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2024 (2) TMI 336 - AT - Income TaxRevision u/s 263 - Reopening of assessment - AO completed the assessment on declared income of the assessee - assessee argued that the action of the ld. PCIT is incorrect, once the case of the assessee was re-opened on the issue which of third party information and the ld. AO has completed the assessment after recording the reasons and again on the same very issue the invoking of the provision of 263 is not correct HELD THAT - The fact that the assessee has on being asked clearly explained the nature and details of the transaction by submitting the necessary evidence and the content of the reply is also filed in the assessee s paper book and the revenue did not contradict the figure which the assessee has replied, and the figures referred in the notice of the PCIT. Thus, it is clear that the AO raised the issue, asked for the details and applied his mind while passing the assessment order. Even in the proceeding u/s. 263 the ld. PCIT did not bring anything on record that how the order of the ld. AO is erroneous and prejudicial to the interest of the revenue what material he relied - He relied on the same material on which the ld. AO has already applied his mind. In the proceeding before the ld. PCIT the assessee in his reply submitted the profit / loss derived by the assessee and the figures reported in the PCIT notice is same in the assessment order and in the reply to the assessee. On issue no. 1 the ld. PCIT noted that The AO accepted the version of the assessee without properly examining and verifying the ITS details with transactions in the ledger account maintained by the broker and from the bank statement. , and on issue no. 2 he observed that The AO is directed to verify the sales from the ledger account in the books of broker and from the BSE/NSE. As regards claim of the assessee in respect of transactions carried out by other parties by utilizing the PAN of the assessee, the AO is directed to carry out necessary verifications from such other parties and from BSE/NSE. Thus, the bench noted that on both the issue the ld. PCIT has not pointed that how the order is erroneous and prejudicial to the interest of the revenue. He merely aims to make inquiry as per his will and wishes which could have been done at the time of assessment proceeding as per the supervisor power vested and for that again and again same exercise cannot be done on the assessee. The law does not permit for change of opinion, when the ld. AO on both the issues raised the questions and considered the explanation of the assessee and assessment was completed. Therefore, we find force in the arguments of the assessee that on the same observation and issue the ld. PCIT cannot direct to make the enquiry what he deem fit. As decided in Aishwarya Rai Bachchan vs. PCIT 2022 (3) TMI 524 - ITAT MUMBAI when the very basis of reasons recorded by the Id. AO was ultimately not added by the Id. AO in the re-assessment proceedings, then the primary reason to believe that income of the assessee had escaped assessment fails and such re-assessment cannot be treated as a valid order in the eyes of law. The same is to be declared as void ab initio. Reliance in this regard was rightly placed on the decision of Jet Airways 2010 (4) TMI 431 - HIGH COURT OF BOMBAY When an assessment framed by the Id. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order passed by the Id. PCIT u/s.263 of the Act deserves to be quashed. Considering the above discussion we quash the order of the ld. PCIT as the same is not in accordance with the provision of section 263 of the Act. Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Legality of the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. 3. Examination of whether the assessment order was erroneous and prejudicial to the interests of the revenue. Summary: Condonation of Delay: The appeal filed by the assessee was delayed by five days. The delay was due to the assessee's mother suffering from COVID-19, which prevented timely filing. The Tribunal condoned the delay, citing sufficient cause as per the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC). Legality of the PCIT's Order: The assessee challenged the order of the PCIT, arguing that it was against the law and judicial decorum. The assessee contended that the PCIT did not conduct any independent inquiry and failed to follow binding precedents. The Tribunal noted that the PCIT had issued a show cause notice under section 263 of the IT Act, 1961, and, after considering the assessee's submissions, found the assessment order to be erroneous and prejudicial to the interests of the revenue. Assessment Order Examination: The PCIT observed that the Assessing Officer (AO) did not properly verify transactions related to penny stocks and other sales transactions carried out using the assessee's PAN. The PCIT directed the AO to conduct a thorough examination of these transactions. The Tribunal reviewed the records and found that the AO had indeed raised queries and verified the details during the assessment proceedings. The Tribunal concluded that the AO had applied his mind and conducted proper inquiries, making the order neither erroneous nor prejudicial to the interests of the revenue. Conclusion: The Tribunal quashed the order of the PCIT, holding that the invocation of section 263 was not justified. The Tribunal emphasized that the AO had already examined the issues raised by the PCIT and that the PCIT's direction for further inquiry amounted to a change of opinion, which is not permissible under the law. Result: The appeal of the assessee was allowed, and the order of the PCIT was quashed.
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