HC stays Section 263 order as Mandatory twin pre conditions were prima facie not fulfilled: Gauhati High Court
Gauhati High Court on 19/08/2021 decided the stays Section 263 order as Mandatory twin pre conditions were prima facie not fulfilled. This was seen in the matter of Karan Jain Vs. The Union Of India & 3 Ors Appeal Number : WP(C)/3999/2021this matter was presided over by Honourable Mr. Justice Achintya Malla Bujor Barua.
FACTS OF THE CASE
Heard Dr. A Saraf, learned senior counsel for the petitioner. Also heard Mr. S Sarma, learned standing counsel for the Income Tax Department. Issue notice, returnable by six weeks. = Extra copies of the writ petition be served on the learned counsel for the respondents within three days. The petitioner was served with the notice dated 24th March 2021 for hearing in respect of a revision proceeding u/s 263 of the Income Tax Act 1961 (for short, the IT Act). In the notice dated 24th March 2021 at Clause 3 it was stated that while the assessment was completed by allowing an amount of Rs.5,30,257/- being the difference between LTCG from sale of shares credited at Rs.36,89,039/- and such LTCG shown in computation of income at Rs.31,58,782/- which was not brought to tax. Accordingly, in clause 4 of the notice dated 24.03.2021, a satisfaction was arrived at that the assessment made 28th decemeber 2018 was erroneous & prejudicial to the interest of revenue.
Dr. A Saraf, learned senior counsel for the petitioner takes the Court to the return submitted by the petitioner. The relevant portion of which is available at page 34 & 35 of the writ petition regarding the statement of long term capital gain u/s 10(38) of the IT Act and in such statement, it is shown that in respect of certain shares there was a loss amounting to Rs.5,30,257/-. According to Dr. Saraf, learned senior counsel once the amount of Rs.5,30,257/- being the loss is taken out from the figure of Rs.36,89,039/-, the balance would be Rs.31,58,782/-. According to the learned senior counsel the aforesaid amount referred in clause 3 of the notice dated 24th March 2021 was clearly stated in the income tax return submitted by the petitioner assessee.
In the aforesaid background, Dr. Saraf also refers to the order dated 28th March 2021 u/s 263 of the IT Act wherein in clause 5.0 a conclusion was arrived at that since there was no explanation from the assessee as regards the aforesaid discrepancies, the Principal Commissioner of Income Tax provided that the matter shall be decided on the basis of the materials available on record & came to the conclusion that there is merit in the claim that the Assessing Officer had failed to examine & consider the fact that the assessee had omitted to disclose the long term capital gains amounting to Rs.5,30,257/-, while computing his income. By referring to the returns submitted by the assessee available at page 34 & 35 respectively, a submission is made that the aforesaid conclusion is arrived at by the Principal Commissioner that there is merit in the claim that the Assessing Officer failed to examine & consider that the assessee had omitted to disclose the long term capital gains amounting to Rs.5,30,257/-. Accordingly a submission is made that the conclusion of there being an erroneous assessment is absent.
Dr. Saraf, learned senior counsel also raises the submission that the aforesaid items are covered under the provisions of Sec 10(38) of the IT Act wherein itself there is a provision that the aforesaid items are exempted from payment of income tax and even if there is any discrepancy in the return submitted by the assessee, the same would not be prejudicial to the interest of revenue.
JUDGEMENTS
In view of above aspects, we find that a prima facie case has been made out by the petitioner. Considering the balance of convenience & irreparable loss that the petitioner may suffer, further process pursuant to the order dated 24th March 2021 u/s 263 of the IT Act shall remain stayed until further order(s). List after 6 weeks. In the meantime, the respondents may file their affidavit explaining the submissions made by the learned senior counsel for the petitioner.
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JUDGEMENT REVIEWED BY YAKSHU JINDAL.