The two member bench of the Income Tax Appellate Tribunal( ITAT ) comprising G.S Pannu ( Vice President) and Anubhav Sharma ( Judicial member) Delhi, quashed the reopening assessment after the taxpayer provided full details, asserting that Long Term Capital Gains ( LTCG ) are exempt under section 10(38) of the Income Tax Act, 1961.
The assessee had filed a return of income declaring total income of Rs.1765140/- on 29.07.2011 as an individual earning income from house property, capital gain and income from other sources. The assessment under Section 143 (3) of the Income Tax Act was completed on 26.02.2014 at returned income. The assessee Rajesh Goyal had taken the benefit of Long Term Capital Gain (exempted income) of Rs.14, 97, 39,733/- on account of sale of equity shares of M/s. Shree Securities Limited. As per the Kolkata Wing of Investigation, the Shree Securities Limited was an accommodation entry provider company.
Considering all these material/ information in totality as was enough credible material on record the AO record ‘reason to believe’ under Section 148 of the Income Tax Act, that at least an amount of Rs.14,97,38,733/- was not disclosed in his income by the assessee during the F.Y. 2010-11 relevant to A.Y.2011-12. Hence, it was found to be a fit case for initiating proceedings under Section 147/148 of the Income Tax Act.
Mr. Salil Aggarwal, representing the assesse submitted that the notice under Section 148 suffers from factual inaccuracies and is based on fishing and roving enquiry. It was submitted that in the objections filed against reopening all the valid grounds were raised but the same were not considered. Further submitted that the reasons were recorded merely relying on the Investigation Wing report. It was pointed out that AO has relied on the statement of Ajay Anand Pugalia alleged entry operator but whose statement was not on record nor confronted to assessee. It was submitted that there was no tangible material except the letter from the Investigation Wing.
The bench satisfied that the assessee had furnished complete details of long term capital gains as exempt under Section 10(38) of the Income Tax Act along with all documents sought by the Assessing Officer including contract note, purchase bill, allotment letter. Thus, there is no justification in the observations of the AO at the time of reopening that there was deficit on the part of the assessee to disclose true and correct facts in regard to the issue.
The bench observed that “ we are inclined to hold that the reopening is not in accordance with the settled proposition of law and thus the exercise of the jurisdiction under Section 147 read with 148 of the Income Tax Act is vitiated. The appeal was allowed and as a consequential effect, impugned assessment was quashed”.
