INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO after making adequate enquiry as regards assessee's claim having taken a plausible view -

CIT held assessment order to be erroneous and prejudicial to the interest of revenue on the ground of AO without having enquired into suspicious transaction relating to short-term capital loss on sale of shares of UNNO Industries Ltd. allowed set-off of short-term capital loss against assessee's other business income.Held: Before the order of assessment was passed, AO had required assessee to furnish transactional document proving purchase and sale of all shares held as investment during the year. On examination of material placed before him AO was satisfied that short-term capital loss was incurred by assessee on sale of shares listed on BSE. Assessee had filed before AO the relevant details and also produced time stamped contract notes issued by its broker. All transactions were made through registered share broker at the rates prevailing on stock exchange on relevant dates. The payment for acquisition of shares and subsequent sale proceeds were also transacted through assessee's regular bank account. The listed shares were sold within a period of one year from the date of acquisition and therefore gain/loss was short term in nature. In the facts and circumstances, AO had discharged his duties as an investigator as well as that of an adjudicator and applied his mind on the issue before him and taking into consideration the explanation rendered by assessee had taken reasonable and plausible decision to allow the claim of short-term capital loss as made by assessee. Accordingly, assessment order could not be treated as erroneous and prejudicial.

Supported by:Malabar Industries Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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