INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - No lack of enquiry on AO's part -

Assessee declared long-term capital gain on sale of equity shares of Kappac Pharma Ltd. as exempt under section 10(38). Pr. CIT relied on information received from Director of Income Tax (Investigation), Kolkatta treating Kappac Pharma Ltd. as a penny stock and took the view that AO had not carried out sufficient enquiries with regard to transaction of Long Term Capital Gain and thus held that assessment order, was erroneous and prejudicial to the interest of revenue. Held: Alleged transaction of sale and purchase of equity shares giving rise to long-term capital gain had been examined by AO in detail by raising specific queries, acknowledging details filed by assessee, examining the same with fair market value and mentioning observation in assessment order with a clear finding, showed that sufficient enquiry was conducted and independent proof of purchase and sale of equity shares, i.e., price appearing at recognized stock exchange had been applied to purchase and sale transaction and further Pr. CIT while conducting proceedings under section 263 had not conducted any specific enquiry on merit nor had found any new information to rebut the facts showed by assessee in the alleged transaction of earning long-term capital gain. Therefore, assessment order could not be held to be erroneous in so far as prejudicial to the interest of revenue.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 263

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