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2022 (3) TMI 423 - AT - Income TaxRevision u/s 263 by CIT - addition in respect of sale consideration of shares u/s 68 and on account of commission paid for taking accommodation entries - HELD THAT - AO during the course of assessment proceedings has examined in details all these purchase and sale of shares from para No.4 to 9 in almost more than 20 pages. We have failed to understood as to how the Ld. PCIT has invoked this jurisdiction to revise the assessment in order to verify the unsold shares. In our opinion, the issue has been examined by the AO at great length and almost the entire assessment order has been dedicated on this issue only. We are of the considered opinion that the jurisdiction invoked by the Ld. PCIT is invalid as the Ld. PCIT has failed to demonstrate as to how the order of AO is erroneous and what prejudice has been caused to the revenue when there is no sale of shares as observed by the ld PCIT. Besides the AO after examining the share transactions has taken a possible view and made addition in respect of entire sales consideration resulting from shares sold during the year and also made addition in respect of commission on accommodation entries as the entire sales consideration was treated as bogus. We are inclined to hold that the revisionary jurisdiction of the Ld. PCIT is invalid and accordingly the order passed by Ld. PCIT is hereby quashed. - Decided in favour of assessee.
Issues:
1. Revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Act. Analysis: The appeal was filed by the assessee against the order of the Principal Commissioner of Income Tax (PCIT) for the assessment year 2015-16. The only issue raised in the grounds of appeal was regarding the revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Income Tax Act. The assessee had disclosed the sale consideration of shares and commission paid for accommodation entries in the return of income. However, the Ld. PCIT noticed that the unsold shares of M/s. Greencrast Financial Services Ltd. were not examined by the Assessing Officer (AO) during the assessment proceedings. The Ld. PCIT issued a notice under section 263, proposing to revise the assessment order. The assessee argued that the issue had already been discussed in detail by the AO and the remaining unsold shares were duly disclosed in the balance sheet. The Ld. PCIT revised the assessment order, directing the AO to re-examine the issue. The assessee contended that the jurisdiction under section 263 was invalidly exercised as the AO had already considered the issue and taken a possible view. The Ld. PCIT's order was challenged on the grounds that the assessment order was not erroneous and prejudicial to the revenue. The Ld. PCIT, however, argued that revising the assessment would not cause prejudice to the assessee as they would have the opportunity to explain before the AO again. Upon hearing both parties and examining the records, the ITAT found that the AO had thoroughly examined the sale and purchase of shares in the assessment proceedings. The ITAT noted that the Ld. PCIT invoked revisionary jurisdiction based on the unsold shares, which had already been addressed by the AO in detail. The ITAT concluded that the Ld. PCIT failed to demonstrate the error in the AO's order or the prejudice caused to the revenue. The ITAT held that the revisionary jurisdiction exercised by the Ld. PCIT was invalid, and subsequently, the Ld. PCIT's order was quashed. Consequently, the appeal of the assessee was allowed. This detailed analysis of the judgment highlights the issues related to the revisionary jurisdiction exercised under section 263 of the Act and the arguments presented by both parties, leading to the decision by the ITAT to quash the Ld. PCIT's order.
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