE CASE AND AS SUCH T HE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS THEREFORE PROPOSED TO SET ASIDE THE ASSESSMENT SO THAT THE POINTS DISCUSSED ABOVE MAY B E EXAMINED BY THE A.O. TO BE DECIDED ON MERIT AFTER GIVING A REASONABLE OPPORTUN ITY OF BEING HEARD. 3. IN RESPONSE TO THE SAID NOTICE U/S. 263 OF THE ACT, THE ASSESSEES REPRESENTATIVE APPEARED AND MADE A WRITTEN SUBMISSIONS, COPIES OF WHICH ARE PLACED AT PAGES 7 TO 15 AND 22 TO 26 OF THE PAPER BOOK. AFTER CONSIDERING THE SAME AND ASSESSMENT RECORDS, THE LD. C.I.T. CONSIDERED THE ASSESSMENT ORDER PASS ED U/S. 143(3) DATED 22/12/2008 AS BEING ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTEREST OF REVENUE FOR THE A.O. FAILED TO APPRECIATE THE FACTS OF THE CASE AND MAKE NECESSARY ENQUIRY IN THE MATTER. HE, THEREFORE, SET ASIDE THE ASSESSMENT ORDER AND DIREC TED THE A.O. TO MADE A FRESH 3 ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AS PER LAW AND AFTER MAKING ENQUIRIES OF THE ISSUES POINTED OUT BY HIM IN HIS O RDER BY OBSERVING AS UNDER :- 3. I HAVE GONE THROUGH THE ASSESSMENT RECORDS, THE ASSESSMENT ORDER AND THE SUBMISSION OF THE ASSESSEE. IT IS EVIDENT FROM THE PARTNERSHIP DEED ANNEXED TO THE RETURN THAT FROM 01.04.05 ALL THE OLD PARTNERS OF M /S SHIVAM ENTERPRISE RETIRED AND NEW PARTNERS WERE ADMITTED BY VIRTUE OF A DEED EXEC UTED ON 17.03.06. THUS IN EFFECT A NEW M/S SHIVAM ENTERPRISE WAS CREATED FROM 01.04.05 WHICH IS DIFFERENT FROM THE EARLIER ONE AS A CHANGE IN CONSTITUTION OF A FIRM I S SAID TO TAKE PLACE ONLY WHEN: A) IF ONE OR MORE PARTNER CEASE TO BE PARTNERS OR O NE OR MORE PARTNERS ADMITTED PROVIDED THAT AT LEAST ONE OF THE PARTNERS OF THE F IRM BEFORE THE CHANGE OF CONSTITUTION CONTINUES AS PARTNER AFTER THE CHANGE. B) WHERE ALL PARTNERS CONTINUE WITH A CHANGE IN THE RESPECTIVE SHARES OR A CHANGE IN THE SHARES OF SOME OF THEM. IN THIS CASE AS NO OLD PARTNER WAS CONTINUING A NEW ENTITY WAS CREATED WHICH HAS A SEPARATE ENTITY FROM THE EARLIER ONE. THE NEW ENTITY WHICH WAS CREATED FROM 01.04.05 , ACQUIRED THE ASSETS OF THE OLD ENTITY WHICH INCLUDED THE IMPUGNED SHARES WORTH RS. 1,83,500/- ON 31.03.04 WHICH WAS LATER SOLD ON 23/03/06 FOR AN AMOUNT OF RS.1,74 ,34,000/-. IT IS CLEAR THAT THE PERIOD OF HOLDING OF THESE SHARES IN THE HANDS OF T HIS NEW ENTITY IS LESS THAN 12 MONTHS. ACCORDINGLY THE GAIN ARISING OUT OF THE SAL E AFTER THE HUGE APPRECIATION IN THE VALUE OF THE SHARES SHOULD NOT HAVE BEEN ASSESSED A S LONG TERM CAPITAL GAIN. IN COURSE OF ASSESSMENT PROCEEDINGS THE AO REL IED ON THE DETAILS SUPPLIED BY THE ASSESSEE REGARDING SALES AND PURCHASE OF THE SHARES IN QUESTION. THE FACT THAT THE SHARES WERE SOLD AT SUCH A HIGH PRICE OUT SIDE THE STOCK EXCHANGE AND THAT THE SHARES WERE SOLD WITHIN 7 DAYS FROM THE EXECUTION OF THE N EW PARTNERSHIP DEED WARRANTS ENQUIRIES REGARDING THE PURCHASERS AND THE SOURCE O F THE FUND. THE RAMPANT PRACTICE OF