Revision u/s 263 to exclude issues settled in Vivad se Vishvas Scheme 2020

Revision u/s 263 to exclude issues settled in Vivad se Vishvas Scheme 2020. ITAT directs AO not to consider capital gains from penny stock while passing fresh order

ABCAUS Case Law Citation
ABCAUS 3396 (2020) (09) ITAT

Important case law relied upon by the parties:
Price Water House vs ACIT reported in (2018) 92 Taxmann.com 278

In the instant case, the assessee had challenged the revisionary order passed by the CIT u/s 263 of the Income Tax Act, 1961 (the Act) setting aside the order passed by the Assessing Officer (AO) under section 143(3) of the Act, for de novo fresh assessment of income.

During the scrutiny proceedings, the AO observed that in the previous year, the assessee had sold shares of a company against which, capital gains was computed and claimed exempt under section 10(38) of the Act. 

The AO while passing assessment order, disallowed the capital gains under section 68 by holding it to be a penny stock.

Against the addition made by the AO, assessee preferred appeal before the CIT(A) who upheld the order passed by the AO.

Asessee preferred an appeal before the Tribunal against order passed by the CIT(A). As the appeal was pending before the Tribunal, the assessee preferred to settle the issue in Vivad se Vishvas Scheme 2020 (VSVS 2020).  Assessee accordingly withdrew appeal filed before the Tribunal.

However, the CIT initiated proceedings under section 263 of the Act on the ground that the AO had completed the assessment without making inquiries or verification on the issue of capital gains, source of deposits and advances/investments which should have been made.

The assessee was served notice u/s 263 holding that the assessment order passed was erroneous in so for as it is prejudicial to the interest of the revenue.

The Tribunal observed that admittedly, the assessee had settled claim of capital gains arising out of penny stock in VSVS 2020.

Therefore, the Tribunal opined that the AO should not consider capital gains arising out of penny stock while passing order giving effect to order under section 263 and AO should restrict his enquiries in respect of issues concerning claim of LTCG exemption, sources of deposits and advances taken and investments made.

Download Full Judgment Click Here >>

• Goods loaded in two trucks with one e-way bill stating both truck numbers – No evasion
• GOI makes four new Labour Codes  effective from 21st November 2025
• Provident fund dues have first charge over claim of bank under SARFAESI Act – SC
• CBDT notifies the Capital Gains Accounts (Second Amendment) Scheme, 2025
• UP Govt. notifies reduced rate of registration/stamp duty fees on lease agreements