2015 (1) TMI 1240 - AT - Income Tax

Revision u/s 263 - in genuineness of the incidence of capital gains - Held that - CIT other than saying that the assessment whether the Assessing Officer really probed the genuineness of the incidence of capital gains cannot make the assessment order erroneous and prejudicial to the interest of revenue. In fact, the ld. CIT has not pointed out what is the exact error. Just because the query nor the answer is reflected in the assessment order, it would not lead to the conclusion that the order of the Assessing Officer called for any interference or revision. CIT having examined and verified the transactions himself and having not pointed out any error in the merits or the order of the Assessing Officer or the view taken by the Assessing Officer, it would not be possible to invoke his powers under section 263, just because the view as desired by the ld. CIT has not been taken by the Assessing Officer in the assessment order. In these circumstances, we are of the view that the order passed under section 263 by the ld. CIT is unsustainable and consequently quash the same. - Decided in favour of assessee.

Summary

Issues:
Appeal against order passed by Commissioner of Income Tax - Assessment year 2009-10 - Capital gains on sale of shares - Invocation of power under section 263 - Genuineness of transactions - Assessment under section 143(3) - Compliance with information requests - Sufficiency of documents produced - Alleged error in assessment order.

Analysis:
The appeal involved a challenge against the order passed by the Commissioner of Income Tax for the assessment year 2009-10 concerning capital gains realized from the sale of shares. The assessee, an individual, had purchased shares in a Private Limited Company and subsequently sold them at a profit. The assessee claimed the capital gains as exempt from taxation due to investments made in REC Bonds. The assessment under section 143(3) was completed after verifying the details provided by the assessee. The Commissioner invoked power under section 263 based on letters from Assessing Officer and JCIT, questioning the genuineness of the transactions and directing a re-assessment. The assessee contended that all necessary details were submitted, and the assessment was completed without any defects. The Commissioner's order was challenged on the grounds that no specific error in the assessment order was identified, and the revision was based on presumption rather than concrete evidence.

The dispute centered on whether the Assessing Officer adequately examined the genuineness of the transactions, especially the sale of shares. The Commissioner argued that the Assessing Officer did not delve deeper into the transactions despite the significant increase in share value over five years. However, the Tribunal noted that the documents submitted by the assessee, including computation of income, expenditure accounts, and sale details, were certified as true copies. The Tribunal found that the Assessing Officer had indeed examined the capital gains and investment in REC Bonds during assessment. The Tribunal emphasized that the Commissioner failed to pinpoint any specific error in the assessment order that warranted revision under section 263. Additionally, the Tribunal highlighted that the Commissioner's personal examination did not reveal any flaws in the assessment or the Assessing Officer's decision-making process. Consequently, the Tribunal concluded that the Commissioner's order under section 263 was unsustainable and quashed it, thereby allowing the appeal filed by the assessee.