INTRODUCING UNACCOUNTED MONEY UNDER THE VEIL OF PENNY STOCK COMPANY CANNOT BE RULED OUT IN THIS CASE. IN THIS CONTEXT IT MAY BE S TALED THAT THERE ARE PLETHORA OF CASE LAWS WHICH IN DIFFERENT WORDS CLEARLY DICTATES THAT ASSESSMENT WITHOUT PROPER ENQUIRY IS ERRONEOUS AND PREJUDICIAL TO REVENUE AND CIT CAN REVISE IT U/S 263. THE LD. A/R OF THE ASSES SEE IN HIS SUBMISSION HAS QUESTIONED THE VALIDITY OF THE PROCEEDINGS U/S 263 IN THIS CASE BECAUSE THE RECORD S WERE EXAMINED BY THE A.0. AND THE VIEW OF THE CIT IS CHANGE OF OPINION. IN THIS M ATTER RELIANCE IS PLACED ON THE CASE LAWS JEHAN NUMA PALACE HOTEL (P) LTD. VS CIT (ITAT, INDORE) 70 ITD 552, D&H SECHERON ELECTRODES LTD. VS DCIT (ITAT, INDORE) 70 ITD 214 WHEREIN IT HAS BEEN HELD THAT CIT CAN PASS ORDER U/S 263 IN DEBATABLE I SSUES. HENCE, AFTER CAREFULLY CONSIDERING THE RECORDS AND THE SUBMISSION OF THE ASSESSEE I CONSIDER THE ORDER PASSED BY THE AO U/S. 143(3) ON 22/12/2008 AS BEING ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVE NUE FOR THE A.0 FAILED TO APPRECIATE THE FACT OF THE CASE AND MAKE NECESSARY ENQUIRY IN THIS MATTER. ACCORDINGLY, THE ASSESSMENT IS SET-ASIDE AND AO IS DIRECTED TO MAKE A FRESH ASSESSMENT AS PER LAW AFTER 4 MAKING PROPER ENQUIRIES OF THE ABOVE POINTS AS CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE AND AFTER GIVING THE ASSESSEE DUE OPPORTUNITY OF BEING HEARD. HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 4. DURING THE COURSE OF HEARING, THE LD. A/R SUBMI TTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND PURCHASED THE SHARES OF DANTA VAYAPAR KENDRA LTD. AND DEEVEE COMMERCIAL LTD., WHICH WERE HELD AS INVESTMENTS. HE SUBMITTED THAT DURING THE YEAR, THERE WAS A RECONSTITUTION OF PARTNERSHIP FIRM. HE SUBMITTED THAT THE ASSESSEE CLAIMED ON SALE OF SAID SHARES AS LONG-TERM CAPITAL GAIN (L TCG) AND WHEREAS THE LD. C.I.T. INITIATED PROCEEDING U/S. 263 OF THE ACT TO EXAMINE WHETHER THE PROFIT ON SALE OF SAID SHARES IS TO BE CONSIDERED AS SHORT-TERM CAPITAL GA IN (STCG) OR BUSINESS INCOME INSTEAD OF LTCG. THE LD. A/R REFERRED PAGE-2 (LAST PARA) OF ORDER OF LD. C.I.T. AND SUBMITTED THAT THE LD. C.I.T. AFTER GIVING A FINDIN G THAT PERIOD OF HOLDING OF THESE SHARES IS LESS THAN 12 MONTHS IN THE HANDS OF THE PARTNERS ON ACCOUNT OF RECONSTITUTED PARTNERSHIP FIRM AND, THEREFORE, THE ORDER OF THE A .O. IS ERRONEOUS, DIRECTED THE A.O. TO CONSIDER THE PROFIT ON SALE OF SAID SHARES AS LTCG. THE LD. A/R SUBMITTED THAT THE A.O. EXAMINED THE BOOKS OF ACCOUNT AND THEREAFTER H AS TAKEN A CONSCIOUS DECISION AFTER DISCUSSING DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THAT IT WAS LTCG AND IN SUCH CIRCUMSTANCES, THE LD. C.I.T. CANNOT INVOKE HI S JURISDICTION U/S. 263 OF THE ACT TO SUBSTITUTE HIS OWN OPINION AND TO HOLD THAT THE ASS ESSMENT ORDER PASSED BY THE A.O. U/S. 