Smt. Rambhaben U. Tanti, RAJKOT-GUJARAT v. The Pr. Commr. of Income Tax-2,, RAJKOT-GUJARAT

ITA 119/RJT/2016 | 2011-2012
Pronouncement Date: 28-10-2016 | Result: Allowed

Appeal Details

RSA Number 11924914 RSA 2016
Assessee PAN AASPT6381R
Bench Rajkot
Appeal Number ITA 119/RJT/2016
Duration Of Justice 6 month(s) 12 day(s)
Appellant Smt. Rambhaben U. Tanti, RAJKOT-GUJARAT
Respondent The Pr. Commr. of Income Tax-2,, RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-10-2016
Date Of Final Hearing 05-10-2016
Next Hearing Date 05-10-2016
Assessment Year 2011-2012
Appeal Filed On 15-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER ./ I.T.A. NO.119/RJT/2016 ( / ASSESSMENT YEAR : 2011-12) SMT. RAMBHABEN U.TANTI 3-NALANDA SOCIETY KALAWAD ROAD RAJKOT / VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 RAJKOT ./ ./ PAN/GIR NO. : AASPT 6381 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.J. RANPURA AR ! / RESPONDENT BY : SHRI YOGESH PANDEY CIT-DR ' #$% ! & / DATE OF HEARING 05/10/2016 '( ! & / DATE OF PRONOUNCEMENT 28/10/2016 / O R D E R PER S.S. GODARA JUDICIAL MEMBER : THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR (AY) 201 1-12 ARISES FROM PCIT-2 RAJKOTS ORDER DATE D 18.03.201 6 DIRECTING THE ASSESSING OFFICER (AO) TO FRAME AFRESH ASSESSMENT IN PROCEEDINGS U/S.263 OF THE INCOME TAX ACT 1961 ( I N SHORT THE ACT). ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 2 - 2. WE COME TO RELEVANT FACTS FIRST. THE ASSESSEE I S ASSESSED AS AN INDIVIDUAL. SHE IS ENGAGED IN GENERATION OF POW ER AND ENERGY. THE ASSESSEE FILED HER RETURN OF INCOME ON 29.9.201 1 STATING INCOME OF RS.13 390/-. THE AO TOOK UP SCRUTINY. WE NOT ICE FROM THE CASE FILE THAT HE ISSUED VARIOUS SECTION 142(1) NOT ICES. THE FIRST ONE CAME ON 14.5.2001 SEEKING DETAILS OF STATEMENT OF C OMPUTATION ACCOUNTS BALANCE-SHEET AND OTHER PARTICULARS. THI S FOLLOWED ANOTHER NOTICE UNDER THE VERY PROVISION DATED 19.8. 2013 WHEREIN THE AO SOUGHT FOR DETAILS OF ASSESSEES LONG TERM A ND SHORT TERM CAPITAL GAINS ALONG WITH DATE OF ACQUISITION. HIS QUESTION NO.14 ASKED THE ASSESSEE TO SUBMIT DETAILS OF HER CAPITAL ASSETS. QUERY NO.16 SOUGHT PARTICULARS OF PREFERENTIAL SHARES HEL D IN M/S. SHUBH REALTY AND SARGEN REALTY WITH DOCUMENTARY EVIDENCE. THE ASSESSEE FILED THE SAME VIDE LETTER DATED 4.12.2013 . THE AO THEREAFTER ISSUED ONE MORE NOTICE ON 19.12.2013 SPE CIFICALLY SEEKING DETAILS OF SALE/PURCHASE BILLS OF THE ABOVE PREFERENTIAL ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 3 - SHARES. THE ASSESSEE AGAIN FILED REPLY ON 06.03.20 14 ALONG WITH THE SAID BILLS AS WELL AS INVOICES OF THE IMPUGNED PREF ERENTIAL SHARES OF VARIOUS DATES. THE AO THEN COMPLETED THE IMPUGNED REGULAR ASSESSMENT ON 29.03.2014 ACCEPTING THE INCOME RETU RNED. 3. WE PROCEED FURTHER TO NOTICE THAT THE PCIT ISSU ED SECTION 263 SHOW-CAUSE NOTICE SEEKING TO REVISE THE ABOVE R EGULAR ASSESSMENT FOR THE FOLLOWING REASONS. 