Nilesh Bipinchandra Mehta HUF Vs PCIT (ITAT Rajkot)
The appeal before the ITAT Rajkot concerned the validity of a revision order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income-tax Act, 1961, in relation to a reassessment completed under section 147 for AY 2014-15. The assessee, a Hindu Undivided Family, had originally filed a return declaring income of Rs.78,030. The case was reopened based on information regarding transactions in penny stock shares of First Financial Services Ltd., where long-term capital gains (LTCG) were claimed as exempt under section 10(38). In the reassessment order dated 28.03.2022, the Assessing Officer (AO) made an addition of Rs.10,05,173 under section 68, determining total income at Rs.10,83,203.
Subsequently, the PCIT invoked section 263 on the ground that the AO had not examined LTCG claimed on another penny stock, namely Centron Ind, involving sale of 4,500 shares and exemption claimed under section 10(38). According to the PCIT, failure to verify the genuineness of these transactions rendered the assessment order erroneous and prejudicial to the interest of revenue. The assessment was therefore set aside with a direction to frame a fresh assessment.
Before the Tribunal, the assessee contended that during reassessment proceedings, complete details relating to all share transactions, including those of Centron Ind, had been furnished. These included contract notes, broker confirmations, ledger accounts, bank statements, demat statements, and evidence of payment through banking channels. The AO had examined these materials and adopted a plausible view. It was argued that section 263 could not be invoked merely because the PCIT held a different opinion. Technical objections regarding the validity of reassessment proceedings were also raised.
