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2022 (10) TMI 35 - AT - Income Tax


Issues:
1. Condonation of delay in filing appeal before ITAT due to Covid-19 pandemic.
2. Validity of order passed under Section 263 of the Income Tax Act, 1961.
3. Assessment of long term capital gains under Section 10(38) of the Act.
4. Allowance of deduction for purchase price of shares.
5. Revision of assessment order under Section 263.

Analysis:
1. The appellant sought condonation of delay in filing the appeal due to the Covid-19 pandemic. The delay of 541 days was condoned by the ITAT based on the application citing the Supreme Court's decision on the extension of limitation period. The delay was deemed reasonable, and the appeal was admitted.

2. The order passed under Section 263 of the Income Tax Act was challenged by the appellant on various grounds, including violation of principles of natural justice. The appellant argued that the assessment order was not served upon them, making it a nullity. Additionally, the appellant contended that the tax on the gains had already been paid under the Income Disclosure Scheme, 2016, and no prejudice was caused to the revenue. The ITAT found merit in the appellant's arguments and allowed the appeal, quashing the order passed under Section 263.

3. The assessment of long term capital gains under Section 10(38) of the Act was a crucial issue. The appellant claimed exemption for long term capital gains from the sale of shares under this section. However, the Principal Commissioner of Income Tax (Pr.CIT) observed discrepancies in the declared gains and directed a fresh assessment. The ITAT, based on judicial precedence, found that the assessment order was not erroneous and allowed the appellant's appeal.

4. The appellant contested the disallowance of deduction for the purchase price of shares. The Pr.CIT argued that the shares were purchased from undisclosed income, and the entire sale proceeds should have been declared. However, the ITAT, following a similar judicial decision, concluded that the purchase of shares was legitimate and allowed the deduction, thereby quashing the Pr.CIT's order.

5. The revision of the assessment order under Section 263 was a significant issue in the appeal. The ITAT found that the conditions for invoking Section 263 were not satisfied, as the Assessing Officer had examined the transaction details and accepted the explanations provided by the appellant. The ITAT held that the assessment order was not erroneous or prejudicial to the revenue, thus allowing the appeal and quashing the order passed under Section 263.

 

 

 

 

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