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2023 (11) TMI 1267 - AT - Income TaxRevisionary jurisdiction u/s 263 - treatment of speculative business and the validity of carrying forward business losses - HELD THAT - We find that the issue raised by the PCIT for which the assessment was set aside to reframe de novo, was examined during the assessment proceedings by the AO and after calling for details and evidences from the assessee has taken a plausible view by accepting the explanation of the assessee which in our opinion is neither against the facts on record nor against the provision of the Act. Therefore on this count alone, the jurisdiction u/s 263 exercised by the PCIT cannot be justified. In the present case, we observe from the order passed by the PCIT that he has stated that the order passed by AO appears to be prima facie to be erroneous which is again is not correct and not as per the provision of Act. In our opinion, the PCIT has to record a clear cut finding after carrying out enquiry into the issue and record a finding as to how the order is erroneous and prejudicial to the interest of the revenue as has been decided in the case of ITO vs. DG Housing (India) Pvt. Ltd 2012 (3) TMI 227 - DELHI HIGH COURT . We also note that the AO has examined these issues and has taken a plausible view on the issue. In case where the view taken by the AO is according to the PCIT is not correct view and AO should have taken an another view. In our opinion when the AO has taken a plausible view then the PCIT cannot be invoked u/s 263 of the Act to justify the assessment framed on the ground that he does not agree with the view of the AO and that the AO should have taken a different view. The case of the assessee finds support from the decision of CIT vs. Gabreal India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT Accordingly we are not in a position to sustain the order of PCIT and same the thereby quashed. Assessee appeal allowed.
Issues involved: Appeal against order u/s 263 of the Income Tax Act, 1961 for assessment year 2016-17.
Summary: The appellant challenged the revisionary jurisdiction exercised u/s 263 of the Act by the Principal Commissioner of Income Tax-2, Kolkata, setting aside the assessment framed u/s 143(3) of the Act. The issue revolved around the treatment of speculative business and the validity of carrying forward business losses. The Principal Commissioner observed that the appellant's business of purchase and sale of shares should be treated as speculative, leading to the order being deemed erroneous and prejudicial to revenue. A show cause notice was issued, and ultimately, the order was set aside for fresh assessment. The appellant contended that the assessment was not erroneous and not against the revenue's interest, citing examination of evidence and plausible views taken by the Assessing Officer (AO). The appellant argued that the Principal Commissioner failed to conduct a proper enquiry and provide clear findings on the alleged errors in the assessment. The appellant relied on legal precedents to support their position. The Tribunal found that the AO had examined the issues thoroughly and taken a plausible view, which was not against the facts or provisions of the Act. Therefore, the Tribunal concluded that the Principal Commissioner's order u/s 263 was not justified, quashing the same and allowing the appeal of the assessee. The Tribunal's decision was pronounced on 30th November, 2023.
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