Revisionary jurisdiction under section 263 invalidated by ITAT for thorough examination by AO.

Smt. Nisha Shantaram Pokle Versus Pr. CIT-8, Mumbai

Smt. Nisha Shantaram Pokle Versus Pr. CIT-8, Mumbai - TMI Issues:
1. Revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Act.

Analysis:
The appeal was filed by the assessee against the order of the Principal Commissioner of Income Tax (PCIT) for the assessment year 2015-16. The only issue raised in the grounds of appeal was regarding the revisionary jurisdiction exercised by the Ld. PCIT under section 263 of the Income Tax Act. The assessee had disclosed the sale consideration of shares and commission paid for accommodation entries in the return of income. However, the Ld. PCIT noticed that the unsold shares of M/s. Greencrast Financial Services Ltd. were not examined by the Assessing Officer (AO) during the assessment proceedings. The Ld. PCIT issued a notice under section 263, proposing to revise the assessment order. The assessee argued that the issue had already been discussed in detail by the AO and the remaining unsold shares were duly disclosed in the balance sheet.

The Ld. PCIT revised the assessment order, directing the AO to re-examine the issue. The assessee contended that the jurisdiction under section 263 was invalidly exercised as the AO had already considered the issue and taken a possible view. The Ld. PCIT's order was challenged on the grounds that the assessment order was not erroneous and prejudicial to the revenue. The Ld. PCIT, however, argued that revising the assessment would not cause prejudice to the assessee as they would have the opportunity to explain before the AO again.

Upon hearing both parties and examining the records, the ITAT found that the AO had thoroughly examined the sale and purchase of shares in the assessment proceedings. The ITAT noted that the Ld. PCIT invoked revisionary jurisdiction based on the unsold shares, which had already been addressed by the AO in detail. The ITAT concluded that the Ld. PCIT failed to demonstrate the error in the AO's order or the prejudice caused to the revenue. The ITAT held that the revisionary jurisdiction exercised by the Ld. PCIT was invalid, and subsequently, the Ld. PCIT's order was quashed. Consequently, the appeal of the assessee was allowed.

This detailed analysis of the judgment highlights the issues related to the revisionary jurisdiction exercised under section 263 of the Act and the arguments presented by both parties, leading to the decision by the ITAT to quash the Ld. PCIT's order.