Pawan Garg Vs ITO (ITAT Chandigarh)
Reassessment u/s 148 Quashed for Lack of Tangible Material; Bogus LTCG Addition u/s 68 Deleted – ITAT Chandigarh
The ITAT Chandigarh allowed the assessee’s appeal for AY 2014-15 & quashed the reassessment proceedings u/s 147/148, holding that the AO lacked any tangible material with live nexus to form a belief that income had escaped assessment.
In this case, the assessment was reopened on the basis of generic information uploaded on the Insight Portal alleging that the assessee was a beneficiary of bogus LTCG of ₹61.23 lakh through reputed stocks. The Tribunal noted that the reasons recorded were vague & mechanical, as the AO did not even mention the name of scrips, dates of purchase/sale, broker details, mode of payment or how the assessee was connected with the alleged modus operandi. The reasons were recorded one day before the limitation date, approval was obtained & notice u/s 148 was issued on the last day, indicating a borrowed satisfaction.
The ITAT held that mere information from Investigation Wing or Insight Portal, without independent verification, cannot constitute “reason to believe”. There was no live nexus between the material & formation of belief, making the reopening invalid in law. Reliance was placed on binding precedents including Meenakshi Overseas & Supreme Court principles.
Once the reassessment itself was quashed, the addition of ₹65.24 lakh u/s 68 on account of alleged bogus LTCG automatically fell. Accordingly, the entire addition was deleted & the appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
