J&K HC: Dispute Involving Elements of Criminality Not Automatically Excluded from Arbitration  ||  J&K HC: Dispute Involving Elements of Criminality Not Automatically Excluded from Arbitration  ||  Karnataka Govt. Proposes Bill to Provide 50-75% Kannadiga Quota in Private Jobs  ||  Madras High Court: Investigation Under PMLA Against Private Contractors, Stopped  ||  All. HC: In UP, Principle of ‘No Pay No Work’ Not Applicable on State Government Employees  ||  Del. HC: Notice Issued on Plea for Reservation of 33% Seats for Women in Lawyers' Bodies Elections  ||  SC: Not Uncommon for Diff. Statutes Concerning Similar Area of Law to Have Convergence of Interest  ||  Supreme Court: Maintenance or Permanent Alimony Should Not be Penal  ||  SC: No Indefeasible Right to Pay Parity Unless Competent Authority Equates Two Posts  ||  Tel. HC: HC has Limited Power in Matter of Granting Permission to Withdraw Appeal    

Dinesh Gangwal, Kolkata vs. ITO - (Income Tax Appellate Tribunal) (26 Dec 2023)

There has to be satisfaction of the Assessing Officer for reopening of the assessment and reopening cannot be made in a mechanical manner

MANU/IK/0545/2023

Direct Taxation

The assessee has challenged reopening of assessment by the learned Assessing Officer under Section 147 of the Income Tax Act, 1961 (IT Act) which was upheld by the learned CIT(Appeals).The assessee filed his return of income declaring total income of Rs. 1,90,560. Thereafter the case of the assessee was reopened under section 147 of the Act by issuance of notice under section 148 after obtaining approval from the competent authority. The said reopening was done on the basis of information received from the Investigation Wing that the assessee has earned long-term capital gain of Rs. 8,30,000 from transfer of shares of Quest Financial Service Limited, which is a penny stock company and the said gain has been claimed as exempt under Section 10(38) of the IT Act.

Thereafter, notice was issued and served upon the assessee and after calling for the necessary details qua the said purchase and sale of shares of Quest Financial Service Limited, an addition of Rs. 7,78,816 was made under Section 68 of the Act, beside making addition of Rs. 46,730 @ 6% towards commission for arranging accommodation entry of long-term capital gain in the assessment framed under Section 147 of IT Act. The learned CIT(Appeals) affirmed the addition by upholding the order of the learned Assessing Officer and held that it was penny stock, which was rightly added by the learned Assessing Officer.

Assessing Officer has stated that, the assessee is beneficiary is of Rs. 4,31,250, which is a surprise figure. The reasons have to be read as they are recorded and there has to be an independent application of mind by the AO and objective satisfaction has to be recorded whereas the AO acted on the borrowed satisfaction which is a clear-cut non- application of mind by the AO. The case of the assessee finds support from the decision of the Hon'ble Bombay High Court in the case of Hindustan Lever Limited -vs.- R.B. Wadkar, Asst., wherein it has been held that the reasons have to be read as they are recorded and it cannot be substituted. The Hon'ble Court has held that, there has to be satisfaction of the Assessing Officer for reopening of the assessment and reopening cannot be made for borrowed satisfaction in a mechanical manner.

In view of decision of the Hon'ble Bombay High Court, the reopening of assessment is quashed and Assessing Officer is directed to delete the addition. Appeal of the assessee is allowed.

Tags : ASSESSMENT   REOPENING   LEGALITY  

Share :        

Disclaimer | Copyright 2024 - All Rights Reserved