2. ON GOING THROUGH THE ASSESSMENT RECORDS IT IS NOTICED THAT YOU HAVE SOLD PREFERENCE SHARES OF THE GROUP COMPANIES NAMELY SH UBH REALITY (SOURTH) PVT.LTD. AND SARJAN REALITIES LTD. AS MENTIONED IN STATEMENT OF LONG TERM CAPITAL GAIN IN COMPUTATION OF INCOME FURNISHED WIT H SUBMISSION DATED 24/05/2013 AND CLAIMED LONG TERM CAPITAL LOSS OF R S.17 02 55 613/-. PARTICULARS QTY./UNIT PURCHASE DATE SALE DATE SALE VALUE COST/FMV INDEXED L.T.C.G. PREFERENCE SHARES IN SHUBH RALITY(S) PVT.LTD. 1950000 30/03/09 14/07/10 199875000 198900000 24298 6082 -43111082 PREFERENCE SHARES IN SARJAN REALITIES LTD. 1950000 30/03/09 28/08/10 199875000 198900000 24298 6082 -43111082 PREFERENCE SHARES IN SARJAN REALIES LTD. 1900000 30/03/09 28/08/10 194750000 193800000 23675 5670 -42005670 PREFEERNCE SHARES IN SARJAN REALITIES LTD. 500000 30/03/09 22/10/10 51250000 51000000 62304124 -11054124 ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 4 - PREFERENCE SHARES IN SHUBH REALITY (S) PVT.LTD. 750000 30/03/09 15/11/10 76875000 76500000 93456186 -16581186 PREFERENCE SHARES IN SARJAN REALITIES LTD. 585000 30/03/09 15/11/10 59962500 59670000 72895825 -12933325 PREFERENCE SHARES IN SARJAN REALITIES LTD. 66000 30/03/09 13/01/11 6765000 6732000 8224144 -14 59144 TOTAL 789352500 785502000 959608113 - 170255613 3. FROM THE DETAILS AVAILABLE ON RECORDS IT IS F URTHER OBSERVED THAT THE SHARES TRANSACTED WERE PERTAINING TO A GROUP OF COMPANIES SUZLON BESIDES IT IS ALSO NOTICED FROM THE SITE OF SEBI THAT THE ASSESSEE BEL ONGS TO PROMOTER OF SUZLON ENERGY LTD. AND ALL THE ENTITIES SELLING AND PURCHA SING COMPANIES AS WELL AS THE COMPANIES WHOSE SHARES HAVE BEEN TRANSACTED. 4. PERUSAL OF THE ASSESSMENT RECORDS SHOWS THAT THE CAPITAL LOSS HAS RESULTED DUE TO INDEXATION OF THE COST OF ACQUISITION ONLY. THE AO DID NOT EXAMINE/ VERIFY THE RATIONAL BEHIND SUCH TRANSACTION IN SHAR ES OF THE GROUP COMPANIES WITH THE GROUP COMPANIES. AS THE ASSESSEE HAD CONTR OL OVER THE AFFAIRES-OF ALL THE RELATED COMPANIES THE AFORESAID TRANSACTIONS WITHOUT ANY REASON ARE A COLOURABLE DEVICE TO AVOID FUTURE INCIDENCE OF TAX BY TAKING SET OFF OF CARRIED FORWARDED LONG TERM CAPITAL LOSS. 5. THE HON'BLE SUPREME COURT IN THE CASE OF MCDOWEL AND CO. LTD. VS COMMERCIAL TAX OFFICER 154 ITR 148 (SC) (1985) WHI LE DISCUSSING USE OF COLOURABLE DEVICES FOR TAX AVOIDANCE HAS HELD THAT 'TAX PLANNING MAY BE LEGITIMATE PROVIDED IT IS WITHIN THE FRAMEWORK OF L AW COLOURABLE DEVICE CANNOT BE PART OF TAX PLANNING AND IT IS WRONG TO ENCOURAG E OR ENTERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF TAX BY RES ORTING TO SUBTERFUGES.' FROM THE ABOVE FACT AS BROUGHT ON RECORD BY THE AO AND J CIT SHOW THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN