SH. SUKHVINDER SINGH,KANPUR vs. PR CIT, CENTRAL, KANPUR

PER ANADEE NATH MISSHRA, A.M.: (A) Vide ITA. No.190/LKW/2020 appeal has been filed by the assessee against the impugned order dated 17.03.2020 passed by the Ld. Principal Commissioner of Income Tax [hereinafter referred to as the “PCIT”], Kanpur for assessment year 2012-13 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). The grounds of appeal of the assessee are as under: - “The Appellant appeals against the revision order dated 17.03.2020 (received by the Appellant on 19/03/2020) passed by the Ld. Principal Commissioner of Income-tax (Central), Kanpur (the Pr. CIT), under section 263 of the Income-tax Act, 1961 (the Act), on the following amongst other grounds each of which is in the alternative and without prejudice to others: 1. That the Ld. Pr. CIT erred in assuming juri iction under section 263 of the Act without fulfilling the juri ictional pre-conditions under the said section. 2. That the Ld. Pr. CIT erred in not accepting that the show cause notice 27/02/2020 and letter allowing the adjournment dated 04/03/2020 under section 263 of the Act ,have fatal defects, are illegal, without

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juri iction , void ab nitio , liable to be withdrawn and are non-sustainable under the law , hence that defects goes to the root of the proceedings under section 263 of The Income tax Act and vitiates the proceedings, resulting in passing of the impugned , illegal order under the relevant section of The Act, which is liable to be quashed.
3. That the Ld. Pr. CIT erred in holding that the AO had passed the assessment order dated 30.12.2016 without carrying out proper/adequate enquiry of certain alleged aspects of the matter. He failed to appreciate that the AO has considered the relevant aspects and the other aspects referred to by the Ld. Pr. CIT have no relevance.
4. That the findings given by the Ld. Pr. CIT In the impugned order dated
26.03.2019 overlooks the relevant facts and circumstances of the case and is based on facts and circumstances which are either irrelevant or non existing rendering his order to be perverse and hence illegal and bad in law.
5.That the order appealed against Is contrary to facts, law, principles of natural justice and equity.
6.That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case, be granted.
That the appellant craves liberty to add, amend, alter or vary any ground of appeal either at the time of hearing of the appeal or before the disposal of the appeal.”
(A.1) Vide ITA. No.191/LKW/2020 appeal has been filed by the assessee against the impugned order dated 17.03.2020 passed by the Ld. Principal Commissioner of Income Tax [hereinafter referred to as the “PCIT”], Kanpur for assessment year 2014-15
under section 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). The grounds of appeal of the assessee are as under: -
“The Appellant appeals against the revision order dated 17.03.2020
(received by the Appellant on 19/03/2020) passed by the Ld. Principal
Commissioner of Income-tax (Central), Kanpur (the Pr. CIT), under section 263 of the Income-tax Act, 1961 (the Act), on the following amongst other grounds each of which is in the alternative and without prejudice to others:
1. That the Ld. Pr. CIT erred in assuming juri iction under section 263 of the Act without fulfilling the juri ictional pre-conditions under the said section.
2. That the Ld. Pr. CIT erred in not accepting that the show cause notice
27/02/2020 and letter allowing the adjournment dated 04/03/2020
under section 263 of the Act ,have fatal defects, are illegal, without juri iction , void ab initio, liable to be withdrawn and are non-sustainable

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under the law, hence that defects goes to the root of the proceedings under section 263 of The Income tax Act and vitiates the proceedings, resulting in passing of the impugned , illegal order under the relevant section of The Act, which is liable to be quashed.
3. That the Ld. Pr. CIT erred in holding that the AO had passed the assessment order dated 30.12.2016 without carrying out proper/adequate enquiry of certain alleged aspects of the matter. He failed to appreciate that the AO has considered the relevant aspects and the other aspects referred to by the Ld. Pr. CIT have no relevance.
4. That the findings given by the Ld. Pr. CIT In the impugned order dated
26.03.2019 overlooks the relevant facts and circumstances of the case and is based on facts and circumstances which are either irrelevant or non existing rendering his order to be perverse and hence illegal and bad in law.
5.That the order appealed against Is contrary to facts, law, principles of natural justice and equity.
6.That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case, be granted.
That the appellant craves liberty to add, amend, alter or vary any ground of appeal either at the time of hearing of the appeal or before the disposal of the appeal.”
(B)
For the sake of brevity and convenience, both appeals are disposed of through this consolidated order. At the time of hearing before us, the Ld. Representatives of the parties were in agreement that the appeal vide ITA. No.190/LKW/2020 for A.Y.
2012-13 may be taken as a lead case and the decision of this appeal will be applicable mutatis mutandis to appeal vide ITA.
No.191/LKW/2020 for A.Y. 2014-15 is also, the facts and circumstances of both the appeals being in pari-materia.
Therefore, first we take up the assessee appeal in ITA. No.
190/LKW/2020, pertaining to the A.Y. 2012-13
(B.1) In this case, for assessment year 2012-13 (Relevant to ITA.
No.190/LKW/2020) assessment order dated 19.05.2017 was passed u/s 153A of the Act, whereby the assessee’s total income was determined at Rs.39,21,290/- as against returned income of Rs.32,73,690/-. Along with the assessment order, the Assessing

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Officer also recorded a detailed office note, which is reproduced below for the ease of reference: -
“1. The seized material as well as appraisal report has duly been considered/examined while passing this assessment order.
2. During the course of search and seizure proceedings, cash to the tune of Rs. 11,40,690/- was found out of which Rs 10,00,000/- was seized and jewellery items (Gold+ Silver) amounting to Rs 1,20,34,130/- was also found out of which gold jewellery amounting to Rs. 79,88,740/- and silver jewellery amounting to Rs 17,56,300/- totalling to Rs.97,45,040/- was seized. Subsequently, locker no 309 in oriental bank of commerce, Ranjeet
Nagar, Kanpur, in the name of Shri Sukhwinder Singh and Smt. Suman
Preet was also operated in which jewellery amounting to Rs.
2,06,20,623/- was found but not seized, all the jewellery items were returned back at the same time.
With regard to the availability of jewellery at my residence and in locker no 309 in oriental bank of commerce, Ranjeet Nagar, Kanpur, the assessee has stated that the jewellery belongs to herself, husband, daughter and Sukhwinder Singh HUF. In addition to above she has also received the jewellery from her mother at the time of her death. As per the chart enclosed it is seen that there is shortage of jewellery of Gold about 169.07
gm purity of making of the jewellery, the shortage was of jewellery of my mother which was kept as a memory. However, M/s Sukhwinder Singh
HUF disclosed the jewellery in IDS 2016 in my HUF that is about 228.100
gm, which fully covers if there was any shortage. The copies of return of wealth in respect of himself, his wife and Sukhwinder Singh HUF for AY
2010-11 to 2014-15 have also been filed.
3. With regard to the cash found of Rs 10,00,000/- was seized the assessee was required to explain source of cash. The assessee in his reply has stated that a cash of Rs. 11,40,690/was out of balance available with him. As per Cash flow statement as on 31/03/2014 and 31/03/2015. As per the wealth tax computation of Rs. 13,39,032/- and thus the availability of cash found and seized and stands explained.
4. During the financial 2011-12 relevant to AY 2012-13 and during FY
2013-14 relevant to AY 2014-15, the assessee has declared long term capital gain of Rs. 60672337/and Rs.40,57,954/- on sale of shares of M/s Bluecircles Services Ltd. In order to verify genuiness of long term capital gains, information u/s 133(6) were called for from the brokers as well as Commission u/s 131(1)(d) of the IT Act1961were also make an enquiry about the transaction. The brokers have furnished the copies of account of the assessee as appearing in their books of accounts. The demant accounts of the assessee have also been furnished. However, the DDIT(INV.) Mumbai, in his report is of the view that the transactions are not genuine for the following reasons:
i. The KYC documents of Shri Sukhvinder Singh have been provided during the course of enquiry. Persual of the KYC documents revealed that Mr
Gopal Ranga has done the KYC in person of Shri Sukhvinder Singh.
However, no evidence of in person verification done by Mr Gopal Ranga are been provided during the course of enquiry like evidence Mr Gopal ranga Was physically present in Kanpur on the date in which in person verification having done is claimed.

