THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD vs. GANESH PLANTATION LTD.

TAXAP/258/2021HC GujaratGJHC24052322202124 January 2022Author: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MS. JUSTICE NISHA M. THAKORE12 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2009-10. The assessee, Ganesh Plantation Ltd., initially filed a return of income of Rs. 7,40,330. The Assessing Officer (AO) determined the total income at Rs. 25,92,480 during scrutiny assessment. Subsequently, the case was reopened under Section 148, with the AO issuing a notice under Section 142(1) regarding loss from share transactions. The assessee contended that this was a 'change of opinion' as the issue was examined during the original assessment and no new material was available. The AO disallowed a loss of Rs. 10,81,15,500 on share transactions, deeming them not genuine. The Commissioner of Income Tax (Appeals) partly allowed the appeal, directing deletion of Rs. 10,81,000, treating the reassessment order as invalid. The ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decision.

What did the High Court hold?

The High Court held that the Appellate Tribunal did not err in law or fact. Regarding the first issue, the Court agreed with the Tribunal that the reassessment proceedings under Section 147 read with Section 148 were initiated without jurisdiction, as the reasons for reopening were already examined during the original assessment, and no new tangible material was brought on record. The Court found no perversity in the Tribunal's finding that it was a case of 'change of opinion'. Concerning the second issue, the Court found that the CIT(A) and the Appellate Tribunal had elaborately discussed the supporting evidence for the share transactions, including applications, share certificates, ROC filings, PAN cards, and banking transactions. The Court agreed that these documents clearly established the genuineness of the transactions. The Revenue failed to produce any contrary evidence to discard the documentary evidence presented by the assessee. The Court also noted that the AO had been satisfied with the genuineness of these transactions during the original assessment. Furthermore, the Court observed that even if the transactions were considered, amendments to Sections 50CA and 56(2)(x) (applicable from April 1, 2018, and April 1, 2017, respectively) indicate that tax liability, if any, would arise in the hands of the recipient, not the transferor. Therefore, the appeal was dismissed.

What were the issues?

1. Whether the Appellate Tribunal erred in law and facts by confirming the CIT(A)'s order quashing the notice under Section 148 and treating the order under Section 143(3) read with Section 147 as invalid, without considering the Supreme Court's decision in CIT vs. PVS Beedies Pvt. Ltd. (1999) 237 ITR 13 (SC) regarding reopening due to an apparently legal mistake? The Revenue argued that the AO had reason to believe income had escaped assessment, particularly concerning the loss on share transactions, and that reopening was permissible. The assessee contended that the reassessment was based on a 'change of opinion' as the same issue was examined during the original assessment, and no new tangible material was presented. 2. Whether the Appellate Tribunal erred in law and facts by confirming the CIT(A)'s order deleting the disallowance of Rs. 10,81,15,500 loss on sale and purchase of shares, without appreciating the AO's findings that the transactions were not genuine? The Revenue argued that the assessee had not furnished necessary details during reopening, leading the AO to conclude the transactions were not genuine. The assessee countered by providing documentary evidence, including share applications, certificates, Form 2 filings, PAN cards, and confirmations, to establish the genuineness of the transactions.

Which sections of the Income-tax Act were involved?

Section 260A,Section 148,Section 143(3),Section 147,Section 246,Section 133(6),Section 50CA,Section 56(2)(x)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/258/2021 ORDER DATED: 24/01/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 258 of 2021 ============================================= THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD Versus GANESH PLANTATION LTD. ============================================= Appearance: M R BHATT & CO.(5953) for the Appellant(s) No. 1 for the Opponent(s) No. 1 MS NUPUR D SHAH(10233) for the Opponent(s) No. 1 ============================================= CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 24/01/2022

ORAL ORDER (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE)

1.

This Appeal filed by the Revenue is directed against the order dated 11.12.2020 passed by the Income Tax Appellate Tribunal, “B” Bench, Ahmedabad, in ITA No.472/AHD /2016 for the Assessment Year 2009-10 ( for short, “year under consideration”), under Section 260A of the Income Tax Act, 1961 (hereinafter referred to in short as “the Act”).

2.

The brief facts giving rise to this appeal are summarized as under:

2.

1 The respondent Company - the origi

The order continues below.

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