RESPECT OF AY 2011-12 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 5 - 6. IT IS THEREFORE CLEAR THAT THE ASSESSMENT ORDE R PASSED BY THE ASSESSING' OFFICER IN RESPECT OF AY 2011-12 APPEARS TO BE ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE I INTEND TO INI TIATE PROCEEDINGS U/S 263 OF THE ACT AND PASS A SUITABLE ORDER. BEFORE PASSING SUCH ORDER YOU ARE HEREBY GIVEN AN OPPORTUNITY OF BEING HEARD IN THE MATTER. PLEASE STATE AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER IN YOUR CASE SHOULD NOT BE REVISED. IN THIS CONNECTION YOU ARE REQUESTED TO ATTEND THIS OFFICE AT 11.30 AM ON 22/12/2015 AND SUBMIT WRITTEN SUBMISSION IF ANY. (A SOFT COPY OF THE SUBMISSION SHOULD ALSO BE PRODUCED.). 4. THE ASSESSEE FILED HER REPLY INTER-ALIA STRONGLY CONTESTING THE ABOVE SHOW-CAUSE NOTICE. SHE PLEADED FIRST OF ALL THAT THE IMPUGNED REGULAR ASSESSMENT WAS NOT A CASE OF NO EN QUIRY SINCE THE AO HAD MADE ALL DUE ENQUIRIES AND VERIFICATIONS WITH RESPECT TO HER PREFERENTIAL SHARES. SHE THEREAFTER CLAIMED THAT THE AO HAD TAKEN A RIGHT CALL IN ACCEPTING HER LONG TERM CAPIT AL GAINS AFTER DUE APPLICATION OF MIND. THE FURTHER EXPLAINED THAT S HE HAD NO CLAIM ANY SET OFF OF LAWS UPTO AY 2015-16. AND ALSO THAT HER CARRIED FORWARD LOSSES OF AY 2007-08 HAD LAPSED FOR WANT OF SET OFF. ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 6 - 5. THE ASSESSEES REPLY THEN CAME TO MERITS OF THE CASE. SHE STATED TO HAVE PURCHASED THE IMPUGNED PREFERENTIAL SHARES IN AYS 2009-10 AND 2010-11 @ RS.102/- PER SHARE RELATING T O THE ABOVE TWO ENTITIES. SHE PAID THESE SUMS THROUGH CHEQUES/BANK ING CHANNEL. HER PURCHASE TRANSACTIONS WERE TREATED AS GENUINE. SHE THEN SOLD THE SHARES IN THE IMPUGNED ASSESSMENT YEAR @ RS.102 .5 PER SHARE TO M/S. SUZLON GREEN POWER LTD. THROUGH CHEQUE PAYM ENTS. ALL THESE TRANSACTIONS INVOLVED DELIVERY OF SHARES ON B OTH OCCASIONS. THERE WAS NO MANIPULATION IN MARKET PRICE THEREOF. THE ASSESSEE THEN PLEADED THAT ALL THESE TRANSACTIONS RESULTED I NTO LOSS OF RS.17 02 55 613/-. SHE DISTINGUISHED MCDOWELL CASE -LAW(SUPRA) ON FACTS BY CLAIMING THAT HER SHARE TRANSACTIONS WE RE IN FACT WITHIN THE FOUR CORNERS OF LAW. THE ASSESSEES CA SE ACCORDINGLY WAS THAT THE IMPUGNED REGULAR ASSESSMENT WAS NEITHE R ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 7 - 6. THIS CASE FILE REVEALS THAT ALL THESE ASSESSEES AVERMENTS FAILED TO IMPRESS UPON THE PRINCIPAL COMMISSIONER O F INCOME TAX. HE INTER-ALIA OBSERVES IN THE ORDER UNDER CHALLENGE THAT THE ASSESSEE IS A MEMBER OF TANTI FAMILY; PROMOTER OF M/S. SUZLON GROUP OF COMPANIES. SHE HAD PURCHASE AND SOLD THE IMPUGNED PREFERENTIAL SHARES WITHIN THE GROUP COMPANIES. TH E PCIT IS OF THE VIEW THAT THE AO COMPLETED THE IMPUGNED REGULAR ASSESSMENT WITHOUT MAKING ANY INVESTIGATION/VERIFICATION INTO CIRCULAR/SHAM TRANSACTIONS