SANJAY VELJIBHAI SOJITRA,RAJKOT vs. ITO WD 3(1)(4), RAJKOT-AMRELI, RAJKOT

ITA 240/RJT/2025Status: DisposedITAT Raipur23 September 2026AY 2018-195 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assumption of jurisdiction by the PCIT under section 263 was not sustainable in law. It was undisputed that the reassessment proceedings were initiated solely to examine the alleged LTCG accommodation entry, which was the same issue forming the basis of the revisional proceedings. The record showed that the AO had issued statutory notices, called for relevant details and supporting evidence, and the assessee had furnished all required documents and explanations. The AO, after examining the material, accepted the assessee's explanation and completed the reassessment without additions. The Tribunal found that the PCIT had merely formed a different opinion that further inquiries ought to have been conducted, without pointing out any specific lack of inquiry or material ignored by the AO. The Tribunal reasoned that once the AO had examined the issue, considered the evidence, and taken a conscious and plausible view, the revisional jurisdiction under section 263 could not be exercised merely because the PCIT preferred another view or believed a deeper inquiry was necessary. This would amount to substituting the AO's opinion with the PCIT's, which is beyond the scope of section 263. As the AO had examined the issue and accepted the assessee's explanation, the assessment order could not be deemed erroneous solely due to the PCIT's differing opinion. Therefore, the impugned revisional order was set aside, and the AO's assessment order was restored.

What were the facts?

The assessee, Sanjay Veljibhai Sojitra, filed a return of income for Assessment Year 2018-19 declaring Rs.4,99,590/-. The assessment was reopened under section 147 of the Income-tax Act, 1961, based on information from a search in the Kushal Group case, alleging the assessee benefited from accommodation entries for Long-Term Capital Gain (LTCG) amounting to Rs.19,67,713/-. During reassessment, the Assessing Officer (AO) called for details and documents, which the assessee provided. The AO accepted the returned income and completed the assessment without additions. Subsequently, the Principal Commissioner of Income Tax (PCIT) initiated proceedings under section 263, holding the AO's order erroneous and prejudicial to revenue due to inadequate inquiries. The PCIT set aside the assessment order, directing a fresh assessment. The assessee appealed this order to the ITAT.

What were the issues?

1. Whether the assumption of jurisdiction by the PCIT under section 263 of the Income-tax Act, 1961, is legally sustainable, given that the AO had already examined the issue of alleged LTCG accommodation entries during reassessment proceedings and accepted the assessee's explanation. Assessee's Contention: The reassessment was reopened based on alleged LTCG accommodation entries. The AO conducted necessary inquiries and accepted the assessee's explanation and documentary evidence, making a conscious decision. The PCIT's revisional order is based solely on a change of opinion, which is impermissible under section 263. The AO adopted one of the possible views, and the PCIT cannot invoke section 263 merely for holding a different opinion. Revenue's Contention: The AO failed to conduct proper and adequate inquiries regarding the alleged bogus LTCG transaction, making the assessment order erroneous and prejudicial to the interests of the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 144B,Section 132,Section 148,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. BRR Kumar & Shri Sonjoy Sarma

For Appellant: Shri Kalpesh J. Shah, Ld. AR
For Respondent: Shri R. V. Arun Prashad, Ld. Sr. DR
Hearing: 28/07/2026Pronounced: 23/09/2026

Per, Shri Sonjoy Sarma, JM: This appeal has been preferred by the assessee against the order dated 23.03.2025 passed by the Ld. Principal Commissioner of Income Tax-1, Rajkot (“PCIT”) under section 263 of the Income-tax Act, 1961 (“the Act”), whereby the assessment order passed by the Assessing Officer under section 147 read with section 144B of the Act dated 03.03.2023 was set aside with a direction to frame a fresh assessment order. Sanjay Veljibhai Sojitra

02.

Brief facts of the case are that the assessee is an individual who

The order continues below.

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