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE MERELY BECAUSE HE DOES NOT AGREE WITH THE VIEW TAKEN BY TH E A.O. THE LD. A/R SUBMITTED THAT DETAILED REPLIES WERE ALSO FILED BEFORE THE LD. C.I .T. IN RESPONSE TO NOTICE ISSUED U/S. 263 OF THE ACT AND REFERRED PAGES 7 TO 15 AND 22 TO 26 OF THE PAPER BOOK TO SUBSTANTIATE HIS SUBMISSIONS. HE FURTHER SUBMITTED THAT THE ASSESSEE ALSO EXPLAINED THE MATTER BEFORE THE A.O. WHEN A QUERY WAS RAISED IN R ESPECT OF LTCG ON SALE OF SHARES AND REFERRED PAGES 20 & 21 OF THE PAPER BOOK, WHICH IS A COPY OF THE LETTER OF THE ASSESSEE FILED BEFORE THE A.O. THE LD. A/R FURTHER RELIED ON THE DECISION OF I.T.A.T., DELHI BENCH IN THE CASE OF ACIT VS. GOEL UDYOG [45 SOT 444] TO SUBSTANTIATE HIS SUBMISSIONS. HE SUBMITTED THAT THE ORDER PASSED BY THE LD. C.I.T. IS TO BE QUASHED AS PROVISION OF SEC. 263 OF THE ACT HAS NOT BEEN RIGHT LY INVOKED BY HIM. 5 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDER OF LD. C.I.T. HE SUBMITTED THAT THERE WAS NOT ONLY A CHANGE OF CONSTITUTION OF THE FIRM BUT IT IS A CASE OF SUCCESSION AS ALL THE EXISTING PART NERS HAVE RETIRED AND THE NEW PARTNERS CAME INTO THE RECONSTITUTED FIRM. HE SUBMITTED THA T ERSTWHILE PARTNERS WERE AWARE OF THE VALUE OF THE SHARES ON THE DATE OF CHANGE IN TH E CONSTITUTION OF THE FIRM AND, THEREFORE, THE SAID VALUE OF SHARES SHOULD HAVE BEE N CONSIDERED WHEN THE OLD PARTNERS RETIRED AND THE NEW PARTNERS CAME INTO EXISTENCE. HE SUBMITTED THAT THE A.O. OVERLOOKED THE SAID VITAL FACTS AND, THEREFORE, THE RE WAS NOT PROPER ENQUIRY MADE BY THE A.O. HE SUBMITTED THAT DUE TO INADEQUATE ENQUI RY AND/OR LACK OF ENQUIRY MADE BY THE A.O. IN RESPECT OF THE SAID SHARES, THE ASSESSM ENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBMITTED THAT I F THERE IS AN INSUFFICIENT ENQUIRY AND/OR LACK OF ENQUIRY, LD. C.I.T. CAN INVOKE HIS P OWER U/S. 263 OF THE ACT AND IN THIS CONNECTION HE PLACED RELIANCE ON THE DECISIONS OF H ONBLE SUPREME COURT IN THE CASES OF RAMPYARI DEVI SARAOGI VS. CIT [67 ITR 84 (SC)] A ND SMT. TARA DEVI AGGARWAL VS. CIT [88 ITR 323 (SC)]. HE, THEREFORE, SUBMITTED TH AT THE ORDER OF LD. C.I.T. SHOULD BE CONFIRMED. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IN ORD ER TO ATTRACT THE PROVISIONS OF SEC. 263 OF THE ACT, THE COMMISSIONER HAS TO BE SATISFIE D OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE A.O. SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT, I.E. IF THE ORDER OF THE A.O. IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE, RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT JUST TO RE-EXAMINE OR RE-VERIFY THE ISSUES ALREADY EXAMINED /VERIFIED AT THE ASSESSMENT LEVEL. IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. FROM THE IMPUGNED ASSESSMENT ORDER, WE OBSERVE THAT HEARING DURING ASSESSMENT PROCEEDINGS TOOK PLACE AS MANY AS FIVE TIMES ON 23/5/2008, 12/6 /2008, 12/12/2008, 15/12/2008 & 22/12/2008. IT IS ALSO EVIDENT FROM THE ASSESSMENT ORDER THAT THE ASSESSEE ON