WITHIN THE GROUP COMPANIES. HE REITE RATES THEREAFTER THE IMPUGNED LONG TERM CAPITAL LOSS HAS ARISEN ONLY DUE TO INDEXATION. HE OPINES THAT ASSESSEES PLEA OF NOT HAVING CLAIMED ANY LOSS SET OFF UPTO AY 2015-16 WOULD NOT MEAN THA T SHE MIGHT NOT HAVE ANY OCCASION TO RAISE SUCH A CLAIM WITHIN A PERIOD OF EIGHT ASSESSMENT-YEARS AS PROVIDED IN THE ACT. THE PCIT FURTHER OBSERVES THAT ASSESSEES APPARENT MOTIVE IS TO BOOK LOSSES AND GET IT SET OFF OF AGAINST FUTURE TAXABLE INCOME. HE H OLDS THAT THE ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 8 - ASSESSEE ALSO DID NOT PROVE EVIDENCE OF RATIONAL OR REASONS OF HER IMPUGNED SHARE TRANSACTIONS. THE PCIT THEREAFTER Q UOTES SECTION 263(1) EXPLANATION-2(A) INSERTED BY THE FINANCE ACT 2015 ENVISAGING AN ASSESSMENT ORDER TO BE DEEMED TO BE E RRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF THE SAME IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATIONS WHICH SHO ULD HAVE BEEN MADE. HIS VIEW IS THAT THE AO ADMITTEDLY DID NOT EXAMINE RATIONAL OR SIMULTANEOUS PAYMENT AND DELIVERY OF T HE ASSESSEES SHARE TRANSACTIONS. THE PCIT ACCORDINGLY DIRECTS THE AO TO FRAME A FRESH ASSESSMENT AFTER AFFORDING REASONABLE OPPOR TUNITY OF HEARING TO THE ASSESSEE. THIS LEAVES THE ASSESSEE AGGRIEVED. 7. BOTH PARTIES REITERATE THEIR RESPECTIVE SUBMISS IONS IN THE COURSE OF HEARING. WE HAVE HEARD RIVAL CONTENTION S. CASE FILE PERUSED. WE RECAPITULATE BASIC FACTS OF THE CASE O NCE AGAIN. THE ASSESSEE PURCHASED THE IMPUGNED PREFERENTIAL SHARES OF HER GROUP ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 9 - COMPANIES HEREINABOVE IN EARLIER ASSESSMENT YEARS. THE DEPARTMENT DID NOT RAISE ANY ISSUE OF GENUINENESS OF THE SAID PURCHASE OF TRANSACTIONS. THE ASSESSEE THEN SOLD T HESE PREFERENTIAL SHARE TO HER GROUP-CONCERNS ONCE AGAIN ADOPTING THE VERY CHANNEL. THIS RESULTED IN LOSSES OF RS.17 02 55 613/-. LD.PCIT IS HIMSELF FAIR ENOUGH IN NOT DISPUTING GEN UINENESS OF THESE TRANSACTIONS IN SECTION 263 SHOW-CAUSE NOTICE . HE RATHER OBSERVES THEREIN THAT ABOVE LOSSES RESULT FROM COST INDEXATION OF THE SHARES SOLD AS TABULATED IN THE SHOW-CAUSE NOTI CE. THESE SHARES HAVE BEEN HELD FOR MORE THAN A YEARS PERIOD TO BE IN NATURE OF LONG TERM CAPITAL ASSETS U/S.2(29A) R.W.S. 2(42A ) OF THE ACT. THE PCITS REASONING IN HIS SHOW-CAUSE NOTICE EXTRACT ED HEREINABOVE READS THAT THE AO DID NOT EXAMINE AND VERIFY THE RA TIONAL BEHIND THE SHARE TRANSACTIONS WITH GROUP-COMPANIES WHEREIN THE ASSESSEE HAD CONTROL OVER AFFAIRS OF ALL RELATED ENTITIES. AND THAT THESE TRANSACTIONS ARE A COLOURABLE DEVICE TO AVOID FUTUR E INCIDENCE OF ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 10 - TAX BY SETTING OFF OF CARRIED FORWARD LOSSES. HE QUOTES THAT MCDOWELLS CASE LAWS(SUPRA). WE THUS PROCEED TO DE AL WITH THESE REASONS FIRST. 