CIT vs. Jawahar Bhattacharjee (Gauhati High Court Full Bench)
The assessee bought shares on 21.4.2000 for Rs.19,536 and sold them on 2.5.2001 for Rs.6,36,640. A gain of more than 30 times was made in one year. The AO accepted the LTCG and allowed s. 54F relief. The CIT passed an order u/s 263 in which he held the order to be ‘erroneous and prejudicial to the interest of the revenue’ on the ground that the AO had not made any enquiry to determine the genuineness of the transaction though the circumstances warranted the same. On appeal of the assessee, the Tribunal relied on B & A Plantation 290 ITR 395 (Gau) and held that as the order of the AO was not without jurisdiction, it could not be held to be ‘erroneous’ for purposes of s. 263. On appeal by the department, the issue was referred by the Full Bench as to the supposed conflict between various judgements of the Court on the subject:
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