The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) while quashing the revision order observed that Standard Operating Procedures guidelines issued by Central Board of Direct Tax ( CBDT ) are not applicable to unlisted scripts.
Assessee Pantime Finance Company Pvt Ltd original assessment was completed. Later the assessment was sought to be reopened.
The reasons for reopening the assessment was to further investigate / analyze / verify the veracity of receipt of funds of Rs 15 lakhs from Anunay sales private limited during the year under consideration.
Thereafter the reassessment order framed on 20.11.2018 was sought to be revised by the Principal Commissioner of Income Tax (PCIT) by invoking revision jurisdiction under section 263 of the Income Tax Act, 1961 and held that the order of the assessing officer was erroneous and prejudicial to the interest of the revenue. Against this order assesee filed an appeal before ITAT.
Rushbha Mehta counsel for assessee submits that issue stated by the PCIT in show cause notice under section 263 of the Income Tax Act 1961 was already duly examined by the AO in the reassessment proceedings itself and assessee had also duly filed all the evidences in support of its contentions thereon.
K.C Selvam ani counsel for the revenue contented that “all the transactions relating to purchase and sales have been made through banking channel and also the shares were disclosed in the balance sheet and that there was no loss or gain from the transaction No additions has been made in this case with respect to penny stock sales as the AO has mentioned in the assessment order that sales have been made through banking channel and also the shares were disclosed in the balance sheet. However, the Standard Operating Procedures (SOP/ Guidelines) issued by the department for dealing with Penny stock cases has not been complied in this case.”
After considering the contentions of the both sides the division bench of the ITAT comprising M.Balaganesh, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) allowed the appeal filed by the assessee and observed that,
“Revision order passed by the PCIT only says that Aditi and Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the AO while framing the reassessment.
But penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. In the instant case, Aditi and Finance Pvt Ltd scrip is not listed in any stock exchange. We hold that the SOP guidelines issued by CBDT cannot be made applicable for unlisted scripts.”
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