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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: SRI RAJESH KUMAR & SONJOY SARMA
order
: November 6th, 2023 ORDER
Per Rajesh Kumar, Accountant Member:
This appeal preferred by the assessee is against the order passed by Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 27.07.2023 for the Assessment Year (in short ‘AY’) 2013-14.
I.T.A. No.: 871/KOL/2023 Assessment Year: 2013-14 Anand Kumar Padia.
In the ground nos. 1 & 2 the assessee has challenged the order of Ld. CIT(A) upholding the reopening of assessment u/s 147 of the Act by the Assessing Officer (in short ld. 'AO') on the basis of borrowed satisfaction that too without application of mind and in a mechanical manner.
The facts in brief are that the assessee filed return of income u/s 139(1) of the Act on 01.10.2013 showing total income at Rs. 10,18,880/-. The return order was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 29.03.2019 recording reasons therein that the assessee has claimed bogus long term capital gain on trading of penny stocks namely M/s. Tuni Textile Mills Ltd. amounting to Rs. 49,40,000/-. The assessee filed the return of income in response thereto on 07.12.2019 and thereafter, statutory notices were issued and duly served upon the assessee. Finally, the assessment was completed by the AO by making an addition of Rs. 43,74,434/- which was calculated by reducing the purchase cost of Rs. 5,47,365/- from total sale value of Rs. 49,21,800/- thus, computing the capital gain of Rs. 43,74,434/-. It is pertinent to note that the assessee purchased 2,500 equity shares of M/s. Tuni Textile Mills Ltd. on 25.02.2011 at Rs. 218.10 per share. Ld. CIT(A) also in the appellate proceedings dismissed the appeal of the assessee.
Now, the assessee has raised the legal issue before us challenging the validity of assessment on the ground that reasons recorded by the AO for reopening the assessment lacks the individual application of mind by the AO and the same were I.T.A. No.: 871/KOL/2023 Assessment Year: 2013-14 Anand Kumar Padia. recorded in a mechanical manner without carrying out any enquiry and were in fact based upon the borrowed satisfaction. Ld. A/R drew our attention to the copy of reasons recorded at page no. 2 of the paperbook. For the sake of ready reference, the same is reproduced below:
“An information has been received from the Office of the CCIT, Kolkata-2, Kolkata vide letter No. CCIT-2/Kol/Misc/2015-16/2663- 2664 dated 31.03.2016 regarding information related to Penny Stock (Suspected Long Term Capital Gains /Short Term Capital Loss) in respect of assessees for consideration for appropriate actions u/s 147/148 of the Act. In the above mentioned report and in the context of investigation conducted by Kolkata Investigation Directorate in respect of large number of penny stock companies, whose share prices were artificially raised on the stock exchanges in or to book bogus claims of long term capital gains or short term capital loss by various beneficiaries. Extensive investigation, including search and seizure/survey action on entry providers, riggers, beneficiaries etc. was conducted by the Investigation Directorate in such cases. Based upon outcome of such investigation and analysis of the data, Sri Anand Kumar Padia is having transaction amounting to Rs. 49,40,000/- in penny stock with scrip name ‘Tuni Textile’. Assessee has filed its return for the A.Y. 2013-14 relevant to F.Y. 2012-13 on 01.10.2013 showing a total income of Rs. 10,18,880/-. From the ITS module of ITD application it is found that no scrutiny assessment u/s 143(3) of IT. Act has been done in this case. From the ITR for the A.Y. 2013-14 available in the e-filing records, it is found that assessee has not disclosed any capital gain in its return filed for the relevant year. Under the circumstances, the above income is required to be re- assessed as per provisions of sec. 147 of the I.T. Act, 1961. Since four years elapsed from the end of the relevant assessment year and the escaped income is more than Rs. 1,00,000/-, the approval of Ld. Pr. CIT-2, Kolkata is to be obtained as per sec. 151 of the I.T. Act in this case.