2024 (8) TMI 877 - AT - Income Tax

Validity of reopening of assessment u/s 147 - bogus LTCG on share transactions - transactions pertain to HUF or to individual - HELD THAT - Referring to assessee submission that the objection and mentioned that the LTCG transaction was not made by the assessee, but by the HUF. AO finally submitted the rebuttal and disposed the objection without any verification from his end. AO duly relied on the observation of the Investigation Department only. No separate investigation was made. AO referred that the verification was made from broker house, but no such evidence was supplied to assessee for cross verification. The certificate from Banas Finance Ltd is duly annexed by the assessee where it is clearly mentioned that the share was issued in the name of HUF and not to an individual. There is no reflection in bank account or in the account statement that the assessee has made the transactions. The Ld.AO was not able to specify the documents / evidence that the assessee had made the transaction and the demat account which is filed by the assessee before the Bench and the Revenue. There is no reflection of the shares in question. The assessee has taken this ground before the CIT(A) but CIT(A) had passed very cryptic order and without considering the submission of the assessee. The reason recorded by the AO itself is erroneous and perverse - AO had no jurisdiction for reopening the assessment u/s 148. So, the recorded reason is baseless and liable to be quashed. Decided in favour of assessee.

Summary

Issues:
1. Reopening of assessment under section 147 of the Income-tax Act, 1961.
2. Denial of long term capital gain transaction by the assessee.
3. Jurisdiction of the Assessing Officer in reopening the assessment.
4. Consideration of evidence and submissions by the Commissioner of Income Tax (Appeals).
5. Addition of unexplained cash credit under section 68 of the Act.
6. Appeal against the order of the Income-tax Officer.

Analysis:

1. The appeal was filed against the order of the National Faceless Appeal Centre (NFAC) under section 250 of the Income-tax Act, 1961 for Assessment Year 2012-13. The assessment was reopened under section 147 based on the observation that the assessee earned long term capital gain related to the sale of shares of Banas Finance Limited. The assessee contested that the transaction was made by "Jogesh Agarwal, HUF" and not by the individual assessee. The objection was filed against the Assessing Officer's reason, and the Commissioner of Income Tax (Appeals) upheld the assessment order. The appeal was then brought before the Appellate Tribunal.

2. The Appellate Tribunal considered the documents and submissions on record. The assessee's written submission and financial statements did not show any trace of the long term capital gain transaction. The Assessing Officer relied on information from the Investigation Department without conducting separate verification. The Tribunal noted discrepancies in the assessment process, including the lack of evidence linking the transaction to the assessee and the HUF's share certificate indicating ownership by the HUF. The Tribunal found the Assessing Officer's reasoning to be erroneous and quashed the addition of unexplained cash credit under section 68 of the Act.

3. The Tribunal held that the Assessing Officer lacked jurisdiction to reopen the assessment under section 148 of the Act. The appeal was allowed, and the addition amount was deleted. The Tribunal emphasized that the recorded reason for reopening the assessment was baseless. The appeal was successful, and the order was pronounced in favor of the assessee.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the proceedings and the Tribunal's decision.