Tribunal reverses PCIT's jurisdiction decision, restores AO's assessment.

The tribunal allowed the appeal, reversing the PCIT-12, Kolkata's revision order due to lack of territorial jurisdiction and on merits. The AO's regular assessment was restored, emphasizing that necessary enquiries were conducted regarding long-term capital gains, deemed genuine. The tribunal highlighted that revision jurisdiction can only be exercised if the order is both erroneous and prejudicial to revenue, which was not the case here. The tribunal referenced previous decisions supporting the AO's actions and concluded that the PCIT's revision was not sustainable.

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Issues Involved:
1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961.
2. Validity and correctness of the PCIT's revision order under Section 263.
3. Examination of the genuineness of long-term capital gains (LTCG) claimed as exempt under Section 10(38) of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961:

The appellant challenged the jurisdiction of the PCIT-12, Kolkata, arguing that the PCIT lacked territorial jurisdiction at the time of invoking Section 263 proceedings. The appellant submitted that the assessment jurisdiction was transferred multiple times, ultimately placing it under the DCIT, Central Circle-2(2), Kolkata, which falls outside the territorial supervision of PCIT-12, Kolkata. The tribunal noted that the PCIT-12, Kolkata did not have the territorial jurisdiction to invoke Section 263 revision jurisdiction in the assessee's case. The tribunal cited the hon'ble jurisdictional high court's decision in Ramshila Enterprises Pvt. Ltd. vs. PCIT, holding similar revision orders by a non-jurisdiction Commissioner as a nullity. Consequently, the tribunal reversed the PCIT-12, Kolkata's revision order for lack of territorial jurisdiction.

2. Validity and correctness of the PCIT's revision order under Section 263:

The PCIT's revision order termed the regular assessment as erroneous and prejudicial to the interest of the revenue due to the alleged non-enquiry into the issue of long-term capital gains. The tribunal examined whether the PCIT rightly exercised his revision jurisdiction under Section 263. It was noted that the Assessing Officer (AO) had issued a Section 142(1) notice and conducted scrutiny proceedings, during which the assessee provided all necessary details regarding the long-term capital gains. The tribunal emphasized that an order can be revised under Section 263 only if it is both erroneous and prejudicial to the interests of the revenue. The tribunal referred to several judicial precedents, including the hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd., which established that an order is not erroneous if the AO adopts one of the permissible views in law. The tribunal concluded that the PCIT's revision jurisdiction was not sustainable as the AO had conducted necessary enquiries and accepted the assessee's claim based on relevant evidence.

3. Examination of the genuineness of long-term capital gains (LTCG) claimed as exempt under Section 10(38) of the Act:

On merits, the tribunal found no reason to accept the Revenue's stand that the AO failed to carry out necessary enquiries regarding the genuineness of the assessee's LTCG. The tribunal noted that the assessee had filed all necessary details during scrutiny, and the AO had issued specific questionnaires which were satisfactorily answered by the assessee. The tribunal referred to its co-ordinate bench's decision in M/s. Gitish Tikmani, HUF & Ors. vs. ITO, which reversed similar revision directions and restored the AO's action accepting the corresponding LTCG as genuine. The tribunal reiterated that the PCIT's exercise of revision jurisdiction based on suspicious circumstances without concrete evidence was not sustainable. The tribunal held that the AO had rightly treated the assessee's LTCG as genuine, supported by all relevant evidence. Consequently, the tribunal reversed the PCIT's revision order on merits and restored the AO's regular assessment.

Conclusion:

The tribunal allowed the assessee's appeal, reversing the PCIT-12, Kolkata's revision order for lack of territorial jurisdiction and on merits. The AO's regular assessment dated 11.01.2016 was restored. The tribunal also noted the extraordinary situation due to the COVID-19 pandemic and excluded the period of lockdown from the ninety days' pronouncement period.

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