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Issues:
- Challenge to revisionary order by CIT as erroneous on facts and law - Verification of genuineness of shareholding and nature of loss declared - Fair opportunity of being heard to the assessee - CIT's authority to set aside assessment order under section 263 of the IT Act - Assessment of speculative or business loss on sale of shares - Compliance with legal requirements in assessment proceedings Analysis: The appeal before the Appellate Tribunal concerns the challenge by the assessee against the revisionary order issued by the CIT, alleging it to be erroneous on facts and in law. The CIT found discrepancies in the assessment records related to the genuineness of shareholding and the nature of the loss declared by the assessee. The CIT directed the Assessing Officer to conduct proper inquiries regarding the shareholders' genuineness and the classification of the loss as either business or speculative. The assessee contended that the CIT's order under section 263 of the IT Act lacked material support and was based on suspicion and surmise, without affording a fair opportunity of being heard. The assessee argued that the CIT's conclusions were unfounded and failed to consider the evidence provided during the assessment proceedings. The assessee further raised concerns regarding the CIT's failure to specify how the Assessing Officer's order was prejudicial to the Revenue, a crucial requirement under section 263. The assessee presented detailed evidence, including records of shareholders, share transactions, and market quotations, to support the genuineness of the shareholding and the business nature of the transactions. The assessee emphasized the importance of providing a proper opportunity for verification and the need for specific objections raised by the CIT to be included in the notice issued to the assessee. In analyzing the case, the Tribunal referred to relevant case laws cited by the assessee, highlighting the significance of the term "prejudicial to the interests of the Revenue" in the context of section 263. The Tribunal concluded that the CIT's order lacked substantial grounds and failed to meet the legal standards required for setting aside the assessment order. The Tribunal, after careful consideration of the arguments presented, upheld the assessee's appeal, thereby quashing the order issued by the CIT. Despite acknowledging the efforts of the Revenue's representative, the Tribunal found in favor of the assessee based on the lack of merit in the CIT's decision and the absence of concrete evidence supporting the revisionary order. In conclusion, the Appellate Tribunal ruled in favor of the assessee, allowing the appeal and setting aside the revisionary order issued by the CIT. The decision was based on the insufficiency of grounds provided by the CIT, the failure to establish prejudice to the Revenue, and the lack of proper opportunity for the assessee to present its case effectively during the assessment proceedings.
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