�Whether On The Facts And In The Circumstances Of The Case, The Tribunal Was Justified And Correct In Law In Cancelling The Order Of The Cit Dated 23.8.2006 Pas v. We Have Heard The Learned Counsel For The Assessee. Learned Counsel For The Revenue Is Unable To Assist The Court As He Says That He Is Not R

ITA 6/2008BEFOREHON’BLE THE CHIEF JUSTICE MR. A.K. GOELHON’BLE MR. JUSTICE P.K. SAIKIA (A.K. Goel, CJ) This appeal has been preferred by the Revenue under Section 260-A of theIncome Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Gauhati Bench, Guwahati dated 22.08.2007 passed in I.T.A. No.92(Gau)/2006 for the Assessment Year 2004-2005. In the course of assessment for the assessment in question, the Assessing Officer allowed the claim of the assessee for long term capital gain under Section 54F of the Act which arose from sale of 4000 shares. The shares were purchased on 26.09.2002 at the rate of Rs.5.52 per share and the same were sold on 18.12.2003 at the rate of Rs.99.50 per share. The Commissioner of Income-Tax, exercised suo-motu revisional jurisdiction under Section 263 of the Act, holding that the view taken by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. In view of the unusual increase in the prices of shares within a short period of 15 months, the Assessing Officer was required to apply his mind as to the genuineness of the prices at which the shares were allegedly purchased and sold. The shares did not belong to any well-known company and purchase price was paid by the assessee in cash. The identity of the person from whom the shares were purchased and the identity of the person to whom the shares were sold was not disclosed. On appeal by the assessee, the Tribunal set aside the revisional order on the ground that there were as many as seven hearings before the Assessing Officer and the Assessing Officer scrutinized the details. In such circumstances, the exercise of jurisdiction under Section 263 of the Act was not called for. Aggrieved by the order of the Tribunal, the Revenue has preferred this appeal which was admitted for consideration of the following substantial questionof law :- �Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in cancelling the order of the CIT dated 23.8.2006 passed u/s 263 of the Income-Tax Act, 1961 ? � This appeal was tagged for consideration with I.T.A. No.2 of 2008 wherein question of scope of jurisdiction under Section 263 of the Act had been referred to a Full Bench. The Full Bench considered the matter vide judgment dated 7.2.2012 and held that jurisdiction under Section 263 of the Act could be exercised whenever itwas found that the order of the assessment was erroneous and prejudicial to theinterest of the Revenue. A wrong assumption of fact, incorrect application of law and non application of mind were also covered within the scope of Section 263of the Act, as held by a Division Bench of this Court in Commissioner of Income-Tax vs. Daga Entrade P. Ltd. (2010) 327 ITR 467 (Gau). The view earlier taken in Rajendra Singh vs. Superintendent of Taxes and others, 1979 STC 10 that jurisdiction under Section 263 could be exercised only in cases of jurisdictional error was explained to the effect that the expression �jurisdictional error � was used in wider sense as including error on account of wrong assumption of fact, incorrect application of law and non-application of mind. The matter was, accordingly, directed to be placed before the Division Bench. I.T.A. No.2 of 2008, has been disposed of today by a separate order, holding that exercise of jurisdiction by the Commissioner under Section 263 of the Act was valid. Relevant observations therein are :- �No doubt, mere different opinion was not enough for an order being termed as ’erroneous’ but the finding of the Commissioner shows that the order of AO suffered from non application of mind. Distinction in cases where the AO takes a view, after applying mind as per settled norms and cases where settled norms are ignored and assessment is made is well known. While in former, revisional jurisdictio �No doubt, mere different opinion was not enough for an order being termed as ’erroneous’ but the finding of the Commissioner shows that the order of AO suffered from non application of mind. Distinction in cases where the AO takes a view, after applying mind as per settled norms and cases where settled norms are ignored and assessment is made is well known. While in former, revisional jurisdictio n may not be exercised, in later it can certainly be exercised. Present case clearly falls in second category. Whether or not exercise of revisional jurisdiction was called for is a question of law, on a given fact situation. � We have heard the learned counsel for the assessee. Learned counsel for the revenue is unable to assist the Court as he says that he is not ready. In the present case, the assessee claimed capital gain arising out of sale of shares. The shares were purchased on 26.9.2002 and sold on 18.12.2003. As already mentioned above, the purchase of the shares was made at Rs.5.52 per share and the same were sold at Rs.99.50 per share after about 15 months. The sharesbelong to Sangotricons Limited which is not a very well known company. The Assessing Officer, in its order, did not discuss the matter at all. The Commissioner, interfered with the order of the Assessing Officer with the following observations :- �4. I have considered the facts of the case. In my view, there was an error in approach as also in appraisal of the facts, which led to an error in computation as well. The basic enquires, which an AO is expected to make in these circumstances, were omitted to be made in this case. The AO should have enquired about theexistence of the