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2020 (10) TMI 660 - AT - Income TaxRevision u/s 263 - assessee has made declaration of Capital Gain only in IDS 2016 - LTCG/STCG arising from sale of equity shares - HELD THAT - AO has issued a questionnaire wherein specific information was sought on transaction of equity shares and working of short term capital gain/long term capital gain. The assessee furnished a detailed reply to the notice issued under section 142(1) of the Act, wherein the assessee while replying to the query on transaction of shares, informed that a declaration under IDS 2016 has been made in respect of long term capital gain arising on sale of shares to GCM Securities Ltd. AO after examining the documents accepted the same and made no addition. Merely for the reason that the Assessing Officer has taken a plausible view after examining the records that is not acceptable to the PCIT, would not make the assessment order erroneous. In the present case twin conditions set out in section 263 are not satisfied and hence, the PCIT wrongly assumed revisional jurisdiction. - Decided in favour of assessee.
Issues: Assessment under section 263 of the Income Tax Act based on the declaration under the Income Declaration Scheme 2016, validity of invoking revisional jurisdiction, erroneous assessment by the Assessing Officer, prejudicial to the interests of the revenue, genuineness of long term capital gains from sale of shares, validity of exemption under section 10(38) of the Act, scrutiny of purchase and sale transactions of shares, invoking revisional jurisdiction to tax the difference between gross sale price and declared long term capital gains, twin conditions for invoking section 263.
Analysis: The judgment by the Appellate Tribunal ITAT Mumbai involved an appeal against the order of the Principal Commissioner of Income Tax under section 263 of the Income Tax Act, 1961. The case revolved around the assessment year 2015-16 where the assessee declared long term capital gains from the sale of shares under the Income Declaration Scheme 2016. The Principal Commissioner invoked revisional jurisdiction based on the declaration made under IDS 2016, questioning the gross sale price of the shares and seeking to tax the difference between the declared gains and the sale price. The Department contended that the transaction involved penny stock, warranting addition of entire sale proceeds to the income. Upon examination, the Appellate Tribunal found that the assessee had substantiated the purchase of shares through banking transactions, supported by documents like bank statements, share application forms, and transaction statements. The Tribunal disagreed with the Principal Commissioner's view, emphasizing the genuineness of the purchase and sale transactions. It highlighted that the Assessing Officer had sought specific information on the shares transaction, and after scrutiny, accepted the details provided by the assessee without making any additions. The Tribunal reiterated the twin conditions necessary to invoke section 263: the order must be erroneous and prejudicial to the revenue's interests. It concluded that the Assessing Officer's assessment, based on the information provided and accepted after examination, did not meet these conditions. Therefore, the Principal Commissioner wrongly assumed revisional jurisdiction. Consequently, the Tribunal quashed the impugned order and allowed the appeal of the assessee, finding merit in the assessee's arguments and supporting documents. In the final decision, the Appellate Tribunal pronounced that the appeal of the assessee is allowed, thereby setting aside the order of the Principal Commissioner and ruling in favor of the assessee based on the genuine nature of the transactions and the lack of grounds to invoke section 263 in this case.
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