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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of ld. Pr. Commissioner of Income Tax (Central), Nagpur (‘the PCIT’) dated 08.06.2018 for the assessment year 2011-12.
The appellant raised the following grounds of appeal :- “1. In the facts and circumstances of the case and in law, the learned Pr.CIT has grossly erred in exercising his revisional jurisdiction u/s 263 of the I.T. Act 1961. The impugned revisional order passed by the learned Pr.CIT is patently illegal., void ab initio, bad in law, arbitrary, perverse, without jurisdiction and being devoid of merits the same may please be deleted.
2. Since the learned Pr.CIT has failed to revise the directions given by the learned J.C.I.T. Nashik to the learned Assessing Officer in the matter of framing the impugned assessment order u/s 143[3] r.w.s.l53A I. T. Act 1961, the learned Pr.CIT miserably lacked the revisional jurisdiction u/s 263 of the I. T. Act 1961. In the circumstances the impugned order passed by the learned Pr.CIT may please be annulled for want of jurisdiction.
3. Since the learned Assessing Officer has framed the impugned assessment order u/s 143[3] r.w.s.153A of the I.T. Act 1961 after conducting proper enquiries of the share transaction of the appellant in respect of the shares of M/s S.V. Electricals Ltd, the learned Pr.CIT had no jurisdiction u/s 263 of the I.T. Act 1961 to revise the said order. The impugned revisional order passed by the learned Pr.CIT be annulled.
4. Without prejudice to Ground of appeal No.3 above and by way of an alternate submission the appellant submits that the learned Pr.CIT has failed to appreciate that during the search and seizure action carried on at the residence and business premises of the appellant, no incriminating material about the alleged share transaction of penny stock script of M/s S.V.Electricals Ltd was unearthed and therefore the learned Assessing Officer had no jurisdiction and authority to conduct any enquiry about the genuineness of the said transaction. In the circumstances the order passed by the learned Assessing Officer deserved no interference.
5. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”
3. Briefly, the facts of the case are that the appellant is an individual deriving income from share of profit from partnership firm, “capital gains”, “Income from other sources”. The return of income for the assessment year 2011-12 was filed on 30.09.2011 declaring total income of Rs.52,10,000/-. Subsequently, there was search and seizure action was conducted u/s 132 of the Income Tax Act, 1961 (‘the Act’) in the business premises of R.C. Bafna group of cases and the appellant, wherein certain incriminating material was stated to have been found. Subsequently, the Assessing Officer had issued a notice u/s 153A on 18.02.2015. In response to which, 30.10.2015 declaring same income as shown in the regular return of income. The Assistant Commissioner of Income Tax, Central Circle-2, Nashik (‘the Assessing Officer’) completed the assessment u/s 143(3) r.w.s. 153A of the Act vide order dated 30.11.2016 accepting the returned income.
4. Subsequently, the ld. PCIT, on examination of the assessment record, found that the appellant had made a claim for bogus capital gains from the penny stock script of M/s. S.V. Electricals Ltd. and formed an opinion that the Assessing Officer had not examined the bogus claim made by the appellant for exemption of bogus capital gains from the penny stock script of M/s. S.V. Electricals Ltd.. Accordingly, ld. PCIT formed an opinion that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Accordingly, issued a show-cause notice u/s 263 of the Act on 24.05.2018 calling upon the appellant to show cause as to why the assessment order should not be set-aside to the Assessing Officer. In response to the show-cause notice, it is submitted that the transaction of purchase and sale of shares of penny stock script of M/s. S.V. Electricals Ltd. were furnished during the course of assessment proceedings and, there was no incriminating material found as result of search and seizure action to M/s. S.V. Electricals Ltd. is bogus. Therefore, the question of examination during the course of assessment proceedings does not arise. Thus, it is submitted that the exercise of jurisdiction of revision in the present case is invalid. However, the ld. PCIT rejected the above contentions of the appellant and held that the transactions of purchase and sale of penny stock script of M/s. S.V. Electricals Ltd. were not examined by the Assessing Officer. Non- examination of this issue, render the assessment order erroneous and prejudicial to the interests of the Revenue. Accordingly, the ld. PCIT set-aside the assessment order to the Assessing Officer for fresh assessment in accordance with law.
Being aggrieved, the appellant is in appeal before us in the present appeal.
The ld. AR challenges the validity of the order of revision passed u/s 263 on the ground that : (i) The ld. PCIT cannot exercise the power of revision in respect of order passed by the Assessing Officer after taking approval of the Joint/Additional Commissioner of Income Tax. (ii) In the absence of any incriminating material suggesting that the appellant made a claim for exemption of bogus M/s. S.V. Electricals Ltd.. (iii) The Assessing Officer cannot examine this issue during the course of assessment proceedings u/s 153A of the Act.
Thus, it is contended that during the course of search and seizure action carried out in the resident and business premises of the appellant, no incriminating material was found about the alleged share transaction of penny stock script of M/s. S.V. Electricals Ltd.. Therefore, the Assessing Officer had no jurisdiction to conduct any enquiry into the genuineness of this transaction.
On the other hand, ld. CIT-DR submits that when the assessment order passed after obtaining the approval of Joint/Additional Commissioner of Income Tax u/s 153A is also an assessment order, which is amenable for jurisdiction u/s 263 of the Act. He also submitted that during the course of search and seizure proceedings in the business and residential premises of the appellant, the statement was recorded from the appellant about the share transactions undertaken by the appellant wherein he has confessed in answer to question no.24 where it was confessed to have indulged in the bogus claim for capital gains exemption. The Assessing Officer had failed to enquire into the genuineness of the M/s. S.V. Electricals Ltd.. Therefore, the assessment order is erroneous and prejudicial to the interests of the Revenue.
We heard the rival submissions and perused the material on record. The Parliament had conferred the power of revision on the Commissioner of Income Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”. Now, we shall examine the facts of the present case. During the course of hearing of appeal before us, the ld. AR could not demonstrate that no incriminating material was unearthed as result of search and seizure action relating to the transaction of purchase and sale of penny stock script of M/s. S.V. Electricals Ltd.. Thus, the contention that no incriminating material was found as result of search and seizure