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ii. During the course of enquiry, it was stated that, with respect to nature of transaction that shri Sukhwinder Singh has sold 819560 shares of M./s
Blur Circles Services Itd. for an amount of Rs. 602,33,455/- between
October, 2011 to March 2012 at an average price of Rs. 73.49. The copy of ledger account has been provided. When enquired who had given instructions for sale of shares, it was stated that Shri Sukhvinder Singh himself had given instructions for sale of shares of M/s Blue Circle
Services Ltd over a phone call. But no evidence of call log was provided by M/s Abans Securities Ltd. for the said transactions.
iii No details of dealer who has purchased the trades of Shri Sukhvinder
Singh were provided.
iv. M/s Abans Securities Pvt Ltd was asked to comments on the financials and fundamentals of the shares of M/s Blue Circle Services Ltd at the same time of sale of shares by Shri Sukhvinder Singh. In response to the same, the director of Abans Securities Pvt Ltd stated that as a broker they are not concerned with the fundamentals and financials of any scrip which are being traded on the exchange.
From the analysis of the fundamentals of the company M/s Blue Circle
Services Ltd, it is observed that the price rise in the shares of the Blue
Circle Services Ltd was not justified on the basis of revenue, profit and EPS etc. It is pertinent to mention that broking firm did not raise any PMLA/ STR in this regard.
vi. It is brought on record that during the course of enquiry one more person namely Mr. Iqbal Singh PAN: ABXPS4731N, HIG, 81, Ratan Lal
Nagar, Kanpur 208022 has also traded in the shares of Blur Circle
Services Ltd.
vii. Thus the transaction made by the assessee Shri Sukhvinder Singh in the shares M/s Blue Circle Services through M/s Abans Securities Pvt Ltd is non genuine. The assessee was show caused vide questionnaire dated
17/04/2017 as to why the long term capital gain being exempt may not be treated as income from other sources and be added to his total income.
The assessee in his reply stated that:
i. the identity of the person duly stands substantiated.
ii. I have purchased the shares and the investments and the source for the same has been duly established.
iii. I have kept the shares in demat account.
iv. The statements of demat accounts have been produced before your honour. The demat account reflect all the transactions.
V. Demat account holder has duly confirmed to your honour regarding the holding of the same.
vi. The shares were kept in account for more than ane year, and thus is eligible for the long term capital asset.
vii. That the shares were sold through the recognised stock exchange.
viii. Sale Bills of the broker have been furnished before your Honour.
ix. The broker has duly confirmed you the transaction done through him and through the recognised stock exchange.

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x. The Security transaction tax has been duly paid on these transactions.
xi. That As per the rule 11UA 1(c) (a) (i) of IT Rules, 1962, if the quoted shares and securities are received by way of transactions carried out through any recognised stock exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange.
The assessee has also placed reliance on the various decisions of the ITAT,
High Court and Supreme court in his support and vehemently objected to the observation made by the DDIT( Inv.) Mumbai, in his report.
Looking to the facts that the shares were duly in the demat account of the assessee and the transactions have been made through registered broker on recognised stock exchange and also keeping in view the fair market value as per Rule 11UA and decision of various Appellate authorities, no adverse inference is drawn.
5. The property number 117/136-B-4, Sarvodaya Nagar, Kanpur was referred to the Valuation Officer, Kanpur for the period 31.03.2009 to 31.03.2015. The Valuation Officer is his report has estimated the value of the investments in the property during financial year 2011-12 relevant to assessment year 2012-13 at Rs. 12,90,400/- as against declared investment of Rs. 9,50,500/- therefore an addition of Rs 3,39,900/- has been made to the total income of the assessee on account of unexplained investment AY 2012-13.”
(B.2) Subsequently, the Ld. PCIT started proceedings u/s 263 of the Act. Vide notice dated 27.02.2020, the Ld. PCIT was of the view that the Assessing Officer accepted the assessee’s claim for capital gain on sale of shares of M/s. Blue Circle Services Ltd on face value, without independent inquiry. The Ld. PCIT was of the view that the assessment order passed by the Assessing Officer showed non-application of mind on the documents and materials on record. The Ld. PCIT passed order dated 17.03.2020 under section 263 of the Act whereby the Ld. PCIT concluded that there was non-application of mind of the Assessing Officer in as much as the necessary enquiries which should have been made have not been made. The Ld. PCIT, vide aforesaid order dated
17.03.2020, set aside the assessment order passed by the Assessing Officer with the direction to pass fresh order. The present appeal before us has been filed by the assessee against

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the aforesaid impugned appellate order dated 17.03.2020 passed by the Ld. PCIT u/s 263 of the Act.
(B.3) In the course of appellate proceedings in Income Tax
Appellate Tribunal (ITAT), the assessee filed a paper book containing the following particulars:

(C)
At the time of hearing before us, the Ld. Authorized
Representative for assessee placed reliance on the aforesaid particulars referred to in foregoing paragraph no. (B.3) of this order. In particular, the Ld. AR for assessee, drew our attention

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to written submissions, which is reproduced as under, for the ease of reference: -
“This is an appeal made against the order passed by Ld. Pr.CIT u/s 263 of the I.-Tax Act, 1961 dated 17-03-2020 in which Ld. Commissioner had set aside the original assessment order passed by the Ld. AO u/s 153A of the I Tax Act, 1961 dated 19.05.2017
In reference to the above, it is submitted as follows:
Ground No.1, 2 & 3
As regards, Ground No. 1 regarding non fulfilment of juri ictional preconditions the appellant has to submit as follows
A. The original assessment order cannot be revised u/s 263 of the Act since the original order u/s 153A of the Act was in itself passed with the prior approval of Ld. Add. CIT itself: -
The Procedures for assessment in Search & Seizure cases is provided in the Manual of Office Procedure Vol. II (Tech.) published by DIRECTORATE
OF INCOME TAX (ORGANISATION & MANAGEMENT SERVICES) CENTRAL
BOARD OF DIRECT TAXES in February 2003. The relevant guidelines as provided in Chapter-3 related to Assessment Procedure (Search and Seizure) are reproduced hereunder:
“4, Appraisal report, panchanama and annexures: Along with the seized material the investigation wing forwards to the Assessing Officer an appraisal report, copies of warrant, ‘and the panchanama and its annexures. These should be handed over to the A.O. within two and a half months from the date of initiation of the search. The appraisal report comprises the investigation wing's findings on the search and may include a note on the modus operandi of tax evasion adopted by the searched parties and their associates, tentative computation of undisclosed income in the hands of various assessees, overview of seized materials and suggestions for further enquires. This report is prepared essentially for the guidance of the AO; as such, its findings are not binding on him. Wherever there is a major deviation between the income estimated in the appraisal report and the income proposed to be assessed, however the matter should be discussed between the assessment wing and the investigation wing and the minutes of this meeting should be recorded. The AO should leave a detailed note in the order sheet of the MR in this regard. It must be noted that the appraisal report is open to scrutiny by audit along with the relevant assessment records in all search cases”.
[Prior approval necessary for assessment in cases of search or requisition.
153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner.]
In case of assessments u/s 153A provision for prior approval under section 153D has been made. Approval can only be made after thorough review of the JCIT/Add. CIT.

