Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (12) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2021 (12) TMI 1127 - AT - Income Tax


Issues Involved:
1. Reopening of assessment under Section 147 by issuing notice under Section 148.
2. Disallowance of exemption claimed under Section 10(38) on account of Long Term Capital Gain (LTCG).
3. Addition under Section 68 for treating LTCG as accommodation entry.
4. Addition under Section 69C for unexplained expenditure on commission payment for procuring accommodation entry.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 147 by Issuing Notice under Section 148:
The assessee challenged the reopening of assessment under Section 147, arguing that the reasons recorded by the Assessing Officer (AO) were based on general information from the Investigation Wing of Kolkata and lacked specific tangible material related to the assessee. The Tribunal noted that the reasons recorded by the AO were not specific to the assessee and were based on borrowed satisfaction from the Investigation Wing’s findings on other assessees. The Tribunal relied on the precedent set by the Division Bench in the case of Shri Nishant Kantilal Patel and Smt. Muktaben Nishantbhai Patel vs. ITO, which held that reopening based on general information without independent application of mind by the AO is invalid. Consequently, the Tribunal quashed the reassessment proceedings initiated under Section 147/148.

2. Disallowance of Exemption Claimed under Section 10(38) on Account of Long Term Capital Gain (LTCG):
The AO disallowed the exemption claimed under Section 10(38) on LTCG, treating the transactions as accommodation entries. The assessee had claimed LTCG on the sale of shares of Global Securities Ltd. and Sun and Shine Worldwide Ltd., which the AO alleged were penny stocks used for bogus transactions. The Tribunal found that the assessee had provided sufficient documentary evidence, including contract notes, share certificates, and bank statements, to substantiate the genuineness of the transactions. The Tribunal noted that the AO had not found any fault in the documents provided by the assessee and that there was no evidence of cash being recycled. The Tribunal held that the transactions were genuine and that the AO’s disallowance was based on suspicion and conjecture rather than concrete evidence.

3. Addition under Section 68 for Treating LTCG as Accommodation Entry:
The AO made an addition under Section 68, treating the LTCG as unexplained cash credits. The Tribunal observed that the AO had not provided any specific evidence linking the assessee to the alleged accommodation entry scheme. The Tribunal emphasized that the assessee had demonstrated the genuineness of the transactions through documentary evidence and that there was no direct nexus between the assessee and the alleged price rigging. The Tribunal held that the addition under Section 68 was unjustified and deleted the addition.

4. Addition under Section 69C for Unexplained Expenditure on Commission Payment for Procuring Accommodation Entry:
The AO also made an addition under Section 69C, alleging that the assessee had paid a commission for procuring the accommodation entry. Since the Tribunal had already held that the main addition of LTCG was genuine and not an accommodation entry, it consequently deleted the addition under Section 69C, as it was consequential in nature.

Conclusion:
The Tribunal allowed the appeals filed by the assessee for both assessment years, quashing the reassessment proceedings and deleting the additions made under Sections 68 and 69C. The Tribunal emphasized that the AO’s actions were based on suspicion and general information rather than specific evidence against the assessee.

 

 

 

 

Quick Updates:Latest Updates