TaxTMI 
TaxTMI 
2026 (9) TMI 1631
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Ld. assessing officer has failed to conduct examination/verification/enquiries. 3. The Ld. PCIT has wrongly invoked explanation -2 to section 263 of the I.T. Act, 1961. 4. That, the Revision u/s 263 of the I.T. Act, 1961 is made on the basis of incorrect legal provisions and therefore the order u/s 263 of the Act is bad-in-law. 5. The Appellant craves leave to add, amend, alter or withdraw any ground of appeals". 2. The assessee has raised the following additional legal/technical ground, which reads as follows: "That, the notice issued u/s 148 of the I.T. Act, 1961 is beyond surviving period as per Hon'ble Supreme Court decision in the case of UOI v. Rajeev Bansal (167 taxmann.com 70)". 3. Learned Counsel for the assessee, submitted that above legal ground goes to the root of the matter and it is a legal ground as to the validity of assessment u/s 263 of the I.T. Act, 1961.The legal ground can be taken up at any stage, therefore, above said legal ground may be admitted in the interest of justice. 4. On the other hand, learned DR for the revenue, opposed the prayer of the assessee to admit the above legal ground and stated that asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... basis of findings of the investigation wing which includes inquiries with regard to financial of the assessee, transaction pattern, price movement of the scrip in the stock market and consequently the statement of the key persons of the management of the said company. The penny scrips are used to bring unaccounted money to the books of the beneficiary by utilizing loophole of section 10(38) of the Act. Booking of long-term capital gain in the return of income as well as in financials of the beneficiary is a part of such tax evasion mechanism. The Assessing Officer has failed to take due cognizance of the fact well known and apparent on record culled out from the investigation carried out by the investigation wing. In view of the above, addition of Rs. 73,44,051/- should have been made to the total income of the assessee u/s 68 of the Act, r.w.s. 115BBE of the Act, however the assessing officer failed to do so. In view of the above, the assessment order passed by the assessing officer u/s 147 r.w.s. 144B of the Act dated 29.05.2023 was prima facie considered both erroneous as also prejudicial to the interest of the revenue. Hence, revision proceedings u/s 263 of the Act are being i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue since the view is duly taken after thorough verification of facts of the case and legal provisions of the Act and various judgements of the Jurisdictional High Court. The assessee contended that twin conditions prescribed in section 263 of the Act are not satisfied in his case. The assessee has provided all the documents called for by the assessing officer and the assessing officer has verified all the details, therefor, such order cannot be said to be erroneous and prejudicial to interest of revenue. The assessee argued that an order passed after due application of mind by the assessing officer and after making detailed enquiry cannot be said to be erroneous and prejudicial to interest of revenue. The assessee has also relied on various judicial pronouncements to buttress his argument. 10. The assessee has also argued before learned PCIT that he has purchased 45,000 shares of Universal Credit and Securities Ltd in FY 2013-14 which are eventually subdivided into 2, that is, 90,000 shares at the end of the year. Out of such 90,000 shares, 70,000 shares were sold during the AY 2015-16 and balance shares were sold during the year under consideration through registered SEBI broke....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the assessee, argued on the legal ground, stating that the notice issued u/s 148 of the I.T. Act, 1961 by the assessing officer, is beyond surviving period, as per Hon'ble Supreme Court decision in the case of UOI v. Rajeev Bansal (167 taxmann.com 70), therefore, reassessment order itself should be quashed, as it is illegal. On such illegal order of assessing officer, the ld.PCIT does not have revisionary power under section 263 of the Act. Since the reassessment proceedings itself is bad in law, therefore, consequential order passed by ld.PCIT under section 263 of the Act, is also bad in law, hence, order passed by the ld. PCIT should be quashed. 15. On merit, learned Counsel for the assessee submitted that during the assessment proceedings, the assessing officer has duly called for various details with respect to capital gain on sale of shares. The assessee has duly submitted the documentary evidence in order to substantiate its claim. The assessing officer, after considering the assessee's submissions and all the material available on record, passed an order dated 29/05/2023, which is not erroneous and prejudicial to the interest of the revenue. The ld.Counsel state....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the books of the beneficiary by utilizing loophole of section 10(38) of the Act and the Assessing Officer has failed to examine these aspects, therefore, there is a lack of enquiry on the part of the assessing officer, and hence the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue, therefore learned PCIT has rightly exercised his jurisdiction under section 263 of the Act, therefore, order passed by the ld. PCIT under section 263 of the Act may be upheld. 