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2024 (5) TMI 1028 - CALCUTTA HIGH COURTRevision u/s 263 - addition u/s 68 - bogus claim of exemption of Long Term Capital Gain by sale of shares of penny stock - HELD THAT:- On perusal of the order passed by the PCIT u/s 263 no doubt it is true that PCIT states that he has perused the proposal of the AO not stopping you that the PCIT holds that prima facie it appears that the AO has failed to take a logical action on the information available with him and, therefore, the impugned assessment was prima facie erroneous in so far as it was prejudicial to the interest of the revenue. After coming to such conclusion by himself, the PCIT issued show cause notice. The operative portion of the show cause notice has been extracted in the order u/s 263 which shows that the PCIT has applied its mind and came to the prima facie conclusion that the assessing officer should have treated the entire credit as bogus and added back the same u/s 263 of the Act rejecting the claim for exemption u/s 10 (38). Therefore, it is not a case where the PCIT solely proceeded based on the report of the assessing officer but on perusal of the report has examined the facts. PCIT has examined the entire assessment records and thereafter discussed the above transaction and in Annexure A to the order under Section 263 a flow chart has been given which shows how some transaction was bogus transaction dealing with penny stock shares. In the case relating to Sinhotia Metals and Minerals Pvt. Ltd.. [2022 (1) TMI 1297 - CALCUTTA HIGH COURT] the facts were entirely different. In the said case the PCIT directed the Joint Commissioner of Income Tax to submit a proposal and to exercise jurisdiction under Section 263 of the Act which was faulted. Therefore, the decision in the case of Sinhotia Metals and Minerals Pvt. Ltd. (supra) cannot be applied to the facts and circumstances of the case. Thus, we find that Tribunal committed a manifest error in allowing the assessee’s appeal and setting aside the order passed under Section 263 of the Act. Order passed by the PCIT is restored.
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