2022 (9) TMI 759 - AT - Income Tax

Tribunal upholds Income Tax revision, emphasizing thorough examination of capital gains claims.

Sidharth Ratanlal Bafna Versus ACIT, Central Circle-2, Nashik.

Sidharth Ratanlal Bafna Versus ACIT, Central Circle-2, Nashik. - TMI Issues involved:1. Revisional jurisdiction u/s 263 of the Income Tax Act, 19612. Examination of claim for exemption of bogus capital gains3. Assessment order passed after search and seizure actionIssue 1: Revisional jurisdiction u/s 263 of the Income Tax Act, 1961The appellant challenged the validity of the revision order passed under section 263, arguing that the Principal Commissioner of Income Tax (PCIT) lacked jurisdiction to revise the assessment order. The appellant contended that the PCIT had no authority to exercise revisional power when the Assessing Officer had already examined the issue after obtaining approval from the Joint/Additional Commissioner of Income Tax. However, the PCIT found that the Assessing Officer had not examined the claim for exemption of bogus capital gains from the penny stock script of M/s. S.V. Electricals Ltd. The PCIT issued a show-cause notice and ultimately set aside the assessment order for fresh assessment. The appellant disputed this decision, asserting that no incriminating material was found during the search and seizure action related to the alleged share transaction. The PCIT rejected these contentions, leading to the appeal.Issue 2: Examination of claim for exemption of bogus capital gainsThe PCIT determined that the assessment order was erroneous and prejudicial to the revenue's interests due to the Assessing Officer's failure to investigate the claim for exemption of bogus capital gains from the penny stock script of M/s. S.V. Electricals Ltd. The appellant argued that since no incriminating material was discovered during the search and seizure action, the Assessing Officer had no jurisdiction to inquire into the genuineness of the transaction. However, the CIT-DR contended that a statement recorded from the appellant during the search and seizure proceedings revealed his involvement in the bogus claim for capital gains exemption. The failure of the Assessing Officer to examine this issue rendered the assessment order erroneous. The Tribunal upheld the PCIT's decision, emphasizing that the Assessing Officer should have investigated the genuineness of the claim for exemption of capital gains, especially in light of information received from the Investigation Wing of the Department.Issue 3: Assessment order passed after search and seizure actionThe Tribunal analyzed the facts of the case and legal precedents regarding the power of revision conferred on the Commissioner of Income Tax under section 263 of the Act. It was established that an assessment order can be revised if it is found to be erroneous and prejudicial to the revenue's interests. The Tribunal noted that the Assessing Officer's failure to inquire into the claim of exemption of capital gains from the purchase and sale of the penny stock script of M/s. S.V. Electricals Ltd. rendered the assessment order erroneous. The Tribunal upheld the PCIT's decision to set aside the assessment order for fresh assessment, concluding that the revisional jurisdiction was validly exercised. Consequently, the appellant's grounds of appeal were dismissed, and the appeal was rejected.This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the Tribunal's decision based on legal principles and factual considerations.