8. THE CASE FILE ALREADY INDICATES THAT THE AO HAD ISSUED SCRUTINY NOTICES TO ASSESSEE CALLING FOR ALL PARTIC ULARS. THE DEPARTMENT HAS ALREADY ACCEPTED ASSESSEES PURCHASE AND SALE PRICE OF THE SHARES IN QUESTION GIVING RISE TO THE ABOVE CITED CAPITAL LOSS. WE HAVE FURTHER NARRATED IN PRECEDING PARAGR APH THAT THE PCIT HIMSELF DOES NOT DISPUTE GENUINENESS OF THESE TRANSACTIONS BY STATING THAT ITS A CASE OF LOSS ARISING FROM COS T INDEXATION . HIS FIRST REASON IS THAT THE AO DID NOT EXAMINE RATIONA LE. WE REPEAT THAT THE AO HAD EXAMINED ALL THE RELEVANT PARTICULA RS SUBMITTED AT ASSESSEES BEHEST BEFORE FRAMING THE IMPUGNED REGUL AR ASSESSMENT AS GIVEN IN PRECEDING PARAGRAPHS. WE ACCORDING QUO TE HONBLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. NIR MA CHEMICAL WORKS LTD. REPORTED IN (2009) 309 ITR 67 (GUJ.) HOL DING IN SUCH A ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 11 - CASE THAT IF AN ASSESSMENT ORDER WERE TO INCORPORAT E REASONS FOR UPHOLDING AN ASSESSEES CLAIM THIS WOULD RESULT IN AN EPITOME AND AN ASSESSMENT ORDER. SIMILAR IS HONBLE BOMBAY HI GH COURTS VIEW IN CIT VS. GABRIEL INDIA LTD. REPORTED IN (1993) 20 3 ITR 108 (BOM.) THAT AN ASSESSMENT CANNOT BE BRANDED AS ERRONEOUS S IMPLY BECAUSE THE ASSESSMENT ORDER COULD HAVE BEEN WRITTE N DIFFERENTLY OR IN A MORE ELABORATE MANNER. 9. WE STAY BACK ON PCITS SECTION 263 SHOW-CAUSE NO TICE REASONS THAT THE AO DID NOT EXAMINE RATIONALE OF TH E IMPUGNED SHARE TRANSACTIONS IN GROUP-COMPANIES CARRIED OUT I N THE NATURE OF A COLOURABLE DEVICE TO AVOID FUTURE INCIDENCE OF TA X BY TAKING SET OFF OF CARRIED FORWARD LOSSES THEREBY DRAWING SUPP ORT FROM MCDOWELL CASE LAW(SUPRA). WE NOTICE THAT THE LD.PC IT HAS NOT CONSIDERED HONBLE APEX COURTS SUBSEQUENT DECISI ON AFTER CONSIDERING ABOVE JUDGEMENT IN VODAFONE INTERNATION AL HOLDINGS B.V. VS. UNION OF INDIA REPORTED IN (2012) 341 ITR 01 (SC) HOLDING ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 12 - THAT AN ASSESSEES TAX PLANNING WITHIN LEGAL FRAME WORK IS VERY MUCH PERMISSIBLE. WE OBSERVE AT THE COST OF REPETI TION THAT APART FROM QUOTING THIS CASE LAW AND TOUCHING UPON RATION ALE AND COLOURABLE DEVICE FACETS LD. PCIT HAS NOT MENTIONE D EVEN AN IOTA OF EVIDENCE MUCH LESS SUBSTANTIVE ONE TO POINT OUT ANY DOUBTS TOWARDS GENUINENESS OF ASSESSEES SHARE TRANSACTION S. OUR OPINION IN THESE FACTS IS THAT THE APPELLANT-ASSESSEE IS VE RY MUCH ENTITLED TO MANAGE HER AFFAIRS WITHIN THE FOUR CORNERS OF LAW P ARTICULARLY WHEN THERE IS NO MATERIAL TO QUESTION GENUINENESS O F HER TRANSACTIONS. THAT BEING THE CASE WE FAIL TO CON CUR WITH PCITS REASON THAT ASSESSEES SHARE TRANSACTIONS ARE IN TH E NATURE OF COLOURABLE DEVICE. WE FURTHER QUOTE IN SUPPORT H ONBLE BOMBAY HIGH COURTS DECISION IN KILLICK NIXON LTD. VS. DCI T IN ITA NO.5518/2010 DECIDED ON 06.03.2012 HOLDING THAT THI S COLOURABLE DEVICE