Mohammedsaqib Aiyub Puthawala Vs PCIT (ITAT Ahmedabad)
Assessee claimed exempt LTCG of ₹12.18 lakh on sale of shares of Kushal Tradelink Ltd. The assessment was reopened u/s 147 only to verify this LTCG. During reassessment, AO issued specific SCN, called for full details, examined contract notes, demat account, bank statements, broker ledger, STT payment, source of funds etc. Assessee also gave a detailed explanation denying any link with operators & requested evidence/cross-examination if any adverse material was relied on.
After verifying, AO categorically recorded that:
- He had no evidence from Investigation Wing to establish Assessee’s involvement in accommodation entry;
- Therefore, on principles of natural justice, no addition was warranted & LTCG exemption u/s 10(38) was accepted.
However, PCIT invoked section 263, alleging that AO failed to make proper enquiry, & directed fresh assessment.
Tribunal completely disagreed with PCIT & held:
- This was not a case of “no enquiry” or “inadequate enquiry.”
- AO made detailed & specific enquiries on the very issue for which case was reopened.
- Assessee’s transactions were through registered broker, reflected in demat, & he was a regular share trader, not a one-time penny stock beneficiary.
- AO took a plausible view after appreciating evidence.
- PCIT failed to point out any defect in assessee’s explanation or AO’s conclusion.
- PCIT did not bring any adverse material or nexus of assessee with alleged price rigging.
- Explanation 2 to section 263 was not attracted since AO had verified the issue in detail.
- Since AO adopted a plausible view based on enquiry & evidence, the order was not “erroneous” nor “prejudicial” to Revenue. Hence, 263 order set aside & assessee’s appeal allowed.
Section 263 cannot be used merely because PCIT has a different opinion – when AO has conducted due enquiry & taken a possible view, revision is invalid.
