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TMI Blog2025 (5) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... g jurisdiction u/s 263 hence the order passed by PCIT u/s 263 of the Income Tax Act, 1961 is bad in law and void-ab- initio. 2. Without prejudice to the above ground, on the facts and circumstances of the case and in law, the Ld. PCIT has erred in assuming jurisdiction and passing the revisionary order u/s 263 of the Income Tax Act, 1961 in spite of the fact that the Ld. AO has made adequate enquiries and conducted proper verification of documents which were sought from the appellant and accordingly Ld. AO took a permissible view. The order passed by the AO is neither erroneous nor prejudicial to the interest of revenue, hence the order of Ld. PCIT should be set aside. 3. That the Ld. PCIT, Delhi-20, ought to have checked that the assessment order is neither erroneous nor prejudicial to the interest of the revenue and that the Ld. PCIT can assume jurisdiction under section 263 only if the twin conditions of the assessment order being erroneous and pre-judicial to the interest of the revenue are satisfied. 4. The Ld. PCIT ought to have seen that while invoking power under revisionary jurisdiction as envisaged u/s 263 is not permissible under law to substitute the view of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m taxation was accepted by the AO in the re-assessment order. The AO while framing the re-assessment order inter-alia observed that various documents, details and evidences were called for and the assessee, in turn, uploaded the requisite details, explanation and evidences in support of queries raised during the re-assessment proceedings to rebut the allegations of sham transactions. Thus after making some enquiries on the claim of LTCG in the course of re-assessment proceedings, no additions were eventually made despite express allegations on assessee company to be beneficiaries of unaccounted income purportedly received in the form of LTCG in the reasons recorded. 5. Thereafter, the Pr.CIT in exercise of revisionary powers, issued show cause notice dated 25.01.2024 under s. 263 of the Act requiring the assessee to show cause as to why the re-assessment order so framed under s. 147 r.w.s. 144B of the Act should not be modified/set aside on the ground that such order of the AO is erroneous and pre-judicial to the interest of the Revenue. 6. As per the show cause notice, the Pr.CIT, in essence, alleged that re-assessment order suffers from non-application of mind and was rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cognizance of the financial strength of the company while coming to the conclusion towards bonafides of the actions of the assessee. 9. The Pr.CIT however remarked in the revisional order that (i) the AO has failed to conduct any enquiry from the assessee as to who purchased shares at such high price while the assessee has sold such shares; (ii) the AO has not conducted enquiries requiring the assessee to explain as to how the share price increased phenomenally by 600 % per share; and (iii) the AO also did not conduct any enquiry from the assessee as to how the assessee had identified PMC Fincorp Limited shares for investment purposes. It was alleged that mere submissions of self-serving documents like Demat account, contract note, banking transactions etc. are not capable of camouflaging the bogus transactions in the nature of LTCG declared by the assessee. 10. The Pr.CIT thus alleged that the AO has routinely accepted the explanation filed by the assessee regarding the purchase of shares at face value without conducting any enquiry or verification on the pointed noted above. The Pr.CIT thus invoked the revisional powers vested under s. 263 of the Act r.w.Explanation-2 appende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner expected by the Revisional Commissioner from a perfectionist point of view. It was contended that the quasi judicial action of the AO cannot be lightly struck down without showing it to be erroneous as well as prejudicial to the interest of revenue. The AO has concluded the issue having regard to the totality of facts and based on tangible material available before him and thus cannot be branded as erroneous in the name of alleged inadequacy of inquiry. 12.2. The Ld. Counsel for the assessee thus urged that the revisional order passed on wrongful assumption of jurisdiction under s. 263 of the Act requires to be quashed. 13. The Ld.CIT DR for the Revenue on the other hand, relied upon the revisional order and submitted that when all the allegations made in the revisional order are integrated with underlying facts, the conclusion of erroneous re-assessment order would be inescapable. The Ld.CIT DR also submitted that the Pr.CIT has merely set aside the re-assessment order for framing fresh assessment after due diligence and taking note of the relevant factual aspects. The action of Pr.CIT is thus justified in terms of Explanation-2 to s. 263 of the Act. 14. We have care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der primarily on the ground that the shares have been sold at abnormally high price for which necessary enquiries have not been carried out. The AO also failed to enquire into the name of the corresponding purchaser of the shares at such high price and what actuated the assessee to invest in the share of this penny stock. We are unable to see any purport in alleged inadequacy of enquiry of such points. Once the assessee has sold the shares on the platform of exchange at the quoted price, the obligation of the assessee ends unless there is any positive material in the possession of the Department to suggest that the assessee has indulged in any concerted action giving rise to unlawful profits to the assessee. The Pr.CIT, to our mind, has attempted to shift the burden on the assessee on the points where he has no control. The enquiry could have been made by the Revenue from the Exchange. No such enquiry has been made or proposed by the Pr.CIT. The Pr.CIT has made allegations cursorily without collecting any material adverse to the assessee. The Pr.CIT has merely alleged inadequacy in enquiry without any sound basis and without making even some minimal enquiry himself. No third party ..... X X X X Extracts X X X X X X X X Extracts X X X X
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