PRINCIPLE APPLIES IN CASE THE SHARE TRANSACT IONS ARE NOT GENUINE WHICH ARE ENTERED TO AVOID TAX LIABILITY. WE DRAW ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 13 - SUPPORT THEREFROM AND HOLD THAT THE PCITS REASONS IN INVOKING SECTION 263 PROCEEDINGS REGARDING RATIONALE COLOUR ABLE DEVICE AND MCDOWELLS JUDGEMENT (SUPRA) ARE NOT SUSTAINABLE IN THE EYES OF LAW. 10. WE NOW DEAL WITH NEXT LIMB OF PCITS SHOW-CAUSE REASON THAT THE ASSESSEE SOLD HER PREFERENTIAL SHARES TO S ET OFF OF HER LONG TERM LOSSES AGAINST FUTURE INCIDENCE OF TAX. WE TE ND TO DISAGREE THIS REASON AS WELL. HONBLE APEX COURT IN CIT VS. MANMOHAN DAS DECIDED WAY BACK IN (1966) 59 ITR 699 (SC) DEALT W ITH A QUESTION AS TO WHETHER THE LOSS IN ANY YEAR MAY BE CARRIED F ORWARD TO THE FOLLOWING YEAR AND SET OFF OF AGAINST THE PROFITS A ND GAINS OF THE SUBSEQUENT YEAR HAS TO BE DETERMINED BY THE AO DEAL ING WITH ASSESSMENT OF THE SUBSEQUENT ASSESSMENT YEAR. THE IR LORDSHIPS OBSERVED THAT ANY DECISION IN THIS REGARD BY THE AO COMPUTING THE LOSS IN SUCH PREVIOUS ASSESSMENT YEAR THAT THE LOSS CANNOT BE SET OFF AGAINST INCOME OF THE SUBSEQUENT YEAR IS N OT BINDING ON THE ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 14 - ASSESSEE. WE REITERATE AT THE COST OF REPETITION THAT THE LD.PCITS CORRESPONDING REASON PROCEEDS IN THE SAME DIRECTION AS HE SEEKS TO TREAT ASSESSEES SHARE TRANSACTIONS LOSSES AS AN ATTEMPT TO SET OFF HER FUTURE INCOME AGAINST THE SAME. WE HOLD IN THE SE FACTS THAT SUCH A COURSE OF ACTION IS NOT SUSTAINABLE AS PER H ONBLE APEX COURTS DECISION HEREINABOVE THAT THE SAME IS BEYO ND THE PURVIEW OF THE ASSESSMENT IN THE IMPUGNED ASSESSMENT YEAR. 11. A PERUSAL OF LD.PCITS SHOW CAUSE NOTICE AND HI S IMPUGNED ORDER REVEALS THAT HE HAS TRAVERSED BEYOND THE REAS ONS STATED EARLIER THAT THE AO DID NOT INVESTIGATE ASSESSEES CIRCULAR TRANSACTIONS. SHRI PANDEY AT THIS STAGE QUOTES HO NBLE APEX COURTS DECISION IN CIT VS. AMITABH BACHCHAN (2016 ) 384 ITR 260(SC) THAT SUCH A COURSE OF ACTION IS VERY MUCH S USTAINABLE IN SECTION 263 PROCEEDINGS. WE FIND THAT HONBLE BO MBAY HIGH COURT IN (2016) 71 TAXMANN.COM 272(BOM.) CIT VS. NI RAV MODI DISTINGUISHES HONBLE APEX COURT S DECISION TO BE APPLICABLE IN ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 15 - CASE OF NO ENQUIRY ONLY AS AGAINST FACTS OF THE IN STANT CASE WHEREIN THE AO HAD MADE ALL DUE ENQUIRIES TO ADOPT ONE OF T HE POSSIBLE VIEW. A COORDINATE BENCH OF THIS TRIBUNAL IN DAMOD AR VALLEY CORPORATION VS. DCIT (2016) 160 ITD 78 (KOL.) ALS O CONSIDERS HONBLE APEX COURTS DECISION HEREINABOVE TO CONCLU DE THAT THE CIT HAS TO AFFORD AN OPPORTUNITY OF HEARING TO THE ASSE SSEE-CONCERNED BEFORE TRAVERSING BEYOND SECTION 263 SHOW-CAUSE REA SONS. WE DO NOT SEE ANY MATERIAL THAT THE LD.PCIT HAD NEVER PUT THE ASSESSEE ON NOTICE BEFORE VENTURING INTO THE