PCIT can't exercise revisionary jurisdiction u/s 263 where AO has taken a Plausible view of Evidences produced by Assessee: ITAT [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the Principal Commissioner of Income Tax (PCIT) cannot exercise the revisionary jurisdiction under Section 263 of the Income Tax Act, 1961 where the Assessing Officer has taken a plausible view of evidence and documents on record produced by the assessee.

The assessee filed a return of income declaring a total income of Rs. 2,51,810/- which was processed under Section 143(1) of the Income Tax Act and thereafter the case of the assessee was selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) for suspicious long-term capital gain on sale of shares and consequently, assessment under Section 143(3) of the Income Tax Act was framed accepting the returned income.

The PCIT observed that the Assessing Officer had failed to take any logical action on the issue of long-term capital gain on the sale of shares and accordingly assessment framed was held to be erroneous insofar as prejudicial to the interest of the revenue.

The counsel for the assessee submitted that the assumption of jurisdiction under Section 263 of the Income Tax Act and passing of a consequent revisionary order under Section 263 of the Income TAX Act by the PCIT is bad in law. And contended that the jurisdiction under Section 263 of the Income Tax Act is not available to the PCIT where after having considered evidence/documents on record and the reply of the assessee, the Assessing Officer has taken a plausible view.

The Departmental Representative relied heavily on the order of PCIT by submitting that it was found during the investigation by DDIT, Kolkata that entry operators, share brokers, and money launderers were acting in an organized manner and were manipulating the shares of some companies which are penny stock on the Bombay stock exchange in order to give accommodation to beneficiaries in lieu of unaccounted cash.

The Two-member comprising of Rajesh Kumar (Accountant member) and Sonjoy Sarma (Judicial member) held that the PCIT cannot exercise the revisionary jurisdiction to set aside the assessment where the Assessing Officer has conducted enquiries and taken a plausible view accepting the contentions of the assessee.

Therefore, the bench was inclined to hold that the revisionary jurisdiction had been exercised by the PCIT invalidly and the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates