PCIT's revision order under section 263 quashed for being impermissible change of opinion

ITAT Jodhpur quashed PCIT's revision order u/s 263. The assessee's case was reopened based on third-party information, and AO completed assessment after recording reasons. PCIT invoked section 263 on the same issues, directing further verification of share transactions and broker ledger accounts. ITAT held that AO had already applied his mind, examined assessee's explanations with supporting evidence, and completed assessment. PCIT failed to demonstrate how the order was erroneous and prejudicial to revenue, merely seeking to conduct inquiries that could have been done during original assessment. The revision order was deemed invalid as it constituted impermissible change of opinion rather than correction of legal error.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legality of the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act.
3. Examination of whether the assessment order was erroneous and prejudicial to the interests of the revenue.

Summary:

Condonation of Delay:
The appeal filed by the assessee was delayed by five days. The delay was due to the assessee's mother suffering from COVID-19, which prevented timely filing. The Tribunal condoned the delay, citing sufficient cause as per the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC).

Legality of the PCIT's Order:
The assessee challenged the order of the PCIT, arguing that it was against the law and judicial decorum. The assessee contended that the PCIT did not conduct any independent inquiry and failed to follow binding precedents. The Tribunal noted that the PCIT had issued a show cause notice under section 263 of the IT Act, 1961, and, after considering the assessee's submissions, found the assessment order to be erroneous and prejudicial to the interests of the revenue.

Assessment Order Examination:
The PCIT observed that the Assessing Officer (AO) did not properly verify transactions related to penny stocks and other sales transactions carried out using the assessee's PAN. The PCIT directed the AO to conduct a thorough examination of these transactions. The Tribunal reviewed the records and found that the AO had indeed raised queries and verified the details during the assessment proceedings. The Tribunal concluded that the AO had applied his mind and conducted proper inquiries, making the order neither erroneous nor prejudicial to the interests of the revenue.

Conclusion:
The Tribunal quashed the order of the PCIT, holding that the invocation of section 263 was not justified. The Tribunal emphasized that the AO had already examined the issues raised by the PCIT and that the PCIT's direction for further inquiry amounted to a change of opinion, which is not permissible under the law.

Result:
The appeal of the assessee was allowed, and the order of the PCIT was quashed.

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