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Facts
The assessee claimed Long-Term Capital Gains (LTCG) from the sale of shares, which the Assessing Officer (AO) treated as bogus based on investigation wing information, leading to reassessment. The CIT(A) upheld the AO's action, dismissing the appeal without sufficient opportunity for the assessee to furnish evidence.
Held
The Tribunal, in the interest of natural justice, set aside the order of the CIT(A) and remanded the matter to the Assessing Officer for a de novo assessment. The assessee is directed to provide all relevant documentary evidence and cooperate fully with the Revenue authorities to verify the genuineness of the share transaction.
Key Issues
Validity of reopening assessment without valid reason; genuineness of Long-Term Capital Gains claimed as exempt; denial of natural justice and opportunity to present evidence by the lower authorities.
Sections Cited
147, 10(38)
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KAMBLE
O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER :-
Delay Condoned The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, vide order dated 29.02.2024 relevant to the Assessment Year 2011-12. Asst. Year : 2011-12 - 2– 2. The assessee has raised the following grounds of appeal:
1. That the learned Assessing Officer (AO) has erred in law and on facts in reopening the assessment under section 147 without furnishing the reasons recorded for such reopening and without there being any valid "reason to believe that income had escaped assessment.
2. That the learned AO has erred in treating the Long-Term Capital Gain (LTCG) of 228,47,365/ on sale of shares of Regency Trust Ltd. as bogus and denying exemption under section 10(38), merely relying upon information from the Investigation Wing, without conducting any independent enquiry or giving due consideration to the evidence submitted by the Appellant. 3. That the learned AO has erred in ignoring the documentary evidence filed by the Appellant in support of the genuineness of the share transaction, including broker contract notes, cash vouchers, confirmation of purchase, sale contract notes, and SEBI's list of penny stocks. 4. That the learned AO has erred in not providing the material or evidence reled upon to creat the scrip as a penny stock and in not affording any opportunity to the Appellant to cross-examine the persons whose statements formed the basis of the reassessment. 5. That the reassessment order is bad in law, based on suspicion, surmises, and conjecture, and deserves to be quashed. 6. That the Appellant craves leave to add, amend, alter or withdraw any of the above grounds at the time of hearing.
3. On perusal of the record, we find that the assessee was granted several opportunities of hearing to furnish details, clarifications, and explanations to substantiate the claim of Long-Term Capital Gains (LTCG) arising from the sale of shares of M/s. Regency Trust Limited. However, despite multiple opportunities, the assessee failed to furnish the requisite details or explanations before the Ld. CIT(A). Consequently, the Ld. CIT(A) upheld the action of the Assessing Officer and dismissed the appeal. We further note that, based on information received from the DDIT (Investigation), the Assessing Officer alleged Asst. Year : 2011-12 - 3– that the assessee had earned exempt LTCG from the sale of shares, which, as per the said information, was treated as a bogus transaction. The assessee, however, contended that documentary evidence substantiating the genuineness of the share transaction had been furnished, but the same was not independently verified by the Assessing Officer. Therefore, the Ld. Counsel for the assessee submitted that, given an opportunity, the assessee would produce all necessary details, clarifications, and documentary evidence before the Revenue authorities in support of her claim. In view of the above and in the interest of natural justice, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer for a de novo assessment, with a direction to verify the documentary evidence to be furnished by the assessee. The assessee shall submit all relevant bank statements, documents, and supporting evidence, and to cooperate fully with the Revenue authorities without seeking unnecessary adjournments.
In the result, the appeal of the assessee is allowed for statistical purposes.