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A review of the provisions of Sec 153A, Sec 153D and procedure for assessment makes it clear that the assessment order u/s 153A is already subject to approval by the Addl. Commissioner u/s 153D and discussed with the investigation wing in case of major deviation between the income estimated in the appraisal report and the income proposed to be assessed.
If the orders already subject to review by two authorities, as explained above have to be reviewed again u/s 263, there would not be finality in the assessment proceedings. This will be against the observation of Hon’ble Bombay High Court in CIT vs Gabriel India Ltd (1993) 203ITR
(BOM), wherein the Hon'ble High Court held that such an action is against the well accepted policy of law that there must be point of finality in all legal proceedings and that state issued should not be reactivated beyond a particular stage.
No assessment can be made u/s 153A or u/s 153B by AO until and unless, the entire record of assessment and the issues arising during assessment are reviewed by JCIT/Addl. CIT and proposed assessment order is approved by him. Hence approval u/s 153D from JCIT / Addl. CIT, tantamount to review by the next higher authority. Orders already reviewed cannot be reviewed again.
The Hor’ble Juri ictional High Court in the following cases has held that CIT would not be u/s 263 of the I.Tax Act, 1961....... Para 16we find that the order impugned passed by the PCIT under Section of the Act whereunder the order passed by the Ld. AO under Section 143(3) r.w.s. 153A of the Act has been sought to be revised is not sustainable due to lack of juri iction in invoking Section 263 of the Act by the Ld. PCIT for this particular reason that the order sought to be revised has already been passed by the Ld.
ACIT upon prior approval from the ACIT, Indore under Section 153D of the Act and therefore, the same cannot be revised without having any revised decision and/or directions of the ACIT under Section 153D of the Act”.
The above order has been decided on merits in favour of the assessee before the Hon'ble High Court of Madhya Pradesh in ITA NO. 182 of 2023
[2024] 162 taxmann.com 48 (Madhya Pradesh)
Pune ITAT in DhariwalIndustries Ltd. v. CIT IT Appeal Nos.1108 to 1113
144.) of 2014 dated 23-12-2016 -
“15. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl. CIT u/s. 153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s. 263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT u/s. 153D of the I.T. Act.”
“Para 15 - Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl.CIT u/s.153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the ITA Nos.190 & 191/LKW/2020
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instant case since the same has been passed with the approval of the Addl.CIT u/s.153D of the I.T. Act.”
Kanpur-
We have also examined the judgment of the Hon’ble juri ictional High
Commissioner of Income-tax would not be justified in interfering in the approval according by the Addl. CIT for framing the assessment order and thus there was no case for setting aside the assessment order for the assessment years in question.”
Commissioner of Income-tax Central Patna “Thus, in the light of the settled judicial precedents referred supra and on our examination of the facts of the case including the enquiries conducted by the Id. Assessing Officer regarding the carried out during the impugned year as well as examining the seized material, and then getting necessary approval u/s 153D of the Act and also observing that the Id. Pr. CIT did not make any specific enquiry prior to assuming juri iction, find the impugned revisionary proceedings as bad in law and deserves to be quashed on account of the following:4) that when there is an approval u/s 153D of the Act, it has been held consistently by the Hon’ble Courts (referred supra) that revisionary power u/s 263 of the Act cannot be exercised. b) even otherwise, without revising the order u/s 153D of the Act, and finding them to be erroneous and prejudicial to the interest of the revenue, revisionary powers cannot be invoked for the assessment order framed u/s 153.A/143(3) of the Act after getting approval u/s 153D of the Act.
that when the Id. Assessing Officer has conducted detailed enquiry, examined the seized records, made necessary observations in the assessment order, referred to various statements filed by the assessee and having taken one of the legally permissible view, then in such circumstances, the revisionary powers cannot be exercised just on the ground that adequate enquiry has not been done.
a) that revisionary proceedings cannot be held to be justified unless Id. Pr.
CIT [9:03 AM, 10/14/2025] Self: had carried out independent enquiry specifically dealing with the details in his possession, for the issues raised in the showcause notice u/s 263 of the Act.
that when the Assessing Officer, based on his observations and examination of records had made addition in the hands of another assessee, the Id. Pr. CIT without revising the assessment order of other assessee, which has been framed by the same Assessing Officer cannot revise the assessment order in the case of the assessee and directing to make the additions as the same would tantamount to double addition.

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f) that the finding on merit of the ld. Pr. CIT contains various mistakes as the documents referred are not for the assessment year in dispute and some of the documents are not belonging to the assessee.”
Hyderabad Bench of ITATin Trini Infra Ventures Ltd v. DCIT IT Appeal Nos.
584 H d. of 2015 dated 4-12-2015 -
“5.4, The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153Dof the I.T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld.
Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C.3, Hyderabad in ITA.No.766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of Mehtab Alam 288/Luck/2014 dated
18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon'ble Allahabad High Court in the case of CIT vs. Dr.
Ashok Kumar in IT. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263
of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee.”
Again, Hyderabad Bench of ITAT in CH Krishn Murthy v ACIT ITA Appeal
No.766 (Hyd.) 2012 dated 13-2-2015. “Therefore, considered in the aforesaid perspective when it is a fact on record that both the addl. CIT while granting approval u/s 153D as well as Assessing Officer in course of assessment proceeding have examined the issue of deemed dividend u/s 2(22)(e) of the Act at the hands of assessee in relation to the advance shown in his name in the books of M/s VCPL and the view taken by Assessing Officer as well as addl. CIT can be considered as one of the possible views, assessment order cannot be treated as erroneous. More so, when assessment order has been passed in terms with section 153D of the Act and Id. CIT has not revised the directions of addl. CIT. In these circumstances, as one of the conditions of section 263 is not satisfied, the impugned order passed u/s 263 is not valid. Accordingly, we set aside the impugned order of learned CIT and restored the assessment order passed.”
B. On bare perusal of the Show Cause Notice it will be clear that the Ld.
Pr.CIT (Central) had already concluded at the time of the issuance of the Show Cause Notice itself that the AO had not carried out necessary enquiries and the order is erroneous and prejudicial to the interest of the Revenue.
Additionally, the Pr.CIT referred to a SEBI order dated 09.07.2017 &
14.06.2017, which was issued to various entities allegedly involved in the said nexus. Despite this reference, the order did not mention the name of the assessee or the companies to which the shares were sold by the assessee. Further, the Pr.CIT did not provide an opportunity for the assessee to address the relevance of this order as the same does not form part of the SCN issued by Pr. CIT( Central).
These procedural lapses violate the principle of natural justice, which mandates to have the right to be heard and respond to all evidence

