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Facts
The assessee's assessment for AY 2013-14 was reopened under Section 147 based on information regarding bogus Long Term Capital Gain (LTCG) from transactions in shares of Sulbha Engineering. The assessee contended that they had, in fact, sold shares of Paridhi Properties Ltd., not Sulbha Engineering, and had already disclosed the LTCG and paid taxes for AY 2015-16 via VSVS 2020. Despite providing detailed information in response to prior notices under Section 133(6), the Assessing Officer proceeded with the reopening and made additions without independent verification.
Held
The Tribunal held that the reopening of assessment under Section 147/148 was invalid as the Assessing Officer failed to conduct any independent inquiry or apply his mind to the information available, relying solely on unverified information. The AO proceeded on suspicion rather than a belief that income had escaped assessment, despite the assessee having provided full details earlier. Consequently, both the reopening and the assessment order were quashed.
Key Issues
Whether the reopening of assessment under Section 147/148 is valid when the Assessing Officer fails to make independent inquiries or apply his mind to the information, despite the assessee having furnished relevant details in response to prior notices.
Sections Cited
147, 144B, 143(1), 148, 139(1), 133(6), 68, 143(3)
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
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 06.05.2024 for the AY 2013-14.
The issue raised in ground no.1, is against the order of ld. CIT (A) confirming the additions in the assessment order passed u/s 147 read with section 144B of the Act by ignoring the fact that the entire assessment proceeding u/s 147 of the Act were invalid and bad in law.
The facts in brief are that the assessee filed the return of income on 29.07.2013, declaring total income at ₹8,71,380/- under the head
In the appellate proceedings, the ld. CIT (A) also passed a very cryptic order stating all facts therein qua A.Y. 2015-16 and thereafter concluded that no interference is called for within the assessment framed by the ld. AO and thus, dismissed the appeal of the assessee. Thus there was total non application of mind by the ld CIT(A).
i. CIT vs. Smt Paramji Kaur (2009) 311 ITR 38 (Punjab and Haryana) ii. CIT vs. Sfil Stock Broking Ltd. (2010) 325 ITR 285 (Delhi) iii. ITO Vs. Sarthak Securities (P.) Ld. (2010) 329 ITR 110 (Delhi) iv. Signature Hotels P. Ld. Vs. ITO Another (2011) 338 IT 51 (supra) 338 ITR 51 v. Akshar Builders and Developers Vs. ACIT WP No. 14490 of 2018 (Bombay) vi. Ankita A. Choksey Vs. ITO (Bombay) WP No. 3344 of 2018
The ld. DR on the other hand relied on the order of the lower authorities.
After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2021. We note that in the reasons recorded, the copies of which is available at page no.41 and 42, the ld. AO noted that the assessee has earned Long Term Capital Gain/Short term capital gain of ₹94,38,891/- on sale of shares of Sulbha Engineering,whereas as a matter of fact the assessee has not made any transactions of sale of shares of Sulbha Engineering. Even the matter was brought to the notice of the ITO, Ward 34(1) on two occasions when notices u/s 133(6) of the Act was issued on two occasions i.e. first on 21.03.2015 and second, on 06.03.2020. The assessee filed all the details comprising contract notes, balance sheet, profit and loss account, Demat Account, etc. and submitted that assessee has earned income by way of Long-Term Capital Gain on sale of shares of Paridhi Properties Ltd. Amounting to ₹37,94,883/- which has been shown in the Profit and Loss account and was also claimed as exempt. We note that during the instant assessment year the assessee has purchased 3,000/- shares of Sulbha Engineering and there was no sale of shares
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15.01.2025.