SMT. TEENA GARG,CHANDIGARH vs. PCIT, PANCHKULA

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ITA 466/CHANDI/2024Status: DisposedITAT Chandigarh20 February 2025AY 2015-1654 pages
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What did the Tribunal hold?

The Tribunal held that the PCIT erred in setting aside the assessment order. The Tribunal found that the AO had conducted inquiries and verified documents during the assessment proceedings, and accepted the returned income after due consideration. The Tribunal noted that the AO had initially misread the information regarding immovable property transactions, but the assessee had provided explanations and documentary evidence, including purchase deeds and bank/loan account details, in response to the PCIT's show cause notice. The Tribunal relied on the Gujarat High Court's decision in CIT Vs. Mohmed Juned Dadlani (2013) 355 ITR 172. Furthermore, the Tribunal observed that the reasons for reopening under Section 147/148 did not mention the purchase of immovable properties. The Tribunal concluded that the PCIT failed to establish the erroneous character of the assessment order in a manner prejudicial to the revenue and that the assessee had provided satisfactory explanations. Therefore, the impugned order passed under Section 263 was set aside.

What were the facts?

The assessee, Smt. Teena Garg, is challenging an order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. The assessment year in question is 2015-16. The PCIT had set aside the assessment order dated March 23, 2022, passed by the Assessing Officer (AO) under Section 147 read with Section 144B of the Act. The AO had accepted the returned income of Rs. 19,23,970/-. The PCIT found the assessment order to be erroneous and prejudicial to the interest of the revenue on two counts: alleged bogus long-term capital gains (LTCG) and failure to verify the source of consideration for immovable property purchases. The assessee contends that the original assessment was completed after due application of mind and consideration of all material.

What were the issues?

1. Whether the PCIT erred in cancelling the assessment order passed by the AO and holding it as erroneous and prejudicial to the interest of the revenue under Section 263 of the Income Tax Act, 1961? (Question of law and fact) Assessee's arguments: - The assessment was completed by the AO after due application of mind and considering all relevant material, making the setting aside of the assessment bad in law. - The assessee claimed LTCG of Rs. 28,75,041/- on the sale of Indusind Bank shares, which is exempt under Section 10(38). The purchase of shares was in cash and sale through a DEMAT account, a genuine transaction. - The PCIT erred in highlighting alleged bogus LTCG of Rs. 60,65,724/- and failure to verify the source of Rs. 2,50,05,000/- for immovable property purchases. - The AO had made inquiries and verified documents during the assessment proceedings. - The PCIT ought to have considered the assessee's explanation regarding the source of investment for immovable properties. Revenue's arguments: - The PCIT found the assessment order to be erroneous and prejudicial to the interest of the revenue on two counts: alleged bogus LTCG and failure to verify the source of purchase consideration for immovable properties.

Which sections of the Income-tax Act were involved?

Section 253,Section 263,Section 147,Section 144B,Section 10(38),Section 148,Section 142(1),Section 143(2)

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5.

In the premises aforesaid we set aside the impugned order.

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

Order pronounced in the open Court on 20/02/2025

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