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PCIT cannot invoke section 263 when AO takes plausible view after proper inquiry and examination ITAT Kolkata allowed the assessee's appeal and quashed the PCIT's order under section 263. The tribunal held that the PCIT failed to establish that the ...
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PCIT cannot invoke section 263 when AO takes plausible view after proper inquiry and examination
ITAT Kolkata allowed the assessee's appeal and quashed the PCIT's order under section 263. The tribunal held that the PCIT failed to establish that the AO's order was erroneous and prejudicial to revenue interest. The AO had examined the issues regarding speculative business treatment and carrying forward business losses, called for details from the assessee, and taken a plausible view after proper inquiry. The tribunal ruled that when the AO takes a plausible view, the PCIT cannot invoke section 263 merely because they disagree with the assessment approach.
Issues involved: Appeal against order u/s 263 of the Income Tax Act, 1961 for assessment year 2016-17.
Summary: The appellant challenged the revisionary jurisdiction exercised u/s 263 of the Act by the Principal Commissioner of Income Tax-2, Kolkata, setting aside the assessment framed u/s 143(3) of the Act. The issue revolved around the treatment of speculative business and the validity of carrying forward business losses. The Principal Commissioner observed that the appellant's business of purchase and sale of shares should be treated as speculative, leading to the order being deemed erroneous and prejudicial to revenue. A show cause notice was issued, and ultimately, the order was set aside for fresh assessment. The appellant contended that the assessment was not erroneous and not against the revenue's interest, citing examination of evidence and plausible views taken by the Assessing Officer (AO). The appellant argued that the Principal Commissioner failed to conduct a proper enquiry and provide clear findings on the alleged errors in the assessment. The appellant relied on legal precedents to support their position. The Tribunal found that the AO had examined the issues thoroughly and taken a plausible view, which was not against the facts or provisions of the Act. Therefore, the Tribunal concluded that the Principal Commissioner's order u/s 263 was not justified, quashing the same and allowing the appeal of the assessee.
The Tribunal's decision was pronounced on 30th November, 2023.
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