REQUISITION FROM THE A.O. APPEARED FROM TIME TO TIM E AND MET THE QUERIES RAISED BY THE A.O. FURTHER, IN RESPONSE TO NOTICE U/S. 143(2)/14 2(1) OF THE ACT, THE ASSESSEE 6 SUBMITTED A WRITTEN NOTE IN SUPPORT OF THE CLAIM, P LACED AT PAGES 20 & 21 OF THE PAPER BOOK, WHICH, INTER ALIA, INCLUDED THE FOLLOWING DOC UMENTS :- 1) DETAILS OF QUOTED SHARES PURCHASED & SOLD OF DANTA VAYAPAR KENDRA LTD. & DEEVEE COMMERCIAL LTD., RESULTING IN LTCG 2) COPIES OF PURCHASE BILLS & OTHER DOCUMENTS OF THE SAID COMPANIES WHOSE SHARES WERE PURCHASED & SOLD, I.E. BALANCE S HEETS FOR A.YS. 05-06 & 06-07, I.T. ACKNOWLEDGEMENT, DOCUMENTS RELATING TO STOCK EXCHANGE. 3) DETAILS OF SALE OF SAID SHARES TO M/S . BHOLANATH METALIKS LTD. WHICH INCLUDED BALANCE SHEET OF THE SAID COMPANY, I.T. ACKN OWLEDGEMENT, SALE BILL, BANK STATEMENT, DETAILS OF SOURCE OF SUCH PAYMENT ETC. KEEPING IN VIEW THE ABOVE MATERIAL, THE A.O. AFTER HEARING THE ASSESSEE ON SEVERAL OCCASIONS HAS COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT BASED ON THE MATERIAL AVAILABLE ON RECORD. HOWEVER, THE A.O. HIMSELF HAS FURTHER SENT PROPOSAL TO THE LD. C.I.T. TO INITIATE PROCEEDING U/S. 263 OF THE ACT. THE REASONS FOR SUCH PROPOSAL ARE NOT AVAILABLE ON RECORD. THE LD. C.I.T. ALSO OBSERVED THAT ALTHOUGH THE A.O. DURING ASSESSMENT PROCEEDINGS EXAMINED THE DETAILS FURNISH ED BY THE ASSESSEE REGARDING PURCHASE & SALE OF THESE SHARES, BUT HE FAILED TO M AKE PROPER ENQUIRIES ABOUT SUCH HIKE IN SALE PRICE WITHIN 7 DAYS FROM THE DATE OF EXECUT ION OF NEW PARTNERSHIP DEED. THE LD. C.I.T. HAS NOT EVEN SETTLED THE ISSUE WHETHER PROFI T ON SALE OF SHARES WOULD RESULT IN STCG OR BUSINESS INCOME, WHICH IS EVIDENT FROM THE NOTICE SENT BY THE BY THE LD. C.I.T. TO THE ASSESSEE AND THE ORDER PASSED BY HIM U/S. 263 OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT NEITHER THE A.O. BY SENDING THE PROPOSAL FOR INITIATION OF PROCEEDING U/S. 263 OF THE ACT NOR TH E LD. C.I.T. WHILE PASSING THE ORDER U/S. 263 OF THE ACT HAS POINTED OUT HOW THE ASSESSM ENT ORDER PASSED BY THE A.O. U/S. 143(3) OF THE ACT IS ERRONEOUS AS WELL AS PREJUDICI AL TO THE INTEREST OF THE REVENUE. THEREFORE, WE QUASH THE ORDER PASSED BY THE LD. C.I .T. U/S. 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 4 !3 '5! 6 5% 7 48 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 11.10.2011 SD/- SD/- ( . . . . . . . . ) ( . .. . . .. . ) !' (B.R.MITTAL) , JUDICIAL MEMBER (C.D.RAO) , ACCOUNTANT MEMBER ORDER PRONOUNCED BY : SD/- JM (NVK) SD /- AM (CDR) ( (( ( ' ' ' ') )) ) DATE: 11-10-2011 7 !3 1 /$$9 :!9';- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : M/S. SHIVAM ENTERPRISES, 25-D, HARISH MUKHERJEE RD. KOLKATA-700 025. 2 /0+, / THE RESPONDENT : A.C.I.T., CIRCLE-29, KOLKATA. 3. $3% / THE C.I.T., KOLKATA-X 4. ?$7 /$% / DR, ITAT, KOLKATA BENCHES, KOLKATA 5 . GUARD FILE . 09 /$/ TRUE COPY, !3%5/ BY ORDER, (DKP) @ A / DY/ASSTT. REGISTRAR .