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2023 (4) TMI 566 - AT - Income TaxRevision u/s 263 by CIT - bogus long term capital gains derived from sale of certain shares through certain companies - Validity of assessment order passed by the AO u/s. 143(3) r.w.s. 147 - HELD THAT - Report of investigation wing is not sacrosanct, but what is necessary to decide the issue is whether said transactions are genuine or not, is independent enquiry in light of available materials. In this case, the evidences filed by the assessee before the AO during the re-assessment proceedings clearly shows that long term capital gains declared u/s. 10(38) of the Act is nothing to do with survey conducted in the case of M/s. Onkar Supply Pvt Ltd and statement recorded from Shri Ashok Kumar Kayan. Therefore, we are of the considered view that capital gains declared by the assessee from sale of certain shares cannot be considered as bogus only on the basis of report of Income-tax Department. Assessment order passed by the AO is neither erroneous nor prejudicial to the interests of the revenue, on the issue of long term capital gains declared u/s. 10(38) - Therefore, we are of the considered view that the PCIT is completely erred in assuming his jurisdiction and revised assessment order u/s. 263 of the Act. Thus, we quashed order passed by the PCIT u/s. 263 of the Act.Appeal filed by the assessee is allowed.
Issues Involved:
1. Legality of the Principal Commissioner of Income Tax's (PCIT) order under section 263 of the Income-tax Act, 1961. 2. Whether the assessment order was erroneous and prejudicial to the interest of the revenue. 3. The adequacy of the Assessing Officer's (AO) inquiry into the long-term capital gains claimed by the assessee. Summary: Legality of the PCIT's Order under Section 263: The assessee challenged the order of the Principal Commissioner of Income Tax (PCIT), Central-1, Chennai, issued under section 263 of the Income-tax Act, 1961, which revised the assessment order for the assessment year 2012-13. The PCIT's order was based on the assertion that the assessment order was erroneous and prejudicial to the interest of the revenue. Erroneous and Prejudicial to the Interest of the Revenue: The PCIT argued that the AO's assessment order was erroneous and prejudicial to the revenue because it failed to properly investigate the assessee's claim of long-term capital gains from the sale of shares. The PCIT cited sworn statements from brokers and investigation reports indicating that the assessee was a beneficiary of bogus long-term capital gains through accommodation entries provided by shell companies. Adequacy of the AO's Inquiry: The Tribunal noted that the AO had reopened the assessment based on information from the Income-tax Department, Kolkata, which suggested that the assessee was involved in bogus long-term capital gains transactions. During the reassessment, the AO examined the evidence submitted by the assessee and concluded that the long-term capital gains declared were genuine. The Tribunal found that the AO had conducted a thorough inquiry and that the PCIT's assertion of inadequate inquiry was unfounded. Tribunal's Conclusion: The Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the interest of the revenue. It held that the PCIT had erred in invoking jurisdiction under section 263 of the Act, as the AO had indeed conducted a sufficient inquiry into the long-term capital gains. The Tribunal quashed the PCIT's order and allowed the appeal filed by the assessee. Final Order: The appeal filed by the assessee was allowed, and the order passed by the PCIT under section 263 of the Income-tax Act was quashed. The Tribunal pronounced the order on 22nd March 2023 at Chennai.
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