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considered against them. The failure to confront these crucial reports and notices deprived the appellant of a fair opportunity to contest the allegations on which the Pr.CIT's order under section 263 was based.
In conclusion, it is evident that the appellant was not afforded a proper opportunity to rebut the evidence forming the basis of the order. This lack of procedural fairness undermines the validity of the conclusions drawn in the order under section 263. The Ld. AO has passed the relevant assessment order after appreciating all the facts, documents, replies submitted during the course of assessment proceedings and also after considering the material available on records, which was duly checked, verified and approved by the Ld.
Addl. CIT and necessary approval u/s 153D of the Income Tax Act, 1961
was given.
(d) The genuineness, manner and source of purchase of shares in 2010
was also important to check the veracity of claim of assessee but not done by the A.O. The genuineness, manner and source of purchase of shares in 2010 was also important to check the veracity of claim of assessee but not done by the A.O. Thus, the documents submitted by assessee in the background of the case would not only be merely self-serving but their authenticity was also greatly suspected in view of the contrary material and conclusion drawn in the enquiry report of the Investigation wing and available on records of the A.O.
(e) The veracity of such documents needed to be further probed by independent enquiries as was already suggested in the report. Mere production of basic documents is not sufficient to accept claim of assessee without examining genuineness of the managed transaction. The A.O. in the instant case also, instead of making any independent verification, just accepted the claim of LTCG, when the sale of penny stock M/s Blue Circle
Services Ltd was already admitted by operators in their statements to be a part of accommodation entry only.
(f) Then Ld. CIT (Central) has inferred, This clearly shows non application of mind by the AO on the documents submitted by assessee, which were not only incomplete but suspicious from its face that too when the AO was aware of the report of the investigation wing Kolkata.
(9) Thus it is apparent that the AO without conducting any independent enquiries accepted the documents on the face value to hold the LTCG as genuine, ignoring the detailed report of the PDIT Kolkata as forwarded by CBDT to all Pr. Chief Commissioner regions vide letter dated 16/3/2016
as well as the results of enquiries conducted by AO by way of issue of commission u/s 131(1)(d) to DDIT(Inv.) Mumbai. It is not the case that the A.O. did not have knowledge of the above reports as the assessments order does find mention of the above reports.
(h) The A.O. ignored these reports and the fact that the astronomical increase in share prices was not commensurate to the intrinsic value of the share at that relevant time. In doing so the A.O. also ignored the fact that the shares of M/s Blue Circle Services Limited was sold at an average price of Rs. 9.0 per share whereas after sub division effective purchase cost in the hands of assessee was Rs. 1.5 per share. Thus, there was an astronomical increase in share prices of M/s Blue Circle Services Limited in a short time, which was not matching with the proportional increase in ITA Nos.190 & 191/LKW/2020
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share market and against the intrinsic value of the share at that relevant time.
(i) The A.O. ignored the above incriminating facts available before him and accepted the transactions as genuine just because the shares were sold through recognized exchange through a broker. The A.O. did not carry out independent/3rd_ party verification/enquiries or studies of the financials of the penny stock, which should have been made to ascertain whether such shares did carry such intrinsic value to be traded at such high prices.
(j) Then Ld. CIT (Central) had inferred, Therefore, it is apparent that the A.O. did not apply his mind to the incriminating reports of PDIT (Inv.),
Kolkata and brought nothing on record to show that the conclusions in the above report were not applicable to the facts of the assessee. As regards the same the assessee begs to submit as under, regarding the above issues:
(1) It may be submitted here that the Ld AO was aware and had made enquiries in the issue thoroughly and comprehensively, with complete application of mind. The order sheet in the case of the assessee read as under:
i. 21/06/2016 “Shri Sanjay Malhotra AR appeared, filed part compliance to notice dated 10/06/2016. This was duly placed on records.
ii. 09/09/2016 Shri Sanjay Malhotra AR appeared, filed his submission, duly placed on record.
iii. On 17/02/2017, In this reply complete details regarding the transactions of the shares, starting from the details towards the purchase of shares, made on 06/09/2010, 300000 shares, which were issued to me for Rs 45,00,000/- the evidence in shape of the bank statement through which the shares were purchased, that was the disclosed bank account maintained with Punjab National Bank, Kanpur. The relevant year
2011-12, which was under section 153 A and the matter of the purchase was thoroughly examined by the learned assessing officer during the course of the assessment proceedings, with bill of the purchase, copy of share certificate as per the requirement of The Companies Act 1956, with other relevant documents. The copy of the Demat account, the copy of the bills and contract note of the broker D.B & Company, a registered broker, with contract note and ledger account of the broker, the proof of STT paid.
iv. On 21.02.2017 Shri Sanjay Malhotra AR appeared. Filed his submission placed on records.
v. On 11.04.2017 Shri Sanjay Malhotra AR appeared. Filed his submissions which are placed on records. In the reply it was submitted, for the sake of brevity, the relevant portion is reproduced below:
1. That in my case the identity of the person duly stands substantiated.
2. That I have purchased the shares and the investments and the source for the same has been duly established.
3. That I have kept the shares in demat account.
4. That I have submitted before you the statement of the demat account.

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(2) In respect to call log book maintenance, it is not regulatory neither not possible to maintain the log books of the calls.
(3) IN respect to the person who has done the punching all the times on different transactions, it is not possible to maintain the track record of the same, however when the transaction has been made through that broker that simply substantiate that it has been done from the officer of the broker.
(4) In respect to financial of the company, it is correct that broker has nothing to do with the financials of the company, he has simply receives the order and has sold the shares, in respect to that all evidences are there.
(5) In respect to the rate of the company dealt with, the rates were established on the recognised stock exchange, your honour attention is also invited towards the method of valuation shares as per the Income Tax
Act, 1961 and the rules. A per the rule 11UA 1(c) (a) (i), Determination in case of fair Market Value of quoted shares and securities are received by way of transaction carried out through any recognized stock exchange, fair
Market Value of such shares and securities shall be the transaction value recorded in such stock exchange.
Hence all the observation of the department in saying that the transactions are not genuine, does not hold good, do stand wrong and is not tenable as all necessary ingredients for the eligibility of the claim of mine have been submitted before your honour from the third parties, hence the transactions do stand substantiated and also stand genuine.
On 24/04/2017 vide letter dated 20/04/2017. The assessee have filed the reply on the show cause notice dated 17/04/2017 which was as follows:
“That I reiterate in continuation to my earlier replies, which I have submitted before your honour along with all the required documents in respect to the details of purchases, details of Demat account, details of sales, sale bills of broker, ledger of broker and other relevant details which it self substantiate that the transactions done by me in this respect are LTCG in shares on which STT has been paid, hence are not taxable as per the applicable sections of The Income Tax Act 1961.It is humbly requested to please not to draw any adverse inference in this aspect of the LTG dealing.”
In respect to specific proceedings on LTCG, the assessing officer has taken following actions, which duly substantiate the proper and complete application of mind of the Learned assessing officer, in respect to the enquiry made on the issue of LTCG:
The Ld. AO vide his notice dated 10/06/2016 with 13 points.
ii, The Ld AO vide his notice dated 25.11.2016 has again show caused the assessee that “In post search enquiry, information related to LTG has been received and it has been established the transaction was not genuine and LTCG received by him is bogus and has also stated that in the case of assesse the LTCG amount is in respect of information received from Delhi and Kolkatta wing, and then he has asked that “Show cause as to why he alleged non genuine LTCG may not be added in your total income”

