ITAT Mumbai Quashes Revision Under Section 263 in Alleged Bogus LTCG Case

The “A” Bench of the Income Tax Appellate Tribunal, Mumbai, has allowed the appeal filed by Mrs. Suneeta Sekhri (legal heir of late Mr. Anmol Govindram Sekhri) and set aside the revision order passed by the Principal Commissioner of Income Tax under Section 263 of the Income-tax Act, 1961, for Assessment Year 2018–19. The order was pronounced on 2 February 2026.

Background and PCIT’s Revision

The case pertained to alleged bogus Long Term Capital Gains (LTCG) of ₹24.39 lakh arising from the sale of shares of Florence Investech Ltd., a scrip alleged to be a penny stock. Although the Assessing Officer had reopened the case, conducted detailed enquiries, and denied exemption under Section 10(38), the PCIT invoked Section 263 on the ground that the addition should have been treated as unexplained cash credit under Section 68 and taxed under Section 115BBE, leading to an alleged short levy of tax.

Tribunal’s Legal Findings

The Tribunal held that the twin conditions for invoking Section 263, namely that the assessment order must be both erroneous and prejudicial to the interests of the Revenue, were not satisfied. It noted that the Assessing Officer had made extensive enquiries and the issue was already pending before the first appellate authority, making the revision impermissible. Relying on settled precedents such as Malabar Industrial Co. Ltd. and Gabriel India Ltd., the Bench observed that Section 263 cannot be invoked merely due to a change of opinion or where two views are possible. Consequently, the revision order was quashed and the assessee’s appeal was allowed.