AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (4) TMI 1564
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....e eye of law and facts. 2. On the basis of facts and circumstances of the case, the order passed u/s 263 by learned PCIT setting aside the assessment order passed under section 147 r.w.s 148 of the Act by the Income Tax Officer, National Faceless Assessment Centre ("AO") holding that the same as erroneous and prejudicial to the interest of the revenue, is void-ab-initio. 3. On the facts and circumstances of the case, the revision order passed under section 263 of the Act by the learned PCIT setting aside the assessment order passed by the AO is illegal and invalid as the assessment order is neither 'erroneous' nor 'prejudicial to the interest of the revenue'. 4. On the facts and circumstances of the case, the learned PCIT has erred both on facts and in law in passing the order rejecting the contention of the assessee that the assessment order passed by the AO do not fall within the requirements of Explanation 2 to Section 263 of the Act and hence said order cannot be deemed to be erroneous so far as it is prejudicial to the interest of the revenue. 5. (i) On the facts and circumstances of the case, the learned PCIT has erred both on facts and in law in setti....
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....es as exempt income under s. 10(38) of the Act. The concluded assessment was however, re-opened under s. 148 r.w.s. 147 of the Act on the ground that based on certain information disseminated to the AO by the other wing of the deptt., the assessee has allegedly traded in penny stock and the name of the assessee figures in the beneficiary list of Yamini Investment Company Limited ("YICL") Scrip. The transactions entered into by the assessee were thus perceived to be non-genuine and alleged to facilitate introduction of non-accounted income of the assessee in the form of exempt capital gains in the books of the assessee. Based on such belief entertained, the AO alleged that the chargeable income has escaped assessment while recording reasons under s. 148(2) of the Act. Pursuant to formation of belief towards escapement of income, the AO issued notice under s. 148 of the Act and assumed jurisdiction under s. 147 of the Act to examine the issue. The re-assessment order was consequently framed under s. 147 of the Act vide order dated 30.03.2022 wherein however, the return of income was accepted by the AO without any adjustment. The stand of the assessee on LTCG claimed being exempt from....
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....ning the bonafides of the claim of exempt income and the AO has specifically recorded his affirmative satisfaction to the evidences placed and reasoning offered by the assessee. Hence, in the background of the enquiries made, one cannot say that the AO has not applied his mind and wisdom to the issues in question or has failed to take a benign view in the mater. 8. In the revisional proceedings, the assessee also reiterated that she has initially purchased 4 Lakh shares of Fidelo Power and Infrastructure Ltd. (FPIL) on 20.02.2012 in the FY 2011-12 directly from the company for a total purchase consideration of INR 40 Lakhs. The payment towards such purchases was made through banking channels. The shares were dematerialized and credited to the Demat account of the assessee on 29.03.2012. Later on, 4 Lakh shares held by the assessee were split up into 40 Lakh shares of INR 1/-each. Subsequently, Fidelo Power and Infrastructure Ltd. entered into scheme of arrangement according to which the company was amalgamated with YICL. Consequent to the scheme of arrangement, the assessee was allotted 32 Lakh shares of YICL in exchange of the share of Fidelo Power and Infrastructure Ltd. Subsequ....
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....ssee, Shri Ved Jain, Advocate, assailed the impugned revisional order and submitted at the outset that the necessary background for exercise of revisional powers of Pr.CIT do not exist in the present case. The Ld. Counsel submitted that the return was filed declaring income correctly in accordance with law as incumbent upon the assessee. The return so filed was subsequently re-opened purportedly guided by certain reports received qua the alleged penny stock of YICL. However, after proper enquiry and after proper collation of documentary evidences, the AO found himself satisfied with the bonafides of the transactions resulting in exempt LTCG claimed on sale of shares and thus agreed with the claim of the assessee. 12.1 The Ld. Counsel asserted that in response to specific queries raised in the re-assessment proceedings, the complete facts in relation to income derived from sale of shares and claimed as exempt income under s. 10(38) of the Act was brought to the notice of the AO and therefore, the Revisional Commissioner mis-directed himself in law and on facts in alleging reassessment order to be erroneous on account of inadequacy in enquiry or lack of application of mind on the pa....
