ITAT set-aside sec. 263 order as CIT failed to prove that order of AO was erroneous & prejudicial to interest of revenue

Case details: Shringar Marketing (P.) Ltd. v. PCIT - [2021] 128 taxmann.com 199 (Kolkata - Trib.)

Judiciary and Counsel Details

• • ABY T Varkey | Judicial Member, and J. Sudhakar Reddy | Accountant Member
  • S.M. Surana, for the Appellant.
  • John, Vineet Donkupar Langstieh, CIT, D/R for the Respondent.

Facts of the Case

Assessee’s case was selected for scrutiny. Assessee produced all the details and documents called for. Assessing Officer (AO) concluded that all transactions of purchase and sale of shares were genuine, and no discrepancy was found in the transaction.

Commissioner of Income-tax (CIT) invoked revisionary power under Section 263 by holding that the issues pointed out in the show-cause need verification. CIT held that AO failed to examine the issues and, accordingly, revised the assessment order. Assessee contended that the Revisional order passed by CIT was beyond the scope of Section 263 as CIT had failed to show that the assessment order was erroneous and prejudicial to the interest of revenue. Assessee submitted that it had filed all the documents and evidence to show the genuineness of the purchase and sale of shares and profits earned. AO had accepted the genuineness of the transactions after due verification.

ITAT Held

On appeal, Kolkata ITAT held that while accepting the return of income filed by assessee, AO satisfied himself with the genuineness of the assessee’s claims. AO discharged his duties as an investigator as well as an adjudicator and took a possible view. Such a view cannot be held as unsustainable in law. AO issued a notice under Section 142(1) during original assessment proceedings and called for details and information. He called for details of purchases/sales/stocks in a particular format. In response to said notice, assessee filed Demat statements, copies of contract notes, copies of Bank passbooks, copies of ledger accounts of brokers, etc. All the transactions were on the stock exchange platform. AO verified the same, and he did not find anything adverse in the claims. This is not a case of non-verification or non-application of mind. CIT, in his order, had failed to make out a case that the order of AO was erroneous as well as prejudicial to the interest of the revenue, which is a condition precedent for invoking jurisdiction under Section 263. Thus, the order passed under Section 263 was quashed.

Cases Review 

• • Gitesh Tikmani & Gitsh Tikmani, HUF v. ITO [IT Appeal Nos. 01-04 (Kol.) of 2019, dated 20-9-2019] (para 11) followed
  • Usha Devi Modi v. ITO [IT Appeal No. 874 (Kol.) of 2019, dated 12-1-2021] (para 11) followed.

List of Cases Referred to

• • Khetawat Properties Ltd. v. Pr. CIT [2020] 113 taxmann.com 8/180 ITD 53 (Kol. – Trib.) (para 5)
  • Gitesh Tikmani & Gitsh Tikmani, HUF v. ITO [IT Appeal No. 01-04 (Kol.) of 2019, dated 20-9-2019] (para 9)
  • Smt. Usha Devi Modi v. ITO [IT Appeal No. 874 (Kol.) of 2019, dated 12-1-2021] (para 11).