ASSISTANT COMMISSIONER OF INCOME TAX vs. SMT JYOTI GUPTA

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TAXC/53/2008HC ChhattisgarhCGHC01011182200831 December 2013Bench: HON'BLE THE CHIEF JUSTICE,HON'BLE SHRI JUSTICE MANINDRA MOHAN SHRIVASTAVA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal committed no illegality in setting aside the order of the CIT. The Court noted that the Assessees had submitted all required documents, including details of share purchases and sales. Crucially, the report from the ADIT was neither placed on the record nor presented before the High Court. The portion of the report quoted in the Tribunal's order was described as being of a general nature. Furthermore, there was nothing on the record to demonstrate that Herald Commercial Pvt. Ltd. was not a registered company or that the shares were not traded through a registered stock exchange. Based on these observations, the Court found no merit in the appeals filed by the Department and dismissed them. The operative direction was the dismissal of the appeals.

What were the facts?

The Income Tax Department (Appellant) filed appeals against the Income Tax Appellate Tribunal's (Tribunal) order dated May 21, 2008. The Tribunal had allowed appeals filed by Smt. Jyoti Gupta and Smt. Sheetal Gupta (Assessees) and set aside the order passed by the Commissioner of Income Tax, Raipur (CIT) under Section 263 of the Income Tax Act, 1961. The Assessees had filed their returns on November 28, 2003, showing long-term capital gains (LTCG) of ₹39,55,200/- and ₹39,57,750/- respectively. The Assessing Officer (AO) accepted these gains by order dated March 20, 2006. Subsequently, the AO received a report from the Additional Director of Income Tax (Investigation), Kolkata (ADIT) regarding the LTCG on March 30, 2006, ten days after passing the assessment order. The CIT then invoked Section 263 on November 14, 2007, setting aside the AO's order and remanding the case for re-assessment.

What were the issues?

1. Whether the Income Tax Appellate Tribunal was legally correct in quashing the CIT's appeal under Section 263 on the ground that there is no specific finding in the order that the purchase and sale of shares and resultant long-term capital gain (LTCG) shown by the assessee are bogus or manipulated, particularly when the inquiry report regarding the nature of the LTCG was not considered at the time of assessment and when the same was available in the record at the time of action u/s. 263? Assessee's Contention (implied by Tribunal's reasoning): The Tribunal correctly quashed the CIT's order because the CIT's order lacked a specific finding that the LTCG was bogus or manipulated. Furthermore, the ADIT's report, though available, was not considered by the AO during assessment and was not properly placed on record or before the appellate authorities. The report was of a general nature, and there was no evidence to suggest that Herald Commercial Pvt. Ltd. was not a registered company or that shares were not traded through a registered stock exchange. Revenue's Contention (implied by the question admitted): The revenue likely argued that the CIT was justified in invoking Section 263 because the AO failed to consider the ADIT's investigation report, which indicated potential issues with the LTCG, thereby rendering the assessment order erroneous and prejudicial to the revenue's interest. The Tribunal erred in not upholding the CIT's action.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

w BEFORE THE HON'BLE HIGH COURT OF CHHATTJSGARH AT BILASPUR Tax Case (IncomeJ'ax AppeaJ) No. /2008 AOpellant Mi6 "' Assistant Commissioner of Income Tax 1(1), Raipur (C.G.) VERSUS Respondent ^!^s^y .o^y°"i ^&^"*^ ^Smt. Jyoti Gupta, C/o. M/s. Sunita Global Ltd. H.No. 510, Opp. Rajkumar College, G.E. Road, Raipur y INCOIVIE TAX APPEAL U/S. 260 A OF INCOME TAX ACT, 1961. ./r c-r-l^

HIGH COURT OF CHHATTISGARH AT BILASPUR CORAM: HON'BLE SHRI YATINDRA SINGH, C.J. HON'BLE SHRI MANINDRA MOHAN SHRIVASTAVA, J. Appellant Respondent Appellant Tax Case (Income Tax Appeal)- 53 of 2008 Assistant Commissioner of Income Tax (1) Raipur (C.G.) VERSUS Smt Jyoti Gupta Tax Case (Income Tax Appeal)- 54 of 2008 Assistant Commissioner of Income Tax (1) Raipur (C.G.) VERSUS Respondent : Smt Sheetal Gupta Income Tax Appeals u/s 260A of the Income Tax Act. 1961 Appearance: Shri Anand Dadariya, counsel for the Appellant. ORDER (01st January, 2014) 1. These appeals are flled by the Income Tax Department (the Department) against the order of the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur, (the Tribunal) dated 21.05.2008 allowing the appeals of Smt Jyoti Gupta (ITA 462/Nag/2007) and of Smt Sheetal Gupta (ITA 464/Nag/2007) (the Assessees) and setting aside the order passed by the Commissioner of Income Tax, Raipur (the CIT) under section 263 of the Income Tax Act, 1961 (the Act) in respect of the Assessment Year 2003-04(the AY). THE FACTS 2. The Assessees filed separate returns on 28.11.2003. In their return, Smt. Jyoti Gupta showed the long term capital gains (LTCG) of ^39,55,200/-; whereas, Smt. Sheetal Gupta showed LTCG of ^39,57,750/-. 3. The Assessing Officer (the AO) by order dated 20.03.2006 accepted LTCG of the Assessees.

'^1 g 1 •%. ^,,^. ^..ss^ ''-'Sia^g^ 4. It appears that the AO had also sent a query to the Additional Director of Income Tax (Investigation), Kolkata (the ADIT) regarding investigation of LTCG. His report was received on 30.03.2006, that is to say, ten days after the AO passed the order. 5. The CIT passed an order under section 263 of the Act on 14.11.2007 setting aside the order of the AO dated 20.03.2006 and remanded fhe case back for re-assessment after considering the report of the ADIT. 6. Aggrieved by the aforesaid order, the Assessees filed appeals before the Tribunal. These appeals have been allowed by the Tribunal on 21.05.2008. Hence, the present appeals by the Department. THE DECISION 7. We have heard counsel for the Appellant. 8. These appeals were admitted on 17.06.2010 and 20.04.2010. However, they were admitted only on the following question: 'Whether the Income Tax Appellate Tribunal is legally correct in quashing the CIT's appeal under Section 263 on the ground that there is no specific finding in the order that the purchase and sale of shares and resultant long term capital gain (LTCG) shown by the assessee are bogusor manipulated, particularly when the inquiry report regarding the nature of the LTCG was not considered at the time of assessment and when the same was available in the record at the time of action u/s. 263?' 9. Considering that— • The Assessees had submitted all documents required from them including purchase and sale of the shares; • The report of the ADIT was neither placed on record nor placed before us. The portion quoted in the order is of general nature;

-%,sy '-..-i^W^ • There is nothing on the record to show that Herald Commercial Pvt. Ltd. Is not a registered company or shares were not traded through registered stock exchange— The Tribunal committed no illegality in setting aside the order of the CIT. 10. The tax cases have no merit. They are dismissed. ^-rfh'1^3? Sd/- Chief Justice Sd/- ManindraMobanShrivastava Judge subbu

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