OTHER REASONS A S STATED IN HIS ORDER UNDER CHALLENGE. WE ACCORDINGLY HOLD HIS ORD ER TO BE NOT SUSTAINABLE IN VIEW OF THESE OBSERVATIONS AS WELL. 12. WE COME TO LD.PCITS NEXT REASON DEALING WITH C ARRYING FORWARD OF LOSS TO BE SET OFF UPTO ASSESSMENT YEAR 2015-16(SUPRA). NEEDLESS TO SAY WE HAVE ALREADY HELD IN PRECEDING PARAGRAPHS THAT SUCH COURSE OF ACTION IS NOT AVAILABLE AS PER HONBLE APEX ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 16 - COURTS DECISION IN MANMOHAN DAS CASE (SUPRA). TH IS REASON IS ACCORDINGLY REVERSED. 13. WE FURTHER FIND THAT LD.PCIT QUOTES SECTION 263 (1) EXPLANATION-2(A) APPLICABLE FROM 01.06.2015. SHRI PANDEY STRONGLY ARGUES THAT THE AO HAD NOT MADE SUFFICIENT/NECESSAR Y ENQUIRIES. WE AGAIN REVERT BACK TO THE BASIC FACTS OF THE CASE WHEREIN THE DEPARTMENT HAS NOT QUESTIONED GENUINENESS OF EITHER ASSESSEES PURCHASE OR SALE TRANSACTIONS. WE RELY ON OUR DI SCUSSION HEREINABOVE THAT THE IMPUGNED LOSS HAS RESULTED FR OM COST INDEXATION OF SHARES ONLY AND THERE IS NO EVIDENCE ON RECORD TO DOUBT ASSESSEES SHARE TRANSACTIONS AND FURTHER T HAT THERE IS NO COLOURABLE DEVICE INVOLVED OR EMPLOYED IN THE SAME. LD.PCIT HAS DRAWN AN INFERENCE OF THE MERE FACT THAT THE ASSESS EE HAS TRANSACTED WITH GROUP-CONCERNS. WE HOLD ON THE BAS IS OF ALL FACTS AVAILABLE IN THE CASE FILE THAT THERE IS NO SUPPORT ING MATERIAL TO ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 17 - QUESTION THE SAME. WE ACCORDINGLY CONCLUDE THAT THE AO HAD RIGHTLY FRAMED THE IMPUGNED REGULAR ASSESSMENT AFTE R MAKING ALL DUE ENQUIRIES AND VERIFICATIONS THEREBY ADOPTING TH E ONLY POSSIBLE VIEW AS PER LAW IN ACCEPTING ASSESSEES LONG TERM C APITAL LOSS SUM (SUPRA). WE THUS RELY ON HONBE APEX COURTS LAND MARK DECISION IN MALABAR INDUSTRIAL CO.LTD. VS. CIT (2000) 243 I TR 83 (SC) HOLDING THAT SUCH AN ASSESSMENT DOES NOT WARRANT EX IGIBILITY OF CITS JURISDICTION VESTED U/S.263 OF THE ACT. WE ACCORDINGLY ACCEPT ASSESSEES ARGUMENTS. THE PCITS ORDER U NDER CHALLENGE STANDS REVERSED AS NOT SUSTAINABLE. 14. THIS ASSESSEES APPEAL SUCCEEDS. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 /10/2016 SD/- SD/- ( AMARJIT SINGH ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28 / 10 /2016 ..# $. #../ T.C. NAIR SR. PS ITA NO.119/RJT/ 2016 SMT. RAMBHABEN U. TANTI VS. PR.CIT ASST.YEAR 2011-12 - 18 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-2 RAJKOT 5. 2$34 & # /DR ITAT RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER 2& & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %& / ITAT RAJKOT 1. DATE OF DICTATION .. 27.10.16(DICTATION DIRECTLY ON COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 28.10.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 28.10.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.10.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER