Case Number: ITA 785/DEL/2021
Appellant: Prateek Gupta, Ghaziabad
Respondent: Pr. CIT, Ghaziabad
Assessment Year: 2015-16
Case Filed on: 2021-06-23
Order Type: Final Tribunal Order
Date of Order: 2022-12-06
Pronounced on: 2022-12-06
This case involves Prateek Gupta, an individual deriving income from salary and interest, and the Principal Commissioner of Income Tax (Pr. CIT) of Ghaziabad. The appellant filed an appeal against the revision order passed under Section 263 of the Income Tax Act by the Pr. CIT for the assessment year 2015-16.
The appellant challenged the order of the Pr. CIT, Ghaziabad, dated 05.03.2021, which directed the reopening of a concluded assessment and ordered a fresh assessment for the assessment year 2015-16. The appeal was filed on the grounds that the order passed under Section 263 was without jurisdiction and bad in law.
The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench “H” on 02.12.2022, with Shri N.K. Billaiya, Accountant Member, and Ms. Astha Chandra, Judicial Member, presiding over the matter. The appellant was represented by Shri Satyajeet Goel, CA, and Shri Prateek Gupta, CA, while the respondent was represented by Shri Rajesh Kumar, CIT (DR), and Shri M. Baranwal, CIT (DR).
The appellant, Prateek Gupta, filed his return of income on 30.03.2016, declaring an income of Rs. 4,11,300/-. The case was selected for scrutiny. During the assessment proceedings, the AO issued a questionnaire, and the appellant furnished the necessary details, replies, and documents as called for.
The AO found that during the year, the appellant sold 17,000 shares of M/s. Surabhi Chemicals and Investment Ltd., a listed entity on the Bombay Stock Exchange, for Rs. 17,80,906/-, which were purchased from M/s. Sarvottam Advisory Pvt. Ltd. for Rs. 50,000/-. The shares were reflected in the Demat account on 04.09.2014 and were sold in December 2014 through Motilal Oswal Securities Ltd. The appellant claimed the profit on the sale of shares as exempt under Section 10(38) of the Act.
During the assessment proceedings, the AO confronted the appellant with the fact that the company M/s. Surabhi Chemicals and Investment Ltd. was not genuine and was a penny stock company. The appellant contended that his transactions were genuine and provided all documentary evidence. However, to avoid litigation, he surrendered the capital gain amount of Rs. 17,46,906/-.
The AO completed the assessment on a total income of Rs. 21,58,206/-, including the surrendered capital gain, on 05.12.2017, and initiated penalty proceedings under Section 271(1)(c) of the Act.
The appellant filed a detailed reply to the penalty notice, arguing that there was no concealment of income or filing of inaccurate particulars. The appellant surrendered the LTCG to purchase peace and avoid penal proceedings. The AO, after considering the facts and the appellant’s submissions, dropped the penalty proceedings on 23.02.2018.
The Pr. CIT initiated proceedings under Section 263 of the Act, issuing a show cause notice to the appellant. The Pr. CIT found that the AO’s decision to drop the penalty proceedings was erroneous and prejudicial to the interests of the Revenue, and directed the AO to reconsider the penalty proceedings and recompute the income tax and interest as per Section 115BBE of the Act.
The appellant challenged the Pr. CIT’s order, arguing that the AO had properly considered the facts and circumstances before dropping the penalty proceedings. The appellant relied on various judicial decisions, including CIT vs. Nihal Chand Rekyan and Pr. CIT vs. M/s. Universal Music India Pvt. Ltd., to support his case.
The tribunal, after considering the submissions and material on record, found that the Pr. CIT’s assumption of jurisdiction under Section 263 was not justified. The tribunal noted that the AO had considered the facts and the appellant’s detailed reply before dropping the penalty proceedings. The tribunal also observed that the case did not involve any incriminating documents or search operations that would justify the Pr. CIT’s assumption of jurisdiction.
The tribunal emphasized that the AO’s decision to drop the penalty proceedings was neither erroneous nor prejudicial to the interests of the Revenue. The tribunal vacated the Pr. CIT’s order and allowed the appeal filed by the appellant.
In conclusion, the appeal filed by Prateek Gupta against the order of the Pr. CIT, Ghaziabad, under Section 263 of the Income Tax Act was allowed. The tribunal found that the AO’s decision to drop the penalty proceedings was justified and not erroneous, thereby vacating the Pr. CIT’s order.
Order pronounced in the open Court on 06/12/2022
Signed:
N.K. Billaiya, Accountant Member
Astha Chandra, Judicial Member
Assistant Registrar, ITAT, New Delhi
Prateek Gupta vs. Pr. CIT: Appeal on Section 263 Revision Order – ITA 785/DEL/2021
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