2021 (5) TMI 154 - AT - Income Tax

Revision u/s 263 - No genuineness of the purchase and sale of shares and profits earned shown - HELD THAT - We find that while accepting the return of income filed by the assessee all the details and documents filed by the assessee, and satisfied himself with the genuineness of the claims of the assessee. Assessing Officer discharged his duties as an investigator as well as an adjudicator, and took a possible view. Such a view cannot be held as unsustainable in law. Assessing Officer during the course of original assessment proceedings issued a notice u/s 142(1) and called for details and information. AO called for details of purchases/sales/stocks in a particular format. The assessee filed a reply on 09/11/2017. Demat Statements, for the period 01/04/2014 to 31/03/2015, were filed. Copy of contract notes, copies of Bank pass books, copies of ledger accounts of brokers etc. were filed. All the transactions were on the stock exchange platform. Assessing Officer verified the same and he did not find anything adverse, in the claims. This is not a case of non-verification or non-application of mind. The ld. Pr. CIT, in his order passed u/s 263 of the Act, has failed to make out a case that the order of the Assessing Officer is erroneous as well as prejudicial to the interest of the revenue, which is a condition precedent for invoking jurisdiction u/s 263 of the Act. See M/S GITSH TIKMANI, HUF, case 2019 (9) TMI 1177 - ITAT KOLKATA - Decided in favour of assessee.

Issues Involved:
1. Delay in filing the appeal.
2. Validity of the invocation of jurisdiction under Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax (Pr. CIT).
3. Examination of the Assessing Officer's (AO) actions and findings during the original assessment.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 242 days. The assessee submitted a condonation petition dated 12/02/2021, citing the prevailing pandemic as a sufficient cause for the delay. The tribunal accepted this explanation, condoned the delay, and admitted the appeal.

2. Validity of the Invocation of Jurisdiction under Section 263:
The Pr. CIT invoked Section 263, stating that the AO's assessment was erroneous due to a lack of enquiry, thus prejudicial to the interests of the revenue. The Pr. CIT directed a de-novo assessment on specific issues, instructing the AO to conduct adequate and effective enquiries.

3. Examination of the Assessing Officer's Actions and Findings:
The AO had issued notices under Sections 143(2) and 142(1) and verified the transactions of purchase and sale of shares. The AO concluded that the transactions were genuine and completed the assessment, making a minor disallowance under Section 14A read with Rule 8D(2).

The tribunal found that the AO had indeed conducted a thorough verification of the transactions, including examining Demat statements, contract notes, bank passbooks, and broker ledger accounts. The AO had taken a possible view, which cannot be deemed unsustainable in law.

The tribunal referred to several precedents, emphasizing that for the Pr. CIT to invoke Section 263, the order must be both erroneous and prejudicial to the interests of the revenue. It was noted that the AO had acted within his jurisdiction, and the Pr. CIT's order lacked a clear indication of how the AO's assessment was erroneous or prejudicial.

Conclusion:
The tribunal quashed the order passed under Section 263, stating that the AO had conducted adequate enquiries and that the Pr. CIT failed to demonstrate that the AO's order was erroneous and prejudicial to the revenue. The appeal of the assessee was allowed.

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