Assessee’s assessment was reopened on the basis that he has shown long-term capital gain from the sale of shares of a penny stock company i.e., CI Ltd. In his reply, assessee submitted before the AO that he has not earned any exempt LTCG from the sale of shares of CI Ltd., and on contrary has disclosed STCG from sale of shares of the said scrip in his original return. AO accepted the income returned by him as such. In light of above factual background, the Tribunal held that the very basis for reopening of the case of the assessee by the AO was absolutely misconceived and incorrect. As the reassessment order passed by the AO under s. 143(3) r. w. s. 147 is in itself based on invalid assumption of jurisdiction by the AO, the same could not have been revised by the Principal CIT. As regards the failure on the part of the AO in not carrying out necessary verifications, when the very foundation for assumption of jurisdiction by the AO is found to be misconceived and fallacious;it was not permissible for him to have proceeded any further and gathered the information i.e.., details of purchase and sales of shares, number of shares, copy of Demat account, transactions of the assessee with broker, manner in which the shares offered by right issues were purchased from the broker, genuineness of the transactions, etc.When the very foundation of impugned revisional proceedings i.e., the reassessment order passed by the 10 u/s. 143(3) r. w. s. 147 is in itself based on an invalid assumption of jurisdiction by the AO and thus, not sustainable in the eyes of law, the Pr. CIT could not have assumed jurisdiction under s. 263 and validated the said reassessment order by restoring the same to the AO with a direction to reassess the income of the assessee afresh. Therefore, the order passed of the Pr.CIT under s. 263 was set aside (AY. 2011-12)