Satish Kumar Lakhmani Vs PCIT (ITAT Kolkata)
Conclusion: CIT could not brand the action of AO to accept the claim of assessee in respect of LTCG as a case of no enquiry on the part of AO to term it as an erroneous order and which finding could have facilitated him to usurp/interfere by exercising his revisional jurisdiction u/s. 263. Further, CIT himself ought to have conducted enquiry to bring out the fallacy as to show how the enquiry conducted by the AO was erroneous. Thus, revision was not justified as the impugned order was nothing but cut & paste exercise without application of mind.
Held: CIT had received a proposal from AO that AO had failed to take a logical action on the information available with him while framing the original assessment order passed u/s. 143(3) and so it required interference u/s. 263 and, therefore, he expressed his desire to invoke revisional jurisdiction u/s. 263. It was brought that AO in the original assessment had scrutinized the assessment for AY 2014-15 since it was selected by the CASS especially for “Suspicious Long Term Capital Gain on Shares (inputs from the Investigation Wing)”. According to assessee, the original assessment was passed by AO after thorough enquiry which could be noted from the documents filed before AO. It was held that following the decision in case of Ritin Lakhmani & Ors Vs. PCIT, ITA Nos. 41 to 47/K/2019 wherein it was held that AO had taken note of this issue i.e. Suspicious Long Term Capital Gain on Shares (inputs from the Investigation Wing) [ LTCG] and had called for the documents from assessee to substantiate the genuineness of the transaction and pursuant to which assessee had filed the documents, which AO in his assessment order had acknowledged to have verified from the share trader, which facts were evident from the perusal of the original scrutiny assessment order. AO’s action on the issue of accepting the claim of assessee in respect of LTCG which CIT would like to rake up by passing the impugned order had already undergone enquiry by AO; meaning AO’s action in the first round could not be termed as a case of “no enquiry” on the issue of LTCG. Hence, CIT could not brand the action of AO to accept the claim of assessee in respect of LTCG as a case of no enquiry on the part of AO to term it as an erroneous order and which finding could have facilitated him to usurp/interfere by exercising his revisional jurisdiction u/s. 263. Further, CIT himself ought to have conducted enquiry to bring out the fallacy as to show how the enquiry conducted by the AO was erroneous. Thus, revision was not justified as the impugned order was nothing but cut & paste exercise without application of mind.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal preferred by the assessee is against the order of Ld. Pr. CIT-10, Kolkata dated 11.12.2018 for A Y 2014-15 passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
2. The assessee has raised a legal issue wherein he has challenged the assumption of jurisdiction u/s. 263 of the Act which according to him, the Ld. Pr. CIT does not enjoy in the facts and circumstances of the case.
3. According to Ld. AR Shri Subash Agarwal, a perusal of the impugned order passed by the Ld. Pr. CIT u/s. 263 of the Act reveals that he has passed the order u/s. 263 of the Act on a proposal made by the AO and he drew our attention to para 2 and 3 of the impugned order which read as under:
“2.Subsequently, an error was detected in the assessment order and a proposal was received in this office for review of the impugned order u/s. 263 of the Act.
3. On perusal of the said proposal of the AO, along with the records, prima facie it transpired that the Assessing Officer, namely ITO, Ward-28(4), Kolkata (hereinafter, the AO) had apparently failed to take a logical action on the information available with him, and accordingly, the impugned assessment looked erroneous in so far as it was prejudicial to the interest of revenue. Thus, a show cause notice initiating proceedings u/s. 263 of the Act was issued to the assessee vide letter No. PCIT-10/Kolkata/263/51/2018-19/5977 dated 22.11.2018, as reproduced ahead:
……”[Emphasis given by us]
4. On a perusal of the aforesaid averments made by the Ld. Pr. CIT it is evident that a proposal was received from the AO to him that he/AO has failed to take a logical action on the information available with him while framing the original assessment order passed u/s. 143(3) of the Act dated 24.08.2016 and so it require interference u/s. 263 of the Act and, therefore, he expressed his desire to invoke his revisional jurisdiction u/s. 263 of the Act. It was brought to our notice that the AO in the original assessment has scrutinised the assessment for AY 2014-15 since it was selected by the CASS especially for “Suspicious Long Term Capital Gain on Shares (inputs from the Investigation Wing)”. According to the Ld. AR, the original assessment was passed by the AO after thorough enquiry which can be noted from the documents filed before the AO which are available in the paper book consisting of 87 pages.
5. According to Ld. AR, the following documents were filed by the assessee when he enquired about the issue of Suspicious Long Term Capital Gain on Shares (hereinafter referred to as “LTCG”) on which STT was levied :