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iii. The Ld. AO has made the enquiry directly from D.B & Company,
Kolkatta, vide it’s notice dated 27/02/2017 in which enquiry all the necessary details of the assessee was enquired upon by the department.
In view of this D.B & Company has confirmed vide it’s letter dated
13/04/2017 accepted each and every transactions, submitted required documents, which are placed in records of the assessee file for the relevant year under consideration in respect to the proceedings under section 153 A of the Income tax act 1961. They have substantiated the transactions also through the commissioning done by the Department DDIT
(Inv), Kolkatta, nowhere mentioning that it is accommodation entry.
The Ld. AO has also made enquiry and has requisitioned for certain information under section 133(6) of The Income tax Act 1961 from Stock
Holding Corporation of India Limited, Kanpur, vide its notice dated
27/02/2017, the complete reply duly confirming my transactions was received from the SHCL.
The Ld. AO has also issued commissioning to Additional / Joint Director of Income Tax (Inv), 1, Kolkatta vide its letter dated 27/02/2017 under section 131(1) (d) of The Income tax Act 1961, the complete report has been received from the DDIT (INV), (Unit-1(3), Kolkatta, duly confirming all these transactions have been made after making the enquiry from the D.B. &
Company, who have also submitted the copies of all the documents, in respect to the form, KYC and other relevant bills, contract notes, ledger account and other related documents from the above it is evident that the Ld AO had fully examined all the documents and statements provided by the Pr. DIT (Inv-1), New Delhi, Pr. DIT Kolkatta and DDIT Unit 1(3),(Inv)
Kolkatta and had applied proper and complete application of mind also gave a show cause regarding the allow ability of alleged bogus LTCG.
Thus, a complete enquiry of the issue was made and the order was passed after proper and complete application of mind by the learned assessing officer.
As regards the observations made by Ld. CIT (Central) in the show cause notice, the assessee begs to submit as under regarding the observations and allegations:
(1) On observation number (a) as per the report of the Pr. Director of Income
Tax (Investigation-1), New Delhi: the report seems to be general in nature, there is no name of the assessee, neither the documentary evidences to substantiate that the accommodation entry has been made to the assessee as is in general alleged in the so called report, which has been prepared at the back of the assessee as well as when no incriminatory documents supporting the impugned allegation was found during the course of search.
Hence this report do not contain any credible material, which may be tenable under the law for making any impugned addition, neither rejecting the legal claim as per the applicable sections of the Income tax act 1961
made by the assessee in its computation of income while filing its return.
This also gets substantiated by the reply submitted by D.B & Company dated 13/04/2017, directly as well as through DDIT (inv) Kolkatta.
(2) On observation number (b) That In view of the credible material available before the AO in the form of comprehensive report of the Inv.
wing Kolkata, it was incumbent upon any AO, for framing an assessment under the Income tax Act, to go through the entire material diligently and examine the same after giving due opportunity to assesse: In respect to the enquiry report of DDIT (Inv) Kolkatta: The learned DDIT has accepted the ITA Nos.190 & 191/LKW/2020
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transactions made through the registered Broker D.B & Company, collected KYC, pan card, address proof, bills, contract notes, ledger of mine and other related documents. It is pertinent to mention here that no adverse report has been formed by the learned DDIT (Inv), Kolkatta. Also it is pertinent to state here that the statement recorded of two persons, Mr.
Sushil Kumar Agarwal and Devesh Upadyaya has got no connection with the assessee, neither they have quoted the name of the assessee, nor there is any evidence in the statements negative upon me, recorded at back of the assessee in its case
(3) On observation number (c) It is noted that in-spite of a detailed report of the investigation wing available on record wherein the shares of M/s Blue circle services Ltd were held to be penny stock and transactions for purchase & sale of these shares through brokers were found to be in nature of accommodation entry only, the A.O. failed to examine the correctness & completeness of the documents submitted by assesse: in respect examination of the transactions and documents submitted by the assesse, the Ld. AO has examined each and every document very meticulously and carefully, also got it verified from the D.B & Company,
Stock Holding Corporation of India Limited and then again the examination of correctness & Completeness of the documents through DDIT Kolkatta.
(4) On observation number (d) The genuineness, manner and source of purchase of shares in 2010 was also important to check the veracity of claim of assessee but not done by the A.O. The genuineness, manner and source of purchase of shares in 2010 was also important to check the veracity of claim of assessee but not done by the A.O: All the documents supporting the purchase of shares through the disclosed bank account maintained with the Punjab National Bank of India, Kanpur along with the bill of the broker through whom purchased the shares, copy of share certificate, Demat account, splitting documents and other relevant documents were submitted with my reply dated 17/02/2017. As well as the purchase was made in the assessment year 2011-12, which was under scrutiny the matter was exhaustively examined in the relevant year.
Hence the purchase in respect to genuity, source of purchase and identity duly gets substantiated. (5) On observation number (e) The veracity of such documents needed to be further probed by independent enquiries as was already suggested in the report. Mere Production of basic documents is not sufficient to accept claim of assessee without examining genuineness of the managed transaction: The required independent enquiries in this respect has been made by the Learned AO during the course of assessment proceedings, in due time and before passing of the assessment order. It is reiterated that , independent enquiry had been made from D.B & Company through letter dated 27/02/2017, in view of which the complete details have been submitted by the broker with copy of ledger account, bills and other relevant documents vide it’s letter dated
13/04/2017, also through DDIT, (Inv) Kolkatta , Stock Holding Corporation of India Limited (Demat holding company) and then again the examination of correctness & Completeness of the documents through DDIT Kolkatta.
(6) On observation number (f) This clearly shows non application of mind by the AO on the documents submitted by assessee, which were not only incomplete but suspicious from its face that too when the AO was aware of the report of the investigation wing Kolkata: the examination of the documents filed by the assessee have been meticulously done by AO,
Independent enquiry has been made, that is enquiry made with the Broker
D.B & Company through letter dated 27/02/2017 and complete reply received from the broker through his letter along with the documents dated

