Order under section 263 set aside, assessee's appeal allowed. Twin conditions not met.

The Tribunal set aside the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263, allowing the appeal of the assessee. The Tribunal found that the PCIT wrongly assumed revisional jurisdiction as the twin conditions required for invoking section 263 were not satisfied. The Assessing Officer had taken a plausible view after examining the records, which was not deemed erroneous by the Tribunal. The decision emphasized the necessity of meeting statutory conditions before revising an assessment under section 263 of the Income Tax Act, 1961.

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Issues:
Reopening of assessment under section 263 of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Act for the assessment year 2013-14. The main contention was regarding the addition made by the Assessing Officer on account of long term capital gain from the sale of penny stock. The PCIT believed that the entire sale proceeds should be considered, not just the capital gain. The Assessing Officer had issued a notice stating that the claim of exemption under section 10(38) was prima facie bogus, leading to the addition of the capital gain. The appellant argued that once the issue was raised and denied by the Assessing Officer, the assessment could not be revised under section 263. The appellant relied on a similar case to support this argument. The Tribunal found that the Assessing Officer had sought specific information on the share transactions, and after examining the documents, accepted the explanation provided by the assessee. The Tribunal concluded that the twin conditions required for invoking section 263 were not met, and hence, the PCIT wrongly assumed revisional jurisdiction. Therefore, the revision of assessment under section 263 was deemed unsustainable in the eyes of the law, leading to the appeal of the assessee being allowed.

In conclusion, the Tribunal set aside the order passed by the PCIT under section 263 and allowed the appeal of the assessee. The decision was based on the lack of satisfaction of the twin conditions required for invoking section 263, as the Assessing Officer had taken a plausible view after examining the records, which was not deemed erroneous by the Tribunal. The judgment highlighted the importance of meeting the statutory conditions before revising an assessment under section 263 of the Income Tax Act, 1961.

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