Karan Jain Vs Union of India And 3 Ors (Guwahati High Court)
The case of Karan Jain vs. Union of India delves into the issue of non-disclosure of exempt Long-Term Capital Gains (LTCG) and its impact on revenue loss. The petitioner contested the initiation of proceedings under Section 263 of the Income Tax Act, 1961, arguing against the jurisdiction of the action taken by the respondent.
The petitioner, represented by Dr. A. Saraf, challenged the Show Cause Notice and subsequent ex-parte Order issued by the Income Tax Department. The crux of the matter lay in the discrepancy between LTCG shown in the capital account and the computation sheet. Despite the initial assessment accepting the returned income, a later notice alleged non-disclosure of LTCG, leading to the initiation of revision proceedings.
Dr. Saraf argued that for the Commissioner to exercise suo moto revisional jurisdiction under Section 263, two conditions must exist: the order must be erroneous and prejudicial to revenue. He contended that mere error isn’t sufficient; it must also result in prejudice to revenue. Additionally, he emphasized the necessity for material on record to satisfy these requisites.
On the contrary, Mr. S. Chetia, representing the Income Tax Department, asserted that the discrepancy in LTCG amounted to an erroneous assessment prejudicial to revenue, justifying the revisional proceedings.