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13/04/2017,also through DDIT (Inv) Kolkatta, Mumbai, Stock Holding
Corporation of India Limited, Kanpur commissioning through the department investigation wing on investigation of the matter has been done, show cause notices have been issued to your humble assessee and all the reports have been thoroughly examined. Hence the proper and complete application of mind has been adopted by the Ld. AO during the assessment proceedings and before passing of the order. Thus the entire enquiry had been done by the Ld AO and once seeing that the Investigation wing Kolkatta has nowhere taken the name of the assessee, neither of the broker, additions cannot be made merely on conjectures and surmises and merely because the company has been stated to be involved in some activity.
(7) On observation number (g) Thus it is apparent that the AO without conducting any independent enquiries accepted the documents on the face value to hold the LTCG as genuine, ignoring the detailed report of the PDIT
Kolkata as forwarded by CBDT to all Pr. Chief Commissioner regions vide letter dated 16/3/2016 as well as the results of enquiries conducted by AO by way of issue of commission u/s 131(1)(d) to DDIT(Inv.) Mumbai.: the examination of the documents filed the assessee have been meticulously done by AO, Independent enquiry has been made, that is enquiry made with the Broker D.B & Company through department letter 27/02/2017, repl y received vide letter dated 13/04/2017 of the broker, also through
DDIT (Inv) Kolkatta, Stock Holding Corporation of India Limited, Kanpur commissioning through the department investigation wing on investigation of the matter has been done, show cause notices have been issued to your humble assessee and all the reports have been thoroughly examined.
Hence the proper and complete application of mind has been adopted by the Ld. AO during the assessment proceedings and before passing of the order. Thus the entire enquiry had been done by the Ld AO and once seeing that the Investigation wing Kolkata has nowhere taken the name of the assessee additions cannot be made merely on conjectures and surmises and merely because the company has been stated to be involved in some activity.
(8) On observation number (h) The A.O. ignored these reports and the fact that the astronomical increase in share prices was not commensurate to the intrinsic value of the share at that relevant time: The price of the share is what that is being quoted on the stock exchange on the date of the dealing, the share price of a particular script cannot be compared with the proportional increase in the share market as there will be number of shares the price of whom on stock exchange may have gone down even if there is increase in the share market that BSE Sensex and vice versa, hence there is no criteria that the share price movement will be in accordance to the increase in share market.. The shares were sold at the rate of Rs. 9 per share, when even at the time of submission of Reply before the Ld. CIT (Central) the rate of the share as per BSE is 9.74,
(9) On observation number (i) The A.O. ignored the above incriminating facts available before him and accepted the transactions as genuine just because the shares were sold through recognized exchange through a broker.
The A.O.
did not carry out independent/3rd party verification/enquiries or studies of the financials:
The required independent enquiries in this respect has been made by the Learned AO during the enquiries in this course of assessment proceedings, in due time and before passing of the assessment order. It is reiterated that that is enquiry made with the Broker D.B & Company through department letter
27/02/2017, reply received vide letter dated 13/04/2017 of the broker,

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also through DDIT (Inv) Kolkatta, Stock Holding Corporation of India
Limited (Demat holding company) and then again the examination of correctness & Completeness of the documents through DDIT Mumbai.
(10) On your observation number (j) Therefore, it is apparent that the A.O.
did not apply his mind to the incriminating reports of PDIT (Inv.), Kolkata and brought nothing on record to show that the conclusions in the above report were not applicable to the facts of the assessee.: the examination of the documents filed by the assessee have been meticulously done by AO,
Independent enquiry has been made, that is enquiry made with the Broker
D.B & Company through department letter 27/02/2017, reply received vide letter dated 13/04/2017 of the broker, also through DDIT (Inv)
Kolkatta,
Stock
Holding
Corporation of India
Limited,
Kanpur, commissioning through the department investigation wing on investigation of the matter has been done, show cause notices have been issued to your humble assessee and all the reports have been thoroughly examined.
Hence the proper and complete application of mind has been adopted by the Ld. AO during the assessment proceedings and before passing of the order. Thus the entire enquiry had been done by the Ld AO and once seeing that the Investigation wing Kolkatta has nowhere taken the name of the assessee neither of the Broker, additions cannot be made merely on conjectures and surmises and merely because the company has been stated to be involved in some activity. In the office note the learned assessing officer has given the finding that “Looking to the facts that the shares were duly in the demat account of the assessee and the transactions have been made through registered broker on recognized stock exchange and also keeping in view the fair market value as per rule
11UA and decision of various appellate authorities, no adverse inference is drawn”.
That from the on record. He had known the details of shares etc. and also the statements and the issue was also discussed with the assessee during the course of assessment proceedings. It may be submitted that the case being a search case under section 153 A of The Income Tax act 1961, the replies on different dates on the issue of LTCG with all the evidences were submitted to the Ld AO, after which the issue was duly examined and no addition had been made. It may be submitted that had the Ld AO been not satisfied on merits he would have gone to make the addition as this was his major query at each instance. Thus, a complete and full enquiry with all the facts, reports from DI wing Kolkata, after conducting a search on the assessee and getting exhaustive report from DDIT (Inv), Kolkata on commissioning, the Ld AO has by going through the submissions and various case laws of the juri ictional court on the same issue has not made an addition. Thus, there is no iota of doubt that the Ld AO did not verify the authenticity and genuinity of the LTCG and has applied proper application of mind during the assessment proceedings and before passing the assessment order on each and every issue related with the LTCG.
The Ld AO after considering all the facts completed the case and the case laws of the juri ictional high court in the matter has gone through the same and with the approval of the Hon’ble Add CIT has not taken an adverse view. It is submitted that the case was assessed under section 153A and the entire file was under the supervision of the Addl CIT (Central
Kanpur) and also at the administrative approval of the Ld. Cit (Central).
There was no incriminating material based upon which such addition could have been made. Hence once one probable view had been taken by the Ld. AO the same cannot be revised u/s 263 0f the Income Tax Act
1961.”

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(C.1) The Ld. Departmental Representative for Revenue placed reliance on the impugned order of the Ld. PCIT.
(C.1.1)
We have heard both sides. We have perused the materials available on record. The Assessing Officer, as noted in foregoing paragraph (B.1) of this order; has recorded a detailed office note along with the assessment order. On perusal of the office note, we find that at Serial no. 4 of the aforesaid office note; the Assessing Officer has discussed in detail the inquiries conducted by him during the assessment proceedings and the materials considered by him. He has, in fact, categorically mentioned that he gave consideration to the report of the Investigation Wing, sent by the DDIT(Inv.), Mumbai. The Assessing Officer, after considering all materials which included the inquiries conducted by him, the report of the Investigation
Wing of Department, submissions made by the assessee, etc.; concluded that no adverse inference was (to be) drawn. In the light of this office note, the conclusion of the learned Pr.CIT (in the impugned order u/s 263 of the Act) that there was non- application of mind and that the enquiries which should have been made, were not made by AO; are found to be patently erroneous in the facts and circumstances of the case. The assessment proceedings, moreover, were under the monitoring of the Range Head and the assessment order was approved by the Range Head vide letter dated 31.03.2021, as recorded in the last paragraph of the assessment order. This acted as an inbuilt mechanism to ensure that all enquiries necessary in the case were carried out by the Assessing Officer, that all the relevant materials were considered by the Assessing Officer, and that there was due application of mind, in the framing of the ITA Nos.190 & 191/LKW/2020
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assessment order. The learned Pr.CIT, in his impugned order passed u/s 263 of the Act, has placed heavy importance to adjudication orders of SEBI (enclosed) as Annexures R-2 and R-3
to impugned order passed u/s 263 of the Act; are, however dated
09.06.2017 and 14.06.2017 which is after the date of assessment order (19.05.2017). The Act of the Ld. Pr.CIT in the faulting the Assessing Officer and revising the assessment order under section 263 of the Act, on the basis of subsequent developments happening after the assessment order is passed is patently irrelevant. It is well-settled that when an order has been passed on the basis of irrelevant consideration, the order is to be held as perverse and unsustainable. The order passed by the Assessing
Officer cannot be held to be erroneous on the basis of materials that came to surface subsequent to passing of the assessment order. Although, the Ld. Pr.CIT states that these orders of SEBI were available in Public Domain on the internet, any materials indicating inquiry or adverse finding of SEBI was never brought to the notice of the Assessing Officer during the assessment proceedings.
(C.1.2)
In the impugned order under section 263 of the Act, the Ld. Pr.CIT has stated in his impugned order u/s 263 of the Act that whether the inquiry should have been made are actually made by AO or not; is primarily a question of fact. The fact that the assessment proceedings were under the monitoring of Range
Head and the assessment order was approved by the Range
Head, raises strong presumption that even the Range Head was satisfied with lines of investigation, and nature and scale of the inquiries made by the Assessing Officer before passing the assessment order.

