ITA No. 1808/DEL/2020 features an appeal by Anusha Maheshwari against a revisionary order passed by the Pr. Commissioner of Income Tax (Appeals) for the assessment year 2015-16. The case involved scrutiny of penny stock transactions and the application of Section 263 of the Income Tax Act, 1961.
The assessment was initially completed under Section 143(3), accepting the return of income filed by the assessee. However, the Pr.CIT later deemed the assessment order erroneous and prejudicial to the interests of revenue, focusing on suspicious sale transactions in shares and inadequate inquiry by the Assessing Officer.
The Pr.CIT’s revisionary order was based on allegations of inadequate investigation into the sale of penny stocks by the assessee, where shares were purchased at significantly low prices and sold at a high premium. This led to a directive for a de novo assessment to explore the nature and taxability of these transactions further.
Anusha Maheshwari challenged the jurisdiction assumed by the Pr.CIT under Section 263, contesting that the initial inquiries made were adequate and the transactions were legitimate. The appeal emphasized that the investments were part of regular trading activities and were declared as business income.
The tribunal found that the assessee had a background in finance and had reported the income from the sale of shares as business income, paid at normal tax rates. It was held that the revisionary order lacked a substantial basis for its claims that the initial assessment was prejudicial to revenue interests, leading to the setting aside of the Pr.CIT’s order.
This judgment highlights the importance of detailed initial assessments and the limits of revisionary powers under the Income Tax Act. It underscores the need for tax authorities to provide concrete evidence before altering an assessment’s conclusions significantly.
Challenging the Revisionary Order in Penny Stock Transactions: Case Review of ITA 1808/DEL/2020
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