ARYAN REALMART PRIVATE LIMITED,JAIPUR vs. PCIT, JAIPUR

Brief facts of the case are that the assessee company filed return u/s 139(1) dated 25-09-2012 declaring total loss Rs 3,26,484/-. The case of assesse was re-opened on basis of transaction of sale of share in Vandana Knitear Ltd (earned profit of Rs. 42,80,363/-) and S.V. Electricals Ltd ( incurred loss Rs. 44,138/-) which were considered as penny stock and assessment made u/s 147 r.w.s. 143(3) on 20-11-2019 by ITO Ward 5(2), Jaipur. In re-assessment the A.O. made detail enquiry for transaction in share of these companies and found no adverse inference on transaction of share of these companies.

Being aggrieved by the AO the assessee preferred an appeal before the ld. CIT(A) and the findings are reproduced as under:-

Being aggrieved by the CIT (A), the assessee preferred an appeal before us. Before the ld AR for the assessee has reiterated its arguments in written submission which are as under:-

That the assessee company engaged in trading of shares on regular basis. the transaction of purchases and sale made in normal course of business and no any such LTGC/LTCL accommodated by the company. In fact the company made purchases of share and sold through in normal course of business and whatever profit or loss comes to profit and loss account of company and no any LTGC/LTCL claimed or any kind of exemption claimed.

For revision of any order u/s 263 there must be two conditions namely that the order of assessment is erroneous and that the order is prejudicial to the interests of the Revenue which must be satisfied before the Commissioner may invoke his powers under Section 263 of the Act. In this case the fact is that all document to verify the transaction called by the A.0 during assessment proceeding and also made further enquiry by calling information u/s 133(6) and verified from books of accounts and document submitted by appellant company. Hence revision is not permissible when inquiries on the issue have already been made by the AO before passing the order of assessment. The Id PCIT before conclusion that the order is erroneous, he must himself make an inquiries with available Material/evidence with him. In support, we draw your attention decision of various High Court as under:- • In the case of CITvs. Vikas Polymers [2012] 341 ITR 537(Delhi)(HC),The Court held that if the AO has made inquiries and replied to by the assessee, then exercise of revisional powers are not warranted. Also, want of evidence cannot be a ground to disturb the findings of the AO or to state that the AO has shirked his responsibility. That the Commissioner should have provided reasons in support of revising the assessment order.

On the other hand, the ld. CIT-DR relied on the order of ld. CIT(A) and stated that ld. CIT(A) has passed exhaustive order explaining the provisions of the Act.

We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is noted that the assessee company engaged in trading of shares on regular basis. The contention of Ld AR for the asessee is that the assessee has taken accommodation entry in form of bogus long term capital gain in penny stock is factually incorrect and the ground of re-assessment itself was factually wrong without considering the nature of transaction of purchase and sale made in normal course of business. From the contentions of ld. AR of the assessee, we know that the assesse company made purchase on shares and sold through in normal course of business and whatever profit or loss comes to profit and loss account of company and no any such LTGC/LTCL. During the course of reassessment proceedings the assessee company submitted all documents and evidences of all facts relating to trading of shares to the relevant year and documents to verify that it has not been any claim of long term capital loss and all trading in shares are no normal course of business. We agree with the averments made by the ld. AR for the assessee that there must be two conditions for revision for any orders u/s 263 of the Act namely that the order of the assessment is erroneous or that the order is prejudicial to the interest of the Revenue. The ld. PCIT erred in passing the order without any justification, the documents which are being produced before AO during the assessment proceedings, all the documents were verified . Further, enquiry by calling information u/s 133(6) of the Act and verified the books of accounts annual financial statement, balance sheet, audit report, computation of income, copy of ledger account of stock broker through which share trading made and global report of all shares trading during the relevant period, Contract note of transaction of trading of share in alleged company, which was in the form of paper books containing at page nos. 111 and the same has been produced before us. Based on evidence produced by the assessee, the ld. AO has rightly passed the orders with the relevant details of transactions business of share. Hence, there is no question that the order passed is erroneous and prejudicial to the interest to the Revenue. We are of the considered view that the revision is not permissible where the enquiries on the issues have already been made by the Assessing Officer before passing the order of the assessment.

In support, reliance was placed on the decisions of Hon’ble Delhi High Court in the case of CIT vs. Vikas Polymers (2012) 341 ITR 537 and in case of ITO vs. DG Housing Projects Ltd. (2012) 343 ITR 329 and considering the facts and circumstances of the present case, the ld. PCIT order is erroneous and In the result, the appeal of the assessee is allowed.