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The Tax Publishers2012 TaxPub(DT) 1792 (Gau-HC) : (2012) 046 (I) ITCL 0523 : (2012) 249 CTR 0534 : (2012) 070 DTR 0214 INCOME TAX ACT, 1961 --Revision under section 263--Erroneous and prejudicial orderNon-application of mind by assessing officer--assessing officer allowed the claim of assessee for long-term capital gain under section 54F which arose from sale of 4,000 shares. The shares were purchased on 26-9-2002 @ Rs. 5.52 per share and the same were sold on 18-12-2003 @ Rs. 99.50 per share. Commissioner , exercised suo motu revisional jurisdiction under section 263, holding that the view taken by the assessing officer was erroneous and prejudicial to the interest of the revenue. In view of the unusual increase in the prices of shares within a short period of 15 months, the assessing officer was required to apply his mind as to the genuineness of the prices at which the shares were allegedly purchased and sold. The shares did not belong to any well-known company and purchase price was paid by assessee in cash. The identity of the person from whom the shares were purchased and the identity of the person to whom the shares were sold was not disclosed. Assessee submitted that merely because assessing officer should have gone deeper into the matter or should have made more elaborate discussion could not be a ground for exercising of jurisdiction under section 263. Held: If the order of assessing officer was based on wrong assumption of facts, incorrect application of law or non-application of mind, jurisdiction under section 263 could be exercised. Since assessing officer failed to make basic enquiry required to be made when there was unusual increase of prices of shares purchased by assessee by cash and the identity of the purchaser and seller was not ascertained nor the broker examined, therefore, the order of assessing officer suffers from non-application of mind. Income Tax Act, 1961 Section 263 IN THE GAUHATI HIGH COURT A.K. GOEL, C.J. & P.K. SAIKIA, J. CIT v. Parasmal Jain ITA No. 6 of 2008 29 February, 2012 Income-tax Act, 1961, s. 263 In favour of: Revenue; Assessment year 2004-05 Respondent by : R. Goenka & A. Goenka, JUDGMENT *A.K. Goel, C.J.* This appeal has been preferred by the Revenue under section 260A of the Income Tax Act, 1961 against the order of the Tribunal, Gauhati Bench, Guwahati dated 22-8-2007 passed in ITA No. 92/Gau/2006 for the assessment year 2004-05. 2. In the course of assessment for the assessment year in question, the assessing officer allowed the claim of the assessee for long-term capital gain under section 54F of the Act which arose from sale of 4,000 shares. The shares were purchased on 26-9-2002 @ Rs. 5.52 per share and the same were sold on 18-12-2003 @ Rs. 99.50 per share. 3. The Commissioner, exercised suo motu revisional jurisdiction under section 263 of the Act, holding that the view taken by the assessing officer was erroneous and prejudicial to the interest of the Revenue. In view of the unusual increase in the prices of shares within a short period of 15 months, the assessing officer was required to apply his mind as to the genuineness of the prices at which the shares were allegedly purchased and sold. The shares did not belong to any well-known company and purchase price was paid by the assessee in cash. The identity of the person from whom the shares were purchased and the identity of the person to whom the shares were sold was not disclosed. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1792 (Gau-HC) : (2012) 046 (I) ITCL 0523 : (2012) 249 CTR 0534 : (2012) 070 DTR 0214

INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial orderNon-application of mind by assessing officer--assessing officer allowed the claim of assessee for long-term capital gain under section 54F which arose from sale of 4,000 shares. The shares were purchased on 26-9-2002 @ Rs. 5.52 per share and the same were sold on 18-12-2003 @ Rs. 99.50 per share. Commissioner , exercised suo motu revisional jurisdiction under section 263, holding that the view taken by the assessing officer was erroneous and prejudicial to the interest of the revenue. In view of the unusual increase in the prices of shares within a short period of 15 months, the assessing officer was required to apply his mind as to the genuineness of the prices at which the shares were allegedly purchased and sold. The shares did not belong to any well-known company and purchase price was paid by assessee in cash. The identity of the person from whom the shares were purchased and the identity of the person to whom the shares were sold was not disclosed. Assessee submitted that merely because assessing officer should have gone deeper into the matter or should have made more elaborate discussion could not be a ground for exercising of jurisdiction under section 263. Held: If the order of assessing officer was based on wrong assumption of facts, incorrect application of law or non-application of mind, jurisdiction under section 263 could be exercised. Since assessing officer failed to make basic enquiry required to be made when there was unusual increase of prices of shares purchased by assessee by cash and the identity of the purchaser and seller was not ascertained nor the broker examined, therefore, the order of assessing officer suffers from non-application of mind.

Income Tax Act, 1961 Section 263

IN THE GAUHATI HIGH COURT

A.K. GOEL, C.J. & P.K. SAIKIA, J.

CIT v. Parasmal Jain

ITA No. 6 of 2008

29 February, 2012

Income-tax Act, 1961, s. 263

In favour of: Revenue; Assessment year 2004-05

Respondent by : R. Goenka & A. Goenka,

JUDGMENT

A.K. Goel, C.J.

This appeal has been preferred by the Revenue under section 260A of the Income Tax Act, 1961 against the order of the Tribunal, Gauhati Bench, Guwahati dated 22-8-2007 passed in ITA No. 92/Gau/2006 for the assessment year 2004-05.

2. In the course of assessment for the assessment year in question, the assessing officer allowed the claim of the assessee for long-term capital gain under section 54F of the Act which arose from sale of 4,000 shares. The shares were purchased on 26-9-2002 @ Rs. 5.52 per share and the same were sold on 18-12-2003 @ Rs. 99.50 per share.

3. The Commissioner, exercised suo motu revisional jurisdiction under section 263 of the Act, holding that the view taken by the assessing officer was erroneous and prejudicial to the interest of the Revenue. In view of the unusual increase in the prices of shares within a short period of 15 months, the assessing officer was required to apply his mind as to the genuineness of the prices at which the shares were allegedly purchased and sold. The shares did not belong to any well-known company and purchase price was paid by the assessee in cash. The identity of the person from whom the shares were purchased and the identity of the person to whom the shares were sold was not disclosed.