2021 (12) TMI 15 - AT - Income Tax

Revision u/s 263 by CIT - assessee had earned long term capital gain which was offered under Income Disclosure Scheme 2016 (IDS) and tax due was paid - only reason for which learned PCIT has invoked his power under section 263 of the Act is, AO should have added back the purchase cost of the shares with alleged commission paid by the assessee for obtaining the entries relating to long term capital gain - HELD THAT - The assessee had paid the purchase cost of shares through account payee cheque and the transaction was carried out through SEBI registered broker and on stock exchange platform. The assessee has furnished the contract note relating to purchase of shares as well as the bank statement showing the transaction made through banking channel. There is no material on record to suggest that the payment made of ₹ 2,00,000 through cheque towards purchase cost has been routed back to the assessee. There is nothing on record to suggest that the assessee has paid commission for obtaining accommodation entry. A reading of the impugned order passed under section 263 of the Act reveals that merely on presumption and surmises learned PCIT has assumed jurisdiction under section 263 of the Act. It is also evident, before the revisionary authority assessee has specifically stated that all relevant materials including evidence for payment made towards purchase cost were furnished before the AO. It cannot be said that the AO has not enquired into the issue. It could be a fact that after considering the materials available on record the AO was satisfied that the assessee had incurred the expenditure towards cost of the shares. That being a plausible view, cannot be termed as erroneous. Further, we find that the issue is squarely covered by the decision in case of Mrs. Manisha Ajay Shah 2020 (10) TMI 660 - ITAT MUMBAI . As the assessment order cannot be held as erroneous and prejudicial to the interest of the revenue. Accordingly, we set aside the impugned order passed under section 263 - Decided in favour of assessee.

Summary

Issues:
Assessment under section 263 of the Income Tax Act, 1961 for the assessment year 2015-16.

Analysis:
The judgment pertains to an appeal against an order passed by the Principal Commissioner of Income Tax under section 263 of the Income Tax Act, 1961 for the assessment year 2015-16. The assessee, an individual, had filed a return of income declaring total income. The Assessing Officer (AO) completed the assessment under section 143(3) of the Act based on information that the assessee had earned long term capital gain. The Principal Commissioner found the assessment order to be erroneous and prejudicial to the interest of revenue as certain aspects were not considered. The assessee argued that the purchase cost was paid through cheque and the transaction was legitimate, citing relevant case law. The Departmental Representative contended that the entire transaction involving a penny stock company should be considered non-genuine. The Tribunal found that the assessee had paid the purchase cost through legitimate means and there was no evidence of commission payment for accommodation entry. Relying on a previous decision, the Tribunal held that the assessment order was not erroneous and prejudicial to revenue, setting aside the order passed under section 263 and restoring the assessment order.

This judgment highlights the importance of thorough examination of transactions and the need for concrete evidence before invoking revisional jurisdiction under section 263 of the Income Tax Act. It emphasizes the significance of considering all relevant facts and legal precedents to determine the legitimacy of transactions and assess the correctness of the assessment order. The Tribunal's decision underscores the principle that a plausible view taken by the Assessing Officer based on available evidence cannot be deemed erroneous solely based on differing opinions, especially when supported by documentary proof. The judgment provides clarity on the application of section 263 in cases where genuine transactions are supported by valid documentation, thereby ensuring fair treatment of taxpayers and upholding the principles of natural justice and due process in tax assessments.