COMMISSIONER OF INCOME TAX Vs. JAWAHAR BHATTACHARJEE

JUDGEMENT

(1.) This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961, against the order dated August 28, 2007, passed by the Income-tax Appellate Tribunal, Gauhati Bench, Guwahati, in I. T. A. No. 07(Gau) of 2007 for the assessment year 2002-03. The Assessing Officer, in the course of assessment, allowed benefit to the assessee for long-term capital gain from sale of shares under section 54F. The shares in question were purchased on April 21, 2000, for Rs. 19,536 and sold on May 2, 2001, for Rs. 6,36,640. The Commissioner of Income-tax exercised suo motu revisional jurisdiction under section 263 of the Act, on the ground that while accepting the genuineness of share transactions, the Assessing Officer failed to make such enquiry as was usually expected in a fact situation where the assessee was neither habitual Operator of share market nor the shares in question were shares of any well known company ; the prices had jumped from Rs. 6 per share to Rs. 200 per share within a span of 13 months. In such a situation, the Assessing Officer could make necessary enquiry to ascertain whether commercial activities of the company justified such a jump of prices. He also did not obtain the details of previous holders nor examined the seller and buyers. The Assessing Officer was, accordingly, directed to make fresh enquiry.

(2.) On appeal, the Tribunal set aside the said order with the observation that the Assessing Officer had made detailed enquiry in respect of shares purchased and sold and receipt and payment relating to the transactions and had verified the claim after perusing documents relating to agreement of flat, evidence of payment for the materials purchased in the flat and had also examined the share transactions. On these facts, exercise of jurisdiction under section 263 was not valid.

(3.) The appeal was admitted to consider the following substantial questions of law: