Om Prakash Badaya v. Pr. CIT [ITA No. 217/Jp/2020,
dt. 19-11-2020] : 2020 TaxPub(DT) 4900 (Jp-Trib)
Reopening under section 263 questioning exempt capital
gains based on penny stocks allegations
Facts:
Assessee returned exempted capital gains from the sale of
shares of a listed company called Jackson Investment Ltd. the scrutiny
assessment was completed after the assessing officer having inquired about the
said exempt capital gains and its corroborating evidences. The case was
reopened by the PCIT on reports that the said company called Jackson Investment
Ltd. was part of the penny stocks money accommodation cases of converting black
money into valid legal tender. The plea of the assessee was --
1. The twin conditions imposed
by the decision of Malabar Industrial (2000) 243 ITR 83 (SC) : 2000
TaxPub(DT) 1227 (SC) were missing in their case that the order to be opened
under section 263 has to be --
(a) Prejudicial to the
interests; and
(b) Erroneous to the revenue.
2. Reliance of PCIT on
Explanation 2 to section 263 inserted with effect from 1-6-2015 that the order
is deemed to be prejudicial to the interest of the revenue and erroneous if the
order was passed without inquiries being made was incorrect as the assessing
officer had inquired about the exempt capital gains.
3. As held in Shri Narayana
Tatu Rane [ITA Nos. 2690 & 2691/Mum/16, dated 6-5-2016] that inadequate
enquiry cannot be a case under section 263. A prudential enquiry if this was
missing then the explanation can be pressed into service. The amendment in
discussion as to whether it is retrospective or prospective is irrelevant.
Bereft the above submissions additions were sustained of
the exempt capital gains under section 68 besides the accommodation entry
commission sustained under section 69C.
On higher appeal --
Held in favour of the assessee that the reopening under
section 263 was bad and deserved to be quashed.
Explanation 2 to section 263 is retrospective in nature
held in --
M/s. Indus Best Hospitality
& Realtors Pvt. Ltd., ITAT Mumai [ITA No. 3125/Mum/2017 dated 19-1-2018]
AV Industries v. ACIT [ITA
No. 3469/Mum/2010, dated 6-11-2015]
Metacaps Engineering and
Mahendra Constructions Co. (JV) v. CIT [ITA No. 2895/Mum/2014, dated 11-9-2017]
: 2017 TaxPub(DT) 4600 (Mum-Trib)
Reliance Money Infrastructure
Ltd. v. PCIT [ITA No. 3259/Mum/2017, dated 6-10-2017]
Shantikrupa Estate Pvt. Ltd.
[ITA No. 1252/Ahd/2015, dated 9-9-2016]
Amira Pure Foods Pvt. Ltd. v.
PCIT [ITA No. 451/Del/2017, dated 29-11-2017] : 2017 TaxPub(DT) 5413 (Del-Trib)
Applied:
Arun Kumar Garg, HUF v. Pr. CIT in ITA No. 3391/Del/2018
: 2019 TaxPub(DT) 2089 (Del-Trib)