Tribunal cancels Commissioner's order under Section 263 for 2014-15 assessment, reinstates Assessing Officer's decision.

The Tribunal set aside and canceled the Principal Commissioner of Income Tax's order under Section 263, restoring the Assessing Officer's assessment order for the assessment year 2014-15. The Tribunal found that the Principal Commissioner's dissatisfaction with the Assessing Officer's inquiry was not justified, as the Assessing Officer had conducted specific inquiries and collected necessary evidence. The Tribunal also noted that the Principal Commissioner's concerns regarding the increase in the building account were based on incorrect information and lacked proper verification.

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Issues Involved:
1. Whether the Assessing Officer (AO) failed to make proper enquiries and verify details, particularly regarding suspicious Long Term Capital Gain (LTCG) on shares.
2. Whether the Pr.CIT was justified in setting aside the assessment order under Section 263 due to alleged inadequacy of inquiry by the AO.
3. Whether the Pr.CIT's action regarding the increase in the building account was justified.

Summary:

Issue 1: Proper Enquiries and Verification by AO
The assessee filed a return of income for AY 2014-15, which was assessed at Rs. 3,82,800/-. The Pr.CIT issued a show cause notice under Section 263, alleging that the AO did not make proper enquiries or verify details, particularly regarding suspicious Long Term Capital Gain (LTCG) on shares. The assessee contended that all required documents, including proof of acquisition of shares, share certificates, dematerialization request form, contract notes, and demat account statements, were submitted to the AO. The AO, after examining these documents, found no reason for further inquiry. The assessee argued that the Pr.CIT's suspicion of penny stock transactions was unfounded and that the AO's assessment was reasonable and based on available facts.

Issue 2: Justification of Pr.CIT's Action under Section 263
The Pr.CIT set aside the AO's assessment order, directing a redo of the assessment. The assessee appealed, arguing that the AO had taken a plausible view based on facts and that the Pr.CIT's action was based on a generic observation without pointing out substantive errors. The Tribunal noted that the Pr.CIT's dissatisfaction with the AO's inquiry did not justify the invocation of Section 263. The Tribunal emphasized that the AO had conducted specific inquiries and collected requisite evidence, and the Pr.CIT had not demonstrated any perceptible error in the AO's action. The Tribunal concluded that the Pr.CIT's action was not justified, as it was based on mere dissatisfaction with the extent of the AO's inquiry.

Issue 3: Increase in Building Account
The Pr.CIT also raised concerns about the increase in the building account. The assessee argued that no opportunity was given to address this issue during the revisional proceedings and that all material particulars were duly provided to the AO. The Tribunal found that the Pr.CIT had acted casually, adopting an incorrect figure for the increase in the building account. The Tribunal held that the Pr.CIT's action was unjustifiable without a proper reference to the circumstances warranting independent verification.

Conclusion:
The Tribunal set aside and canceled the Pr.CIT's order under Section 263, restoring the AO's assessment order. The appeal of the assessee was allowed, and the Tribunal emphasized that the Pr.CIT's dissatisfaction with the AO's inquiry did not justify revisional action under Section 263. The Tribunal highlighted that the AO had conducted a reasonable inquiry and that the Pr.CIT had not demonstrated any substantive error in the AO's action.

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