JIGNABEN PRASHANTBHAI PATEL,SATELLITE, AHMEDABAD vs. PRINCIPAL COMMISSIONER OF INCOME TAX-3, AHMEDABAD, PRATYAKSHKAR BAWAN, AMBAWADI, AHMEDABAD

Being aggrieved by the order u/s. 263 of the Act, the assessee filed appeal before us.

The ld. A.R. submitted that the assessee filed her original return of income on 28-06-2013 thereby declaring income at Rs. 7,62,330/-. The reopening u/s. 147 was for the very basis in Jignaben Prashantbhai Patel, A.Y. 2013-14 respect of the said scrip Parikh Herbals Ltd. and the persons who have admitted that they were engaged in providing accommodation entries to their clients. The ld. A.R. submitted that the assessee at the time of assessment proceedings vide submissions dated 18-09-2021 provided following documents:-

The ld. D.R. submitted that the Pr. CIT has rightly invoked section 263 as the Assessing Officer failed to add tax on long term capital gain to penny stock named Parikh Herbals Ltd. and therefore it resulted into under assessment of Rs. 41,03,175/-. The ld. D.R. relied upon the order passed u/s. 263 of the Act.

We have heard both the parties and perused all the relevant material available on record. From the perusal of the reasons for reopening, it can be seen that the very basis for reopening was on the ground of the scrip Parikh Herbals Ltd.. In fact, the Assessing Officer has confronted the assessee during the re-assessment proceeding related to the said transaction and called upon the details of purchase as well as the sale of the said scrip. The assessee also responded the same vide submissions dated 16-09-2021 and submitted the details such as contract note in respect of purchase of shares, contract note in respect of sale of shares as well as the bank statements and the ledger account from the books of the broker through whom the assessee made these transactions. After perusing all these documents only the Assessing Officer has arrived at the conclusion that the assessee has rightly taken exemption u/s. 10(38) of the Act. The assessee has demonstrated before the Assessing Officer during the assessment proceedings about the genuineness, creditworthiness of the transactions which was questioned to the assessee during re-assessment proceedings. The invocation of section 263 cannot be applicable in the cases where the assessee has proved the claim of the assessee for exemption or deduction in respect of his income when Jignaben Prashantbhai Patel, A.Y. 2013-14 confronted by the Assessing Officer through various statutory notices as well as show cause notices. There is no lapse on the part of the Assessing Officer as well as on the part of the assessee in respect of granting the claim of exemption of the assessee or claiming the exemption u/s. 10(38) of the Act. The observation of the Pr. CIT while invoking section 263 is not justified when the Revenue through its Assessing Officer has properly verified and has taken into account all the evidences and has arrived at a proper conclusion as per Income Tax Statute. The Pr. CIT has not pointed out as to how the assessment order is erroneous and prejudicial to the interest of revenue. It is merely a second opinion which cannot be the criteria for invoking section.

Thus, invocation of section 263 of the Act by the Pr. CIT is not justified.

In the result, the appeal of the assessee is allowed.