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2017 (5) TMI 1153 - AT - Income TaxReopening of assessment - to reat the share income as unexplained investments u/s.69 - Held that - Assessee s case case is that the Assessing Officer ought to have disposed of her objections to reopening in question. The case file does not indicate any such recourse taken at assessee s behest so as to challenge the reopening reasons. We repeat that learned CIT(A) s findings on merits have gone against the assessee in proving source of the money in question to be arising from sale of shares. Section 147 Explanation 2 squarely applies in facts of instant case wherein the assessee claimed her profits to be arising from share transactions as exempted which were found to have been never carried out. We thus decline assessee s challenge to this legal aspect of the reopening in question as well. - Decided against assessee.
Issues Involved:
1. Validity of the reopening of assessment under Section 147 of the Income Tax Act, 1961. 2. Addition of ?13,40,369 as unexplained investment under Section 69 of the Income Tax Act, 1961. 3. Disallowance of the assessee's claim of exemption of ?13,40,369 under Section 10(38) of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of the Reopening of Assessment Under Section 147: The assessee argued that the reopening of the assessment was illegal and unlawful. The primary contention was that the Assessing Officer (AO) had no reason to believe that income chargeable to tax had escaped assessment, particularly after receiving the assessee's reply to an audit query. The assessee also contended that the AO did not dispose of the objections filed by the assessee by passing a speaking order, thereby not following the principles set by the Supreme Court in the case of GKN Driveshafts (India) Ltd. v/s Income-tax Officer. The CIT(A) rejected these arguments, stating that the assessment was reopened based on a factual mistake pointed out by the audit party, which constitutes valid information for the AO to conclude that income chargeable to tax had escaped assessment. The CIT(A) relied on the Supreme Court's decision in the case of CIT v/s PVS Beedies Pvt. Ltd., where it was held that reopening of assessment based on factual information given by the audit party is valid in law. The Tribunal upheld the CIT(A)'s findings, concluding that the AO had validly reopened the assessment under Section 147. The Tribunal also noted that the reopening was within four years from the end of the relevant assessment year, making Section 147 Explanation 2 applicable. 2. Addition of ?13,40,369 as Unexplained Investment Under Section 69: The AO added ?13,40,369 as unexplained investment under Section 69, treating the sale proceeds of equity shares as unexplained. The assessee contended that the shares were purchased and sold through recognized stock exchanges, and securities transaction tax (STT) was paid. However, the AO found discrepancies in the assessee's claims and noted that the transactions were off-market and not eligible for exemption under Section 10(38). The CIT(A) verified the assessee's claims by writing to the Interconnected Stock Exchange of India (ICSE), which confirmed that no trades were executed on their platform in the name of the assessee for the relevant assessment year, and no STT was levied. Consequently, the CIT(A) treated the entire sale proceeds as unexplained money and taxed them under Section 69. The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to prove the correctness of her claim of deriving profits from the sale of shares. The Tribunal found no reason to interfere with the CIT(A)'s findings on this issue. 3. Disallowance of the Assessee's Claim of Exemption Under Section 10(38): The assessee claimed exemption of ?13,40,369 under Section 10(38) for long-term capital gains (LTCG) from the sale of shares. The AO disallowed this claim, stating that the transactions were off-market and not eligible for exemption as they were not subjected to STT. The CIT(A) confirmed the AO's findings, noting that the assessee failed to provide sufficient evidence to prove that the transactions were conducted through a recognized stock exchange and subjected to STT. The CIT(A) relied on the information from ICSE, which indicated that no such trades were executed on their platform. The Tribunal upheld the CIT(A)'s decision, noting that the assessee conceded during the lower appellate proceedings that she had no basis for pursuing the claim for exemption under Section 10(38). The Tribunal found no reason to interfere with the CIT(A)'s findings on this issue. Conclusion: The Tribunal dismissed the assessee's appeal, upholding the validity of the reopening of the assessment under Section 147, the addition of ?13,40,369 as unexplained investment under Section 69, and the disallowance of the assessee's claim of exemption under Section 10(38). The Tribunal found no reason to interfere with the CIT(A)'s findings on these issues.
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