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.... to correct each and every type of ordinary mistake. In the circumstances of alleged inadequacy of enquiry, the Pr.CIT is expected to exert himself and make at least some preliminary enquiry himself and come to a definite conclusion instead of flippantly remitting the matter back to AO to start the proceedings afresh casting enormous burden on a taxpayer. 12.5 The Ld. Counsel for the assessee thus submitted that the AO in the instant case has taken a plausible view on the claims made after relevant enquiries and having regard to corroborative evidences and in the absence of any definite material adverse to the assessee, the claim towards LTCG has been rightly accepted. Such re-assessment order passed cannot be made susceptible to the revisional proceedings under s. 263 of the Act by capricious exercise of jurisdiction. 12.6 It was further pointed out that the concluded assessment was itself reopened is founded upon a very vague and non-descript reasons without reference to any actionable or definite material. The reassessment order under revision itself is plagued with incorrigible jurisdictional defects of fundamental nature and the exercise of powers under s. 263 to disturb and....
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.... factual aspects. The action of Pr.CIT is thus justified in terms of Explanation-2 to s. 263 of the Act. A reference was made to the decision of the co-ordinate bench in the case of Zile Singh vs. Pr. CIT ITA no. 6863/Del/2019 order dated 21/08/2020 to lend support the revisional action. The Ld.CIT DR also observed that raising questions in the form of wrongful assumption of jurisdiction under s. 147 of the Act in 263 proceedings is outside the bounds of law and cannot be legally entertained such different proceeding. 14. We have carefully considered the rival submissions on challenge to assumption of revisional jurisdiction and perused the revisional order passed by the Pr.CIT under s. 263 of the Act in this regard. While it is the case of the assessee that revisional jurisdiction exercised by the Pr.CIT is unsustainable in law, the revenue seeks to contend that impugned reassessment order has been passed without proper enquiry and thus such order is of no moment and thus rightly set aside for fresh determination of chargeable income. 15. Supervisory jurisdiction vested under Section 263 of the Act enables the concerned Pr.CIT/CIT to review the records of any proceedings and ord....
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....not apparent in the allotment advice. (ii) During the assessment proceedings vide reply dated 26.03.2022, copy of bank statement from which the amount was paid for allotment of shares in F.Y. 2011-12, was attached as Annexure -2. As per the bank account no.1120000100162383, bank name not mentioned. (iii) In response to notice issued u/s 263, it is stated that payment for purchase of shares was made vide cheque no. 679261 for a sum of Rs. 40,00,000/-. The assessee has again skipped the name of the bank through the payment was made for purchase of shares. Thus it is noted that the assessing officer has accepted the alleged transaction regarding purchase of shares from M/s Fidelo Power and Infrastructure Limited even without bringing on record the name of the bank through which payment was made. The explanation filed by the assessee before the assessing officer regarding purchase of shares has been accepted by the Assessing officer at face value without conducting any enquiry or verification regarding investment made by the assessee for purchase of shares which has subsequently yielded tax exempt income of Rs. 1,64,30,419/-. Therefore as per Explanation-2 to section 263 (1) of t....
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....e tangible material to allege existence of accommodation entry in the form of LTCG to cast aspersions on the credibility of the claim. In the instant case, the AO did conduct enquiry and based on appraisal of documentary evidences such as contract notes, Demat statement, bank payments etc. the AO found the claim of the assessee to be acceptable in the absence of any adverse material. The Pr.CIT in such backdrop could step in under s. 263 only if it is demonstrated that the approach of the AO is perfunctory. Such finding would depend on specific facts emerging from record. In the instant case, purchase/ allotment of shares took place nearly three years prior to the year of sale. The payments were made through banking channel. The company underwent corporate restructuring in the intervening period. The factum of actual payment and investment towards purchase of shares is demonstrable from record and further supportable by corresponding receipts of shares in Demat account. The Pr.CIT has merely alleged inadequacy in enquiry on the basis of absence of the bank name which is also discredited from the facts emerging from record. No third party statement or SEBI report etc. is available t....