Revision u/s 263 invalid where assessment after detailed enquiry on debatable penny stock LTCG issue; s.68 inapplicable to screen-based trading; mere change of opinion or different view in other cases does not satisfy twin conditions of error and prejudice.

आदेश/ORDER 

PER PRABHASH SHANKAR [A.M.] :-

The present appeal is filed by the assessee against the Revision order u/s 263 of the Act passed by the Principal Commissioner of Income-tax, PCIT, Mumbai-8 [hereinafter referred to as “PCIT”] pertaining to assessment order made u/s. 147 r.w.s. 144B of the Income- tax Act, 1961 [hereinafter referred to as “Act”] dated 28.02.2023 for the Assessment Year [A.Y.] 2018-19.

2. The grounds of appeal are as under:-

1. On the facts and circumstances of the case and in law, the Learned Principal Commissioner of Income Tax, [hereinafter referred to as “Ld. PCIT”] erred in invoking jurisdiction under Section 263 of the Income Tax Act, 1961 (“the Act”) and passing the impugned order dated 01/02/2025, which is bad in law and liable to be quashed for various reasons including that the very assessment which has been revised is bad in law.

2. On the facts and circumstances of the case and in law, the assessment order passed by the (“Ld. AO”) under section 147 read with section 144B of the Act dated 28/02/2023 is erroneous and prejudicial to the interests of the revenue, without satisfying any of the mandatory conditions laid down under section 263 of the Act.

3. Without prejudice to the foregoing and to the submissions made in appeal against assessment before Ld CIT(A), and on the facts and circumstances of the case and in law, the Ld. PCIT has failed to appreciate that the assessment order dated 28/02/2023 was passed after due consideration of all material facts, submissions, and evidence furnished by the Appellant, and Ld PCIT himself accepts the same hence, there was no error in the said order within the meaning of section 263 of the Act.

4. Without prejudice to the foregoing and on the facts and circumstances of the case and in law has relied on the provisions of 68 as applicable to the primary transactions of allotment of shares of a Company ignoring the fact the impugned transactions were transactions in the secondary market and hence on this ground also the impugned order is bad in law. Even the table of figures of additional tax payable given by Ld PCIT is misleading.

5. On the facts and circumstances of the case the Ld. PCIT has grossly erred in holding for various reasons that the Long Term Capital Gain (“LTCG”) of Rs. 24,39,772/-arising from the sale of shares of Florence Investech Ltd. is bogus and further erred in directing that such LTCG should be taxed as unexplained cash credit under section 68 of the Act without any material evidence on record.

6. The Ld. PCIT has failed to appreciate that:

a) The transactions of purchase and sale of shares of Florence Investech Ltd. were conducted through recognized stock exchanges in a transparent manner.

b) The Appellant has provided all necessary documentary evidence, including demat statements, bank statements, contract notes, and details of transactions, to establish the genuineness of the capital gains.

c) No specific evidence has been brought on record to prove that the transactions in the said shares were fictitious or manipulated.

d) The holding period of the shares was substantial, demonstrating the genuine investment nature of the transactions.

7. That the Ld. PCIT has erred in assuming jurisdiction under section 263 solely on the basis of a change of opinion and without establishingthat the assessment order was erroneous as well as prejudicial to the interest of the revenue.

8. The Ld. PCIT has misinterpreted and misapplied the decision of the Hon’ble Supreme Court in PCIT v. Kuntala Mohapatra [2024] 160 taxmann.com 608 (SC), which in fact sup