TaxTMI 
TaxTMI 
2026 (2) TMI 308
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.... 1961 ("the Act") and passing the impugned order dated 01/02/2025, which is bad in law and liable to be quashed for various reasons including that the very assessment which has been revised is bad in law. 2. On the facts and circumstances of the case and in law, the assessment order passed by the ("Ld. AO") under section 147 read with section 144B of the Act dated 28/02/2023 is erroneous and prejudicial to the interests of the revenue, without satisfying any of the mandatory conditions laid down under section 263 of the Act. 3. Without prejudice to the foregoing and to the submissions made in appeal against assessment before Ld CIT(A), and on the facts and circumstances of the case and in law, the Ld. PCIT has failed to appreciate that the assessment order dated 28/02/2023 was passed after due consideration of all material facts, submissions, and evidence furnished by the Appellant, and Ld PCIT himself accepts the same hence, there was no error in the said order within the meaning of section 263 of the Act. 4. Without prejudice to the foregoing and on the facts and circumstances of the case and in law has relied on the provisions of 68 as applicable to th....
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.... under section 263, is bad in law and contrary to the facts and circumstances of the case. 3. In this case, as per facts narrated in the impugned order the return of income was filed by the assessee declaring total income Rs. 2,47,64,810/- for the relevant year. The assessee is an Individual and during the year derived income from Salary, House Property, Capital Gain and Income from Other sources. On perusal of the assessment records, it was observed by the ld.PCIT that the case was selected under CASS under LT&ST Bogus. Further, as per the information available, it was observed that during the year, the assessee had received bogus Long Term Capital Gain on sale of bogus Penny scrip i.e. M/s. Florence Investech Ltd.(FIL),a Kolkata based company and the case was re-opened and the assessment was finalized under section 147 r.w.s. 144B of the Actdetermining assessed income at Rs. 2,72,04,582/- after addition of Rs. 24,39,772/-, being bogus LTCG claimed u/s. 10(38) of Act. Scrutiny of assessment details revealed that during the year, the income was assessed at Rs. 2,72,04,582/- on which tax was required to be levied as per the applicable rates. However, it was observed that there wa....
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....e and registering the proceeds arising out of the sale of shares into the books as Long Term Capital Gain. This issue had been comprehensively discussed by the AO.Hence considering the facts and circumstance of the case, the assessment order passed u/s. 147 r.w.s. 144B was set aside on the above issues and was erroneous and prejudicial to the interest of revenue. The AO was directed to pass fresh order in accordance with the law and after making necessary enquiries and providing sufficient opportunity to the assessee in accordance with the principles of natural justice. 4. Before us, the ld.AR has made a detailed submission in this regard. It is submitted that the assessee was a regular investor in shares for over 20 years. Notice u/s 148A(b) was issued and the main contention was that as per the report of the Investigation wing, FIL was found to have an unusual trading pattern. It was alleged that it was dealing in penny stocks/scrip shares. The assessee in the year had sold shares in the said company and claimed long term capital gains. As per the information, it was alleged that he had generated fictitious profits in equity/derivative trading. In response to show cause notice....
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....ax. The assessee was eligible to claim exemption under section 10(38) of the Act for long-term capital gains. Therefore, in view of the above Hon'ble Supreme Court's decision, even the disallowance of exemption u/s 10(38) was bad in law, and there was no question of ld.PCIT's show-cause notice about the applicability of Section 68 of the Act. Reliance was also placed on the decision of the Hon'ble High Court in Principal Commissioner of Income Tax v. Indravadan Jain (HUF) (Order dated 12.07.2023, ITXA No. 454 of 2018), wherein it was held that when shares are purchased and sold through the recognized stock exchange, payments are routed through banking channels, delivery is reflected in the demat account, and contract notes are duly issued, the resultant capital gains could not be treated as unexplained cash credits under section 68 of the Act. 4.2 It is further argued that the very foundation on which the ld. PCIT invoked section 263 did not exist. The cause of action assumed by him thus fails at the inception, rendering the revisionary proceedings void ab initio. Proceedings u/s 263 are bad in law as he erred in invoking jurisdiction as the revision was based on a mere change o....
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....te a mere change of opinion. Moreover, with taking due note of the fact that quantum appeal was already pending on the impugned issue, he was wrong in assuming jurisdiction on the same issue which is not permitted by the provisions of section 263 of the Act. There being adequate enquiry by the AO, it cannot be said that the assessment order was passed without making any enquiry and therefore Explanation 2 to the section was clearly not applicable to the facts of the case. Moreover, as rightly pointed out by the ld.AR that the coordinate bench in another case involving the same scrip had deleted similar addition in the case of Kishore Jethalal Morabiain ITA no. 582/Mum/2025 dated 14.07.2025.Therefore, even on this count, it could well be concluded that the issue in hand is a debatable one on which different views could be taken and on which section 263 provisions cannot be invoked otherwise also. 5.1 The Hon'ble Supreme Court in the case of Malabar Industries Ltd. v. CIT (supra) have held that twin conditions needs to be satisfied before exercising revisionary jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erron....
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....e case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo-motu revision because the first requirement, viz., that the order is erroneous, is absent." (Emphasis supplied) 5.3 Apart from the above principles, we deem it appropriate to make reference to the dec....