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The question of fact whether the Assessing Officer made enquiries which should have been made were actually made by the Assessing Officer; and whether the assessment order has been passed after due application of mind; are, therefore, answered in the affirmative. The Assessing Officer did make einquiries about the assessee’s claim for Long Term Capital and the Assessing Officer has also categorically confirmed this is in the aforesaid office note referred to paragraph no. (B.1) and (C.1.1) of this order. Therefore, it is held that the order of the Ld.
PCIT holding the assessment order dated 31.03.2021 to be erroneous and prejudicial to interests of Revenue, is not supported by credible material and, therefore, is unsustainable.
(C.1.1.3)
We are conscious of order of Hon’ble High Court in the case of Pr. CIT vs Prakhar Developers (P.) Ltd 162
taxmann.com 48 (Madhya Pradesh) in which it was held that an order of assessment passed u/s 153A after getting approval u/s 153D of IT Act could not be revised under section 263 of the Act.
Nursing Home; Hon’ble Allahabad High Court (vide order dated
06.08.2012 in Income Tax Appeal No.192 of 2000) approved the order of Income Tax Appellate Tribunal taking the view that once approval given by Addl. Commissioner before completing the assessment order is not disputed by Revenue, the CIT would not be justified in interfering in the approval accorded by Addl. CIT for framing the assessment order and thus there was no case for setting aside the assessment order u/s 263 of the Act. Similar view was taken by Pune Bench of ITAT in the case of Dhariwal
Industries Ltd vs CIT (in ITA. No.1108/Pune/2014); by Mumbai
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(order dated 14.02.2018 in ITA. No.3226 to 3232/Mum/2017); by Lucknow Bench of ITAT in the case of Mehtab Alam vs ACIT
(order dated 18.11.2014 in ITA. Nos. 288 to 294/LKW/2014), by Hyderabad Bench of ITAT in the case of Trinity Infra Ventures
Ltd (order dated 04.12.2015 in ITA. No.584 to 59/Hyd/2015), by Pune Bench of ITAT in the case of Ramamoorthy Vasudevan vs
Pr. CIT (order dated 29.11.2018 in ITA. Nos. 967 and 968/Pune/2016), by Hyderabad Bench of ITAT in the case of Sri
No.766/Hyd/2012), and by Patna Bench of ITAT in a recent order in the case of Gyan Infrabuild (P.) Ltd vs Pr. CIT 162
Taxmann.com 664 (Patna-Trib)/2024) 114 ITR (T) 184 (Patna-
Trib). For illustration, relevant portion of order in the case of Gyan Infrabuild (P.) Ltd vs Pr. CIT (supra) is reproduced below: -
“19. Before us, the ld. Counsel for the assessee, has referred to plethora of decisions whether the revisionary order u/s. 263 of the Act has been quashed, where only the order u/s 153A of the Act is revised without revising order u/s 153D of the Act. 20. Reliance is placed on the following judicial pronouncements:
i. Smt. Abha Bansal v. Principal Commissioner of Income-tax [2021] 132
taxmann.com 231 (Delhi - Trib.) –
"9.4 It is evident from the plain reading of the — aforesaid Explanation that an Order passed on or before or after 1 st Day of June, 1988 by the A.O. shall include (/) an order of assessment made by the Assistant
Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or ' Commissioner authorised by the Board in this behalf under section 120. It may be noted that Order of assessment passed with the approval of JOT under section 153D of the I.T. Act, 1961 could not be revised under section 263 of the I.T. Act, 1961. The Ld. D.R. has, however, relied upon the Order of ITAT, Panaji Bench, but, has not explained whether the Judgment of Hon'ble Allahabad High Court in the case of Dr. Ashok Kumar (supra) or different Benches of the Tribunal have been considered in this case by the Panaji Bench. It is not decided in this case that assessment order cannot be revised without revising the approval under section 153D of the I.T. Act and Explanation 1 to section 263 of the I.T. Act has also not been ITA Nos.190 & 191/LKW/2020
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considered. Therefore, this decision relied upon by the Ld. D.R. would not apply to this case. Further the Judgment in the case of Param Transport
(P.) Ltd. (supra), of Hon'ble Chhattisgarh High Court (supra) is not with regard to approval obtained under section 153D of the I.T. Act because in this case it was held that revisional power under section 263 of the I.T. Act is applicable to assessments under search and seizure. However, it is not explained by the Ld. D.R. whether in this case the approval under section 153D have been revised by the Learned PCIT. It may also be noted that it is well settled Law that if two views are possible, then the view which is in favour of the assessee should be made applicable. We rely upon Judgment of Hon'ble Supreme Court in the case of CITv. Vegetable Products Ltd.
R9731 88 ITR 192. It may also be noted here that the Hon'ble Allahabad
High Court is one of the juri ictional High Court of Delhi Bench, therefore, preference shall have to be given to the Judgment of the Hon'ble Allahabad
High Court as reproduced above. In the totality of the facts and circumstances of the case and following the decisions referred to above, we are of the view that the Learned PCIT was not having juri iction to proceed under section 263 of the I.T. Act, 1961 in the matter in issue and as such the Order passed by the Learned PCIT is nullity and void ab initio.
We therefore, decide this issue in favour of the assessee.
ii) Surendra L. Heera Nandani v. Pr.CIT [IT Appeal No.3226/Mum./2017
etc., date. 14-2-2018]
28. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl. CIT u/s.l53D of the I.T. Act, therefore respectfully following the above-mentioned decisions of the Coordinate Benches o the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s.263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT U/S.153D of the I.T. Act. We respectfully following the decision of ACIT Vs. Dr. Ashok Kumar, ITA 192 of 2000. We find that in the instant case the original approval 25 ITA No3226- 3232.M.17 A.Y.2008 09 to 2014-15 was granted by Addl. CIT and this assessment order is cannot be revise without approval of Add. CIT.
iii) Dhariwal Industries Ltd. v. CIT [IT Appeal Nos. 1108 to 1113 (Pune) of 2014 dated 23-12-2016]
9. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. Vs. DCIT vide ITA Nos. 584 to 589/H/2015 order dated 04-12- 2015 for A.Yrs. 2005- 06 to 2010-11 he submitted that the Tribunal in the said decision, following various decisions including the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar vide Income Tax Appeal No. 192/2000
order dated 06-08-2012, has held that assessment order approved by the Addl.CIT U/S.153D cannot be subjected to revise u/s.263 of the I.T. Act.
12. We have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld.CIT and the paper book filed on behalf of the assessee.
14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of MehtabAlam Vs. ACIT vide ITA Nos.288 to 294/Lkw/2014 order dated 18-
11-2014 while deciding an identical issue has observed as under.

