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Income Tax Appellate Tribunal, ‘A‘ BENCH
Before: SHRI M.BALAGANESH & SHRI AMARJIT SINGH
आदेश / O R D E R PER AMARJIT SINGH (JM):
The present appeal has been filed by the assessee against the order dated 28/01/2021 passed by the Pr. Commissioner of Income Tax in view of provision u/s 263 of the I.T. Act, 1961 relevant to the assessment year 2013-14. 2. The assessee has raised the following grounds: -
“The Principal Commissioner of Income-tax - 17, Mumbai (hereinafter referred to as the Pr CIT) erred in framing an order dated 28.01.2021 under section 263 of the Act to set aside the order of the Income-tax Officer - 17(1)(1) Mumbai (hereinafter referred to as the Assessing Officer) by holding that the assessment order dated 13.12.2017 passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Act is erroneous and prejudicial to the interest of the Revenue and consequently, directing the Assessing Officer to frame the order of assessment de novo. The appellant contends that the Pr CIT has not appreciated the facts of the case in its entirety; the impugned order under section 263 is bad in law inasmuch as the assessment order of the Assessing Officer is neither erroneous nor prejudicial to the interests of the Revenue. The appellant further., contends that the Pr CIT ought not to have reached the aforesaid conclusion inasmuch as her conclusion is based on the same material which has been considered by the Assessing Officer to make the addition in his assessment order, and thus, the impugned order passed by the Pr CIT under section 263 is bad in law. The appellant further, contends that on the facts and in the circumstances of the case and in law. the Pr CIT lacks jurisdiction to pass the impugned order inasmuch as the Assessing Officer on the basis of the same material has made addition, which is a subject matter of appeal to the CIT(A), and thus, the order of the Assessing Officer will merge with the order of the CIT(A) on the same subject matter. The appellant craves leave to add to, alter and/ or amend the aforestated ground of appeal.”
3. The brief facts of the case are that the Assessing Officer completed the assessment in view of provision u/s.143(3) r.w.s. 147 for the A.Y.2013-14 vide order dated 13/12/2017 determining total income of Rs.65,34,590/-. On verification, it was found that the Assessing Officer has erred in adding only long term capital gain of Rs.47,37,582/- on sale of penny stock and not the whole proceeds amounting to Rs.49,52,450/- because the transaction was not genuine. A Show-cause notice u/s.263 of the Act was given on assessee and after the reply of the assessee, the case of the assessee was reopened on the said ground in view of the provision u/s.263 of the Act.
Feeling aggrieved, the assessee has filed the present appeal before us.
5. All these issues are in connection with the reopening of the assessment of the assessee in view of the provision u/s.263 of the Act. The basic contention is that the Assessing Officer added a long term capital gain of Rs.47,37,582/- on account of sale of penny stock however, the ld. PCIT is of the view that the whole-sale proceeds amounting to Rs. 49,52,450/- should be considered. We observed that while completing the assessment in view of provisions u/s.143(3) r.w.s. 147 of the Act, the Assessing Officer issued a notice stating the reason as under:-
“There is enough reason to believe that not only the claim of exemption under section 10(38) by the assessee is prima facie bogus but by making such bogus claim, the assessee has clearly failed to disclose all material facts for determination of income.”
5.1. Thereafter, the Assessing Officer completed the assessment in view of provision u/s.143(3) r.w.s. 147 of the Act raising the addition on account of long term capital gain in sum of Rs.47,37,582/-. It is argued by the ld. representative of the assessee that once the issue has already been raised by the Assessing Officer and thereafter, the claim of the assessee was denied then, in the said circumstances, the assessment could not be revised in view of provision u/s.263 of the Act. In support of this contention, the ld. representative of the assessee has placed reliance on the case based upon similar circumstances titled as Mrs. Manisha Ajay Shah vs. Pr. CIT-30 in dated 14/10/2020. The copy of this order is placed in the file and relevant finding is hereby reproduced as under:-
“4. We have heard the submissions made by ld. Departmental Representative and have examined the material available on record. The PCIT has invoked revisional jurisdiction under section 263 of the Act on the ground that the Assessing Officer has failed to examine the transaction of purchase and sale of shares. Another reason for invoking revisional jurisdiction by the PCIT is, that the assessee in IDS 2016 has only declared long term capital gain on penny stock, whereas, the assessee should have declared gross sale receipt of the shares. The immunity is granted to the assessee to the extent (A.Y.2015-16) declaration is made under IDS 2016 and not against the entire transaction. The PCIT invoked revisional jurisdiction to tax the difference between gross sale price of the shares Rs.34,30,000/- and Long Term Capital Gains declared by the assessee Rs.32,86,815/- In other words, the PCIT seeks to tax even the purchase cost of the shares i.e. Rs.1,43,185/- stating it to be a bogus purchase transaction.
After examining the documents on record we do not concur with the view of the PCIT. The assessee has demonstrated from the bank statement that the amount has been paid for purchase of shares of GCM Securities Ltd. through cheque. This is further corroborated by share application form of GCM Securities at page 22 of the Paper Book and transaction-cum-holding statement in the case of assessee issued by Stock Holding Corporation of India Ltd. at page 19 of the Paper Book. The documents furnished by the assessee clearly indicates that the shares were indeed purchased by the assessee through banking transactions. It is not the case of the Revenue that the amount paid by the assessee for purchase of shares has travelled back to the assessee in the form of cash or any other manner.
The provisions of section 263 of the Act can be invoked if, the twin conditions mandated under the section are satisfied, i.e: (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If any one of these two conditions is absent, the Commissioner of Income Tax cannot take recourse to section 263 of the Act.
In the present case, we find that the Assessing Officer has issued a questionnaire wherein specific information was sought on transaction of equity shares and working of short term capital gain/long term capital gain. The assessee furnished a detailed reply to the notice issued under section 142(1) of the Act, wherein the assessee while replying to the query on transaction of shares, informed that a declaration under IDS 2016 has been made in respect of long term capital gain arising on sale of shares to GCM Securities Ltd. Ostensibly, the Assessing Officer after examining the documents accepted the same and made no addition. Merely for the reason that the Assessing Officer has taken a plausible view after examining the records that is not acceptable to the PCIT, would not make the assessment order erroneous. In the present case twin conditions set out in section 263 are not satisfied and hence, the PCIT wrongly assumed revisional jurisdiction.
5.2. In view of the above facts and circumstances, it is quite clear that the fact of the present case is quite similar to the fact of the case under consideration. Taking into all these facts, we are of the view that the revision of assessment u/s.263 is not liable to be sustainable in the eyes of law. Therefore, we set aside the same and allowed the appeal of the assessee.
In the result, appeal of the assessee is allowed. 6.
Order pronounced on 08/10/2021 by way of proper mentioning in the notice board.