18. We have carefully considered the facts of the case, the submission of the Learned Counsel for the assessee and ld DR for the Revenue and evidences on record. So far, assessee's legal ground is concerned, we find that the notice u/s 148 of the Act has been issued on 25/06/2021. The notice is enclosed at page no. 8 of the paper book. Thereafter, as per the Supreme Court Directions, the notice u/s 148A(b) of the Act, was issued on 20.05.2022 which is enclosed at page no.9 -10 of the paper book. The order/notice u/s 148A(d) of the Act has been passed on 29/07/2022, and the final notice u/s 148 of the Act has been issued on 29/07/2022, the said notice is enclosed at page no. 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to issue the reassessment notices u/s148 of the new regime. The year under consideration is assessment year (AY) 2016-17, the period of three years from the end of the assessment year will be over prior to 20/03/2020 and the period of six years will be over between 20/03/2020 and 30/06/2021. Therefore, the notices issued u/s 148 of the Act under old regime between 01/04/2021 and 30/06/2021, as per TOLA, will be a valid notice, if the notice u/s 148 of the Act under new regime is issued within the period of 'surviving time' as per the directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). The concept of "surviving time" can be explained below, by way of tabular format: The Hon'ble Gujarat High Court has quashed the reopening in following case under surviving period: Judgment Date of notice u/s 148 under TOLA Date of order under section 148A(d) and notice under section 148 Date of 148 notice under new regime Krishna Naitik Patel POA Holder of Ishwerbhai Keshavbhai Patel 175 taxmann.com814(Gujarat) 30.06.2021 21.07.2022 21.07.2022 Saroj Predhiman Kaw 176 taxmann.com76(Gujarat) 30.06.2021 15.07.2022 15.07.2022 Tyr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce of a valid and subsisting order is thus a sine qua non for the exercise of that power. If the order sought to be revised is itself a nullity, then invocation of section 263 of the Act is not justified. In the present case, the assessment order dated 29/05/2023 passed u/s 147 r.w.s. 144B of the Act is premised upon the notice u/s 148 of the Act dated 29/07/2022. The notice has been issued beyond the surviving time limit available with the assessing officer and is therefore barred by limitation u/s 149 of the Act. We note that only 5 days of the surviving time limit was available with the assessing officer as on the date of the deemed show cause notice. The notice u/s 148 of the Act could have been issued on or before 09/06/2022. The notice has been issued on 29/07/2022, the same is barred by limitation and therefore wholly without jurisdiction. Therefore, the assessment order dated 29/05/2023 passed u/s 147 r.w.s. 144B of the Act is non-est and void ab initio. Since there is no valid order in the eyes of law, the Ld. PCIT could not have assumed jurisdiction u/s 263 of the Act to revise the same. Therefore, the order u/s 263 of the Act is liable to be quashed. For this, reliance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee's submissions and all the material available on record, passed an order dated 29/05/2023. According to Section 263 of the Act, an order can only be revised if the said order is erroneous and the error has resulted in prejudice to the interests of the revenue [Tara Devi 88 ITR 323 (SC).]. It can be seen from the records that the assessee has made detailed submissions during the course of assessment proceedings. The assessee has also provided all the documents and details as and when they have been called to prove the contentions and therefore while passing the order u/s 143(3), the assessing officer has verified each and every aspect in great detail, therefore, such an order cannot be considered as erroneous and prejudicial to the interest of the revenue and therefore such order cannot be revised u/s 263 of the Act and for this reliance is placed on the following judgements: (i) Malabar Industrial Co. Ltd. (243 ITR 83) (SC) It has been held by the apex court that as per section 263 there must be twin condition to be satisfied for application of section 263 i.e. the order should be erroneous as well as prejudicial to the interest of revenue, if the Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fit and loss statement also duly reflects profit on sale of shares of Rs. 73,44,051/- The same is claimed as exempt u/s 10(38) of the Act. The copy of Audit Report was submitted during the assessment proceedings. Since the shares sold are capital asset and the capital asset is a long term capital asset on which STT is duly paid, the gain on such shares is duly eligible for long term capital gain exemption u/s 10(38) of the Act.As per mechanism and working of stock exchange either seller places bid for sale of shares giving number of shares to be sold and the rate at which the shares are to be sold. Purchasers also places bid for purchase of shares giving number of shares to be purchased and the rate at which he is ready to purchase the shares. When the prices of the seller and the purchaser match the transaction is confirmed by the system of the stock exchange the Purchaser and seller do not know each other. 25. After completion of the transaction as stated above, the purchase price is debited to the share broker of the purchaser which in turn recovers the same from the purchaser after adding the STT and other charges. Likewise, sale consideration of shares is credited to the ac....