NEENA BIHANI,KOLKATA vs. I.T.O., WARD -49(2), KOLKATA

PDF · subscribers
ITA 1900/KOL/2024Status: DisposedITAT Kolkata25 March 2025AY 2015-20164 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of the assessment was unsustainable due to a total non-application of mind by the Assessing Officer at every stage. The reasons recorded for reopening and the subsequent show cause notice focused on the purchase of shares, but the assessment order was framed inconsistently, sometimes referring to escaped income and at other times to unexplained share transactions. Crucially, the AO noted that the shares were sold in the next financial year, yet the addition was made on account of Long Term Capital Gain. This contradiction demonstrated a casual approach and a complete lack of application of mind. Consequently, the Tribunal quashed the reopening of the assessment and the assessment framed thereafter. The appeal of the assessee was allowed.

What were the facts?

The assessee, Neena Bihani, is in appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2015-16. The Assessing Officer (AO) received information regarding the assessee's purchase of shares in Jackson Investment Ltd. worth ₹1,30,17,199/-, with unexplained sources. A notice under Section 148 of the Income Tax Act, 1961, was issued on 28.07.2022, after reopening under Section 147. The AO noted that the assessee had obtained bogus accommodation entries in the form of Long-Term Capital Gain/Loss and Short-Term Capital Gain/Loss. The AO observed that 41,900 equity shares of Jackson Investment Ltd. were purchased between 26.08.2014 and 16.10.2015 and sold on 09.07.2015. As the assessee failed to provide documentary evidence, the AO added ₹1,30,17,199/- as bogus Long Term Capital Gain. The CIT(A) dismissed the appeal, upholding the reopening.

What were the issues?

1. Whether the reopening of assessment under Section 147/148 of the Income Tax Act, 1961, was valid, considering the AO's inconsistent findings and the sale of shares occurring in the subsequent financial year, thereby raising questions of law and fact concerning the legality of the assessment proceedings. Assessee's contention: The assessee argued that the assessment order was erroneously based on long-term capital gains, contradicting the initial allegations in the Section 148A(d) order and the show cause notice, which pertained to the purchase of shares. This inconsistency, coupled with the sale of shares occurring in the next financial year, indicated a lack of application of mind and unfairness in the assessment process. Revenue's contention: The revenue did not record any specific contentions in the judgment regarding the validity of the reopening or the assessment itself, beyond what was presented in the lower authorities' orders.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Narendra Kedia, AR
For Respondent: Ms. Monalisha Pal Mukherjee, DR
Hearing: 13.03.2025Pronounced: 25.03.2025

O R D E R Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.07.2024 for the AY 2015-16.

2.

At the time of hearing the ld. Counsel for the assessee pressed the ground no.6, which read as under:-

“6. On the facts and in the circumstances of the case, and in accordance with the order under section 148A(d) of the Act, and in the show cause notice also the allegation of escaped income pertained to the purchase of shares, which led to the issuance of a notice under section 148. However, the assessment order erroneously assessed the case based on long-term capital gains, which contradicts the principles of equity and fairness in completed assessments.”

5.

After hearing the rival contentions and perusing the materials available on record, we find that the reasons recorded by the ld. AO to reopen the assessment and issued notice u/s 148 of the Act on 28.07.2022. We note that in the order passed u/s 148A(d) of the Act and in the show cause notice the allegation was with regard to escapement of income pertaining to purchase of shares which led to issuance of notice u/s 148 of the Act. However, in the assessment framed the ld. AO has made a very incoherent finding sometimes referring to the escapement of income and sometime stating that the assessee has not explained the purchase and sale of shares with cogent evidences with contract notes and Demat accounts, bank statement, etc. and on page no.8 para 2, the ld. AO himself noted that these shares were sold in the next assessment year and these shares of M/s Jackson Investment Ltd. numbered 41,000/- equity shares were sold through SMC Global Securities Limited and finally, added the same on account of Long Term Capital Gain. In our opinion there is total non-application of mind while passing the order u/s 148A(d) of the Act, issuing show cause notice and while framing the assessment at every stage as the AO was fully of casual and there was complete non-application of mind. Under these circumstances, we are not in a position to sustain the reopening of assessment by the ld. AO. We note that AO recorded a finding that the shares were sold in the next financial year whereas the addition was made on account of long term

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 25.03.2025.

More judgments on Section 148A

All 3,543 judgments and leading authorities on Section 148A →

Recent GST High Court judgments

Search GST case law →