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2018 (7) TMI 1812 - AT - Income TaxRevision u/s 263 - claim of long term capital gain exempt U/s 10(38) - Held that - Once the AO has called for the relevant record and verified the same before allowing the claim of the assessee then the AO is not required to give detailed reasons in respect of each and every item of deduction in the assessment order. The Commissioner has given much importance and emphasis to the report of the DIT Patna however once the assessee has produced evidence which established the genuineness of the transaction being holding of shares by the assessee in the demat account and purchase of the shares against the consideration paid through banking channel then in the absence of bringing any contrary fact or disapproving the evidence produced by the assessee the mere setting aside issue by the Pr. CIT for denovo consideration is not sustainable. Though Explanation-2 to Section 263 mandates a proper enquiry as the AO should have conducted however even in the opinion of the Pr. CIT the AO has not conduced a proper enquiry as it ought to have been once the AO has examined the relevant record in support of the claim of the assessee then the Commissioner in the proceedings U/s 263 of the Act it also required to have conducted an enquiry to contradict evidence. In the absence of any efforts on the part of the Commissioner to cause a routine inquiry on the issue that has already been conducted by the AO the order passed by the Pr. CIT merely setting aside the issue to the AO for conducting the denovo assessment is not permissible When the entire evidence in support of the claim was available on the assessment record and the Assessing Officer has already examined the same then the Pr. CIT directing a re-enquiry on the issue is not permissible U/s 263 of the Act. - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed under Section 263 of the Income Tax Act, 1961. 2. Determination of whether the original assessment order was erroneous and prejudicial to the interest of the Revenue. 3. Verification of the genuineness of the deduction claimed under Section 10(38) of the Income Tax Act, 1961. 4. Consideration of the information from the DIT, Patna, available at the time of the assessment. Issue-wise Detailed Analysis: 1. Validity of the Order Passed Under Section 263 of the Income Tax Act, 1961: The appeal by the assessee challenges the revision order passed under Section 263 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax (Pr. CIT). The assessee contends that the order is void ab initio and should be quashed. The Pr. CIT initiated the revision based on the claim that the Assessing Officer (AO) did not conduct a proper inquiry regarding the exemption claimed under Section 10(38) of the Act. The Tribunal analyzed whether the Pr. CIT had the jurisdiction to invoke Section 263 and whether the conditions for its invocation were satisfied. 2. Determination of Whether the Original Assessment Order Was Erroneous and Prejudicial to the Interest of the Revenue: The Pr. CIT held that the AO's order was erroneous and prejudicial to the interest of the Revenue because the AO did not verify the genuineness of the exemption claimed under Section 10(38). The Tribunal examined the AO’s scrutiny assessment, which included issuing a notice under Section 142(1) and requesting detailed information and supporting evidence from the assessee. The AO accepted the claim after examining the provided documents, although the assessment order did not explicitly discuss the verification process. The Tribunal emphasized that the AO’s acceptance of the claim, after examining the evidence, does not automatically render the assessment order erroneous or prejudicial to the Revenue. 3. Verification of the Genuineness of the Deduction Claimed Under Section 10(38) of the Income Tax Act, 1961: The Tribunal scrutinized the evidence provided by the assessee, including purchase bills, bank statements, demat account statements, share certificates, and transaction details. The assessee had purchased shares of M/s Lambodar Nirmit Ltd., which were later merged with M/s Indian Info Tech & Software Ltd., and the shares were duly reflected in the demat account. The Tribunal found that the AO had conducted a thorough examination of the evidence, and the genuineness of the transaction was established beyond doubt. The Tribunal held that the Pr. CIT’s reliance on the report from the DIT, Patna, without contradicting the evidence provided by the assessee, was not justified. 4. Consideration of the Information from the DIT, Patna, Available at the Time of the Assessment: The Pr. CIT based the revision on the CIB report from the DIT, Patna, which suggested accommodation entries for bogus capital gains. However, this report was received after the assessment order was passed. The Tribunal noted that the subsequent receipt of the report could not be considered conclusive proof of the transactions being bogus. The AO had already verified the transactions based on the evidence available at the time of the assessment. The Tribunal concluded that the Pr. CIT’s action to revise the assessment order based on the later report was not permissible. Conclusion: The Tribunal held that the AO had conducted a proper inquiry and verification of the exemption claimed under Section 10(38). The evidence provided by the assessee was sufficient to establish the genuineness of the transactions. The Pr. CIT’s order under Section 263 was deemed not sustainable, as it was based on a report received after the assessment and did not contradict the evidence on record. Consequently, the Tribunal set aside the Pr. CIT’s order, allowing the appeal filed by the assessee.
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