Suneeta Sekhri Vs DCIT (ITAT Mumbai)
PCIT Cannot Invoke Section 263 on Penny Stock LTCG Where AO Conducted Detailed Enquiry & Issue Is Debatable – ITAT Mumbai
The ITAT Mumbai quashed the revision order passed u/s 263 for AY 2018-19, holding that the PCIT wrongly assumed jurisdiction in a case involving alleged bogus LTCG on sale of penny stock shares.
The Tribunal noted that the AO had conducted detailed enquiry during reassessment proceedings u/s 147 r.w.s. 144B, examined demat statements, bank statements, contract notes & trading details, and thereafter made an addition by denying exemption u/s 10(38). The very same issue was already pending before CIT(A) in quantum appeal, and therefore, revision u/s 263 on the same issue was impermissible.
It was further held that the revision was based merely on a change of opinion, as the PCIT sought to tax the same LTCG as unexplained cash credit u/s 68 r.w.s. 115BBE, despite the AO having already taken a conscious view after enquiry. Once enquiry is made, Explanation 2 to section 263 does not apply.
The Tribunal also relied on settled law that screen-based, stock-exchange driven transactions cannot be brought to tax u/s 68, particularly when purchases & sales are through recognised exchanges, payments are routed through banking channels, delivery is reflected in demat accounts & contract notes are available. The issue being clearly debatable, section 263 could not be invoked.
Accordingly, holding that the assessment order was neither erroneous nor prejudicial to the interest of revenue, the ITAT quashed the revision order u/s 263 & allowed the assessee’s appeal in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
