Sanjay Singh Rana Vs PCIT (ITAT Delhi)
PCIT Can Step In Even If Issue Pending Before CIT(A): ITAT Delhi Upholds 263 in Bogus LTCG Case
Tribunal dismissed the appeal of Sanjay Singh Rana challenging PCIT’s revision u/s 263. Assesse had declared LTCG exempt u/s 10(38) on sale of IndusInd Bank shares. Reassessment u/s 147 was completed treating the entire transaction as bogus on the basis of Investigation Wing findings that shares were actually purchased in FY 2014-15 through entry-operator M/s Life Line Securities Ltd & backdated contract notes were fabricated to show purchase in 2009. AO taxed Rs.1,57,25,322/- as unexplained credit u/s 68 r.w.s 115BBE after allowing purchase cost of Rs.7,78,156/- & further added 2% commission u/s 69C. PCIT revised the order u/s 263 holding that once the transaction is held bogus, AO should have taxed entire sale consideration Rs.1,65,03,478/- without allowing any cost, & therefore the order was erroneous & prejudicial to Revenue.
Assessee argued that issue of capital gain was already pending before CIT(A) & therefore PCIT could not exercise jurisdiction u/s 263, relying on Renuka Phillip & other ITAT decisions.
Tribunal rejected this contention by relying on binding Supreme Court rulings in Shri Arbuda Mills Ltd & Eimco K.C.P. Ltd which hold that PCIT’s powers u/s 263 extend to all matters “not considered & decided” in appeal. Since CIT(A) had not yet adjudicated the issue, PCIT was fully empowered to revise the reassessment order. Tribunal also noted that Explanation 1(c) to s.263 clearly authorises such revision. Arguments challenging the validity of reassessment u/s 147/144B were held not entertainable in 263 proceedings as they are pending before CIT(A). Accordingly, Tribunal upheld PCIT’s order & dismissed the appeal.