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order of assessment passed after obtaining prior approval u/s 153D of the Act cannot be revised u/s 263 of the Act.
(C.2) It is not in dispute that no incriminating material was found from the assessee’s premises during search under section 132 of the Act conducted in the case of the assessee, in respect of the issue on which assessment order of the Assessing Officer has been set aside by Ld. PCIT in order under section 263 of the Act.
It is well settled by orders of Hon'ble Supreme Court in the case of PCIT Vs Abhisar Buildwell (P.) Ltd 149 taxmann.com 399 (SC) and Dy CIT Vs. U. K Paints (Overseas) Ltd 150 Taxmann.com 108
(SC) that no addition can be made in respect of the issues on which no incriminating material has been found during search under section 132 of the Act in the case of the assessee. Thus, impugned order of Ld. PCIT passed under section 132 of the Act is clearly inconsistent with this well settled principle laid down by Hon'ble Supreme Court.
(C.2.1) In the case of CIT v Max India Limited (2007) 295 ITR 282
(SC):
it was held that when the Assessing Officer takes one of the two view permissible in law and which the Commissioner does not agree with and which resulted in a loss of Revenue, it cannot be treated as erroneous order prejudicial to the interest of Revenue, unless the view taken by the Assessing Officer is completely unsustainable in law.
In the case of Malabar Industrial Co. Ltd (2000) 243 ITR 83:
it was held by Hon'ble Supreme Court that the Commissioner has to be satisfied of two conditions cumulatively, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the Revenue. If one of the absent, Hon'ble Supreme Court held, i.e. if the order of the Assessing Officer is either not erroneous or to the prejudicial to the Revenue, re-cours cannot be had to Section 263 of the Act.
In the case of CIT v Gabriel India Ltd, 203 ITR 108 (Bom):

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it was held by Hon'ble High Court that substitution of judgment of Commissioner for that of the Assessing Officer is not permissible under section 263 of the Act, unless decision of the Assessing Officer is erroneous and the order of the Assessing Officer cannot be termed as erroneous unless which is not in accordance with law. The Hon'ble Court further held that Section 263 of the Act does not permit substitution of the judgment of the Commissioner for that of the Assessing Officer who pass the assessment order, unless order of the Assessing Officer is erroneous.
In the case of CIT v Land Infrastructure Development Projects Ltd
(2013) 357 ITR 763 (Mad):
It was held by Hon'ble High Court that whether adequate inquiries were made by the Assessing Officer was pure and simple factual finding. It was also held that the assumption of revisional juri iction can be justified only on the basis of materials indicating that the order of the assessment was payable of erroneous and prejudicial to the interest of the Revenue.
In the case of CIT vs Sunbeam Auto Ltd (011) 332 ITR 167 (Del):
it was held by Hon'ble High Court that there are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. It was further held that one has to keep in mind the distinction between “lack of inquiry” and “inadequate inquiry”. The Hon'ble
Court held if there is any inquiry even inadequate that would not by itself give occasion to the Commission to pass orders under section 263 of the Act, merely because he has a different opinion of “lack of inquiry” that action under section 263 of the Act would be open.
In the case of CIT v Vikas Polymers (2010) 194 Taxman 57
(Del):
Hon'ble High Court held that mere lack of inquiry by Assessing Officer is not sufficient for revision under section 263 of the Act.
In the case of CIT v Ganpat Ram Bishnoi 152 Taxman 242 (Raj):
it was held that juri iction under section 263 of the Act cannot be invoked for making enquiries or to go into process of assessment again and again merely on basis that more enquiry ought to have been conducted to find to find something. Hon'ble Rajasthan High Court held in the case of CIT vs
Mangilal Didwani 286 ITR 126 (Raj) that whether Assessing Officer has made proper enquiry with due application of kind or not, is not the domain of the CIT to judge and further held that the fact that the Assessing Officer has made enquiries is sufficient itself.
In the case of CIT vs Arvind Jewellers, 259 ITR 502 (Guj):
Hon'ble Gujarat High Court held merely because the Assessing Officer had taken a particular view with which the Commissioner did not agree cannot

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form the basis for an action under section 263 of the Act. The Hon'ble
Gujarat High Court applied the principles laid down by the Hon'ble
Supreme Court in the case of Malabar Industrial Co. Ltd (supra).
In the case of Ratlam Coal Ash co. v CIT 171 ITR 141 (MP):
377 (MP):
it was held by Hon'ble High Court that juri iction under section 263 of the Act cannot be invoked merely on the ground that the assessment order was completed in a haste.
In the case of Goyal Family Trust Vs. CIT 171 ITR 698 (All):
it was held by juri ictional High Court that merely because the assessment is brief and cryptic that itself would not be a case for revisional under section 263 of the Act.
In the case of Hari Iron Trading Co. Vs. CIT 263 ITR 437:
Hon'ble High Court held that A bare perusal of the aforesaid provision shows that the Commissioner can exercise powers under sub-section (1) of section 263 of the Act only after examining “the record of any proceedings under the Act”. The expression “record” has also been defined in clause (b) of the Explanation so as to include the Commissioner. Thus, it is not only the assessment order but the entire record which has to be examined before arriving at a conclusion as to whether control over the way an assessment order is drafted. The assessee on its part had produced enough material on record to show that the matter had been discussed in detail by the Assessing Officer. The least that the Tribunal could have done was to refer to the assessment record to verify the contentions of the assessee. Instead of doing that, the Tribunal has merely been swayed by the fact that the Assessing Officer has not mentioned anything in the assessment order. During the course of assessment proceedings, the Assessing Officer examines numerous issues. Generally, the issues which are accepted do not find mention in the assessment order and on assessee’s explanations are rejected and additional disallowances are made. As already observed, we have examined the records of the case and find that the Assessing Officer had made full inquiries before accepting the claim of the assessee qua the amount of Rs. 10 lakhs on account of discrepancy in stock. Not only this, he has even gone a step further and appended an office note with the assessment order to explain why the addition for alleged discrepancy in stock was not being made. In the absence of any suggestion by the Commissioner as to how the inquiry was not roper, we are unable to uphold the action taken by him under section 263 of the Act. Another fact which deserves mention in this case is that in response to the show cause notice, the assessee had raised a legal issue pointing out that the assessment in its case had been made under ITA Nos.190 & 191/LKW/2020
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effective monitoring of the Commissioner of Income-tax and had been finalized with his approval. As already observed, the Commissioner of Income-tax has not bothered to examine the specific objections raised by the assessee in its reply in the impugned order and the Tribunal has rejected the same summarily by observing that the objections were not supported by any material. Both the authorities have failed to take the trouble of even referring to the assessment record.
(C.3) In view of the foregoing discussion, the impugned order dated 17.03.2020 of the Ld. PCIT passed under section 263 of the Act is set aside and the aforesaid assessment order dated
19.05.2017 of the Assessing Officer for AY. 2012-13 is restored.
Following the same reasoning and in view of the foregoing paragraph no. (B) of this order, the impugned order under section 263 of the Act for Assessment Year 2014-15 is also set aside and the assessment order dated 19.05.2017 is also restored as no material has been brought for our consideration by either side to persuade us to take a view in AY. 2014-15, different from aforesaid view taken in AY. 2012-13. These two appeals are disposed of in accordance with aforesaid directions.

In the result, both appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open Court on 17/10/2025. [KUL BHARAT]
[ANADEE NATH MISSHRA]
VICE PRESIDENT
ACCOUNTANT MEMBER

DATED: 17/10/2025
Vijay Pal Singh, (Sr. PS)

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