company and obtained its complete address and telephone numbers. He should also have obtained the annual accounts of the company as on 31.3.2003 & 31.3.2004 so as to satisfy himself if the commercial activities of the company justified such a jump in the prices of shares. The price quotations of the shares on various dates during the check-period should also have been examined toascertain the reasonableness of the jump. What was more important is that the AO should have obtained the details of the previous holder and examined the genuineness of the alleged cash transaction. The broker named Shri Rajendra Prasad Shah should have been examined and his books of account should have been scrutinized. The details of the ultimate purchaser should also have been obtained and the sources of his payments should have been verified with reference to his bank account. The brokers, the seller, the purchaser and the assessee himself should have been separately examined by the A.O. These enquiries were a must for obviating the possibility of secreted income having been introduced for acquiring real estate. In short, the genuineness of the transactions was not established in this case, which is the sine qua non for acceptance of the claim of deduction u/s 54F in a case like this. � The Tribunal held the same to be erroneous as follows :- �5. I have heard the Ld. Department Representative and perused the material available on record. In this case, in response to notices issued u/s 143(2) and 142(1), the assessee appeared and explained the return and claims made thereunder with details as called for. From the assessment order it is evident that therewere as many as 7 hearings the A.O. took and after hearing the assessee and scrutinizing the details required by him, the A.O. completed the assessment t a figure of Rs.84,882/-. The impugned case is a small one on which very meager revenue is involved. The investigation expected from an Assessing Officer would dependon the volume of business and quantum of income. When a small case is fixed andthe A.O. calls for details, examines the same and passes a brief order accepting the returned income, that would not lead to treat the order as erroneous. & &. It is not the case of the C.I.T. that the claim made by the assessee is not in accordance with law. The only objection of the C.I.T. was that the A.O. before allowing such claim did not call for and examined the details which, according to the C.I.T., were required to adopt the right view. To reiterate, the A.O. after hearing the assessee on several occasions and examining the details requisitioned by him framed the assessment u/s.143(3) of the Act. � Learned counsel for the assessee supports the view taken by the Tribunalby submitting that the finding recorded by the Tribunal was a finding of fact w hich was not challenged as perverse by the Revenue. It was also submitted that merely because the Assessing Officer, should have gone deeper into the matter or should have made more elaborate discussion could not be a ground for exercising of jurisdiction under Section 263 of the Act. In support of his submission, reliance has been placed on the judgments of the Bombay High Court in Commissioner of Income-Tax Vs. Gabriel India Ltd. (203 ITR 108), Commissioner of Income-Tax Vs. Development Credit Bank Limited (2010) 323 ITR 206 (Bom) and judgment of the Delhi High Court in Commissioner of Income-Tax vs. Hindustan Marketing and Advertising Co. Ltd. (2012) 341 ITR 180(Delhi) and judgment of High Court of Punjab and Haryana in Commissioenr of Income-Tax Vs. Unique Autofelts (P) Ltd. (2009) 30 DTR (P&H) 231. We are of the view that the Commissioner was justified in exercising hisjurisdiction under Section 263 of the Act and the Tribunal committed patent error of law. It is well settled that jurisdiction under Section 263 can be exercised whenever it is found that the order of the assessment was erroneous and prejudicial to the interest of the Revenue. Merely because a different view could be taken on a debatable issue may not be enough to hold that the order was erroneous.However, if the order of the AO was based on wrong assumption of facts, incorrect application of law or non application of mind, interference was certainly permissible. Reference may be made to the decision of the Full Bench referred to above, relying on the earlier judgments, including the judgment of the Hon’ble Supreme Court in Malabar Industrial Co. Ltd. Vs. C.I.T. (243 I.T.R. 83). The present case is not a case were the Commissioner has sought to substitute his opinion for that of the Assessing Officer but a case where the order of the Assessing Officer suffers from non-application of mind. The Assessing Officer failed to make basic enquiry, required to be made when there was unusual increase of prices of shares purchased by the assessee by cash and the identity of the persons from whom the shares were purchased and to whom the shares were sold, was not ascertained, nor the broker examined. The shares were not of well known company and possibility of undisclosed income being introduced in the form of capital gain was not ruled out. Thus, the case was clearly within the purview ofexercise of suo-motu revisional jurisdiction. The observation of the Tribunal that since as many as 7 hearings had taken place and that the C.I.T. could not have raised an objection to the manner of assessment, are unsustainable in law and not warranted by legal requirement under Section 263 of the Act for exercise ofsuo-motu revisional jurisdiction. Judgments relied upon on behalf of the assessee are distinguishable on facts. Thus, the substantial question of law raised is answered in favour of the Revenue. The appeal is allowed.