TaxTMI 
TaxTMI 
2012 (4) TMI 91
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....n were purchased on April 21, 2000, for Rs.19,536 and sold on May 2, 2001, for Rs. 6,36,640. The Commissioner of Income-tax exercised suo motu revisional jurisdiction under section 263 of the Act, on the ground that while accepting the genuineness of share transactions, the Assessing Officer failed to make such enquiry as was usually expected in a fact situation where the assessee was neither habitual operator of share market nor the shares in question were shares of any well known company ; the prices had jumped from Rs. 6 per share to Rs. 200 per share within a span of 13 months. In such a situation, the Assessing Officer could make necessary enquiry to ascertain whether commercial activities of the company justified such a jump of prices....
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....t jurisdiction under section 263 was validly exercised when the order revised was erroneous and prejudicial to the interests of the Revenue. The assessee submitted that revisional jurisdiction could be exercised only for jurisdictional error as held in Rajen- dra Singh v. Superintendent of Taxes [1990] 79 STC 10 (Gauhati). The Bench, hearing the appeal, was of the view that the view taken in Daga Entrade was in conflict with the earlier judgment of this court in Rajendra Singh. Accordingly, the matter was directed to be placed before a Larger Bench. The Larger Bench, vide judgment dated February 7, 2012 (since reported in CIT v. Jawahar Bhattacharjee [2012] 341 ITR 434 (Gauhati) [FB]), reiterated the view taken in Daga Entrade explaining th....
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....it can certainly be exercised. Present case clearly falls in second category. Whether or not exercise of revisional jurisdiction was called for is a ques- tion of law, on a given fact situation. Whether, in the facts of the present case, exercise of jurisdiction was permissible is the substantial question of law for our consideration, before proceeding further, we may refer to the findings of the three authorities. The same are : Assessing Officer "The assessee purchased 320 shares of Goyal Achal Sampatti Vikas and Niyojan Nigam Limited from one Janaki Devi, through Rahendra Nahata, Member, Gauhati Stock Exchange Limited on April 21, 2000, for Rs. 19,536. The same were sold by the assessee on May 2, 2001, through Pannalal Bh....
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....ould have obtained the price quotations of the shares on a few dates during the check-period to examine the rea- sonableness of the jump. Since the shares were purchased in cash, it was necessary to obtain the details of the immediately previous holder and find out whether she was a genuinely existing person. The date-wise cash-flow statement of the assessee in the year of acqui- sition should also have been scrutinized. It was necessary to examine the books of Shri Rajendra Nahata to verify the cash transactions. In fact, both Smt. Janki Devi and Shri Rajendra Nahata should have been personally examined by the Assessing Officer The Assessing Officer should have also examined Shri Pannalal Bhansali through whom the shares were sold. His boo....
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....t of deduction under section 54F by perusing the documents like copy of agreement for flat, evidence of payment to M/s. Legand Apartments, proof of payment for material purchased, etc. It is, there- fore, evident that the Assessing Officer while completing the assess- ment under section 143(3) has thoroughly examined the share transactions of the assessee and the claim for deduction under section 54F which are sought to be revised by the Commissioner of Income- tax by invoking the provisions of section 263 which is, in our con- sidered opinion, not permissible under the Act as for invoking such revisionery power there must exist two circumstances, i.e., (1) the order must be erroneous, and (2) because of being an erroneous order the order m....