Case Law Details
PCIT Vs Pradip Kumar Jajodia (Supreme Court of India)
The matter arose from an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 against the order dated December 30, 2024 passed by the Income Tax Appellate Tribunal, Kolkata Bench, for the assessment year 2016-17.
Before the Calcutta High Court, the Revenue challenged the Tribunal’s decision deleting an addition of Rs.9,87,300 allegedly linked to bogus long-term capital gains through penny stock transactions. The Revenue argued that the Tribunal failed to consider investigations conducted by the Assessing Officer, the Investigation Wing of the Income Tax Department, and SEBI concerning the abnormal rise in prices of shares of companies allegedly lacking financial foundation. It was also contended that the Tribunal failed to apply the test of human probabilities and ignored the principles laid down in the earlier Calcutta High Court decision in Swati Bajaj relating to bogus LTCG claims.
Read HC Judgment in this case: Reassessment Invalid as AO Had Only ‘Reason to Suspect’ and Not ‘Reason to Believe’ in Bogus LTCG Case
The High Court first condoned a delay of 40 days in filing the appeal after noting that the delay had been properly explained. The Court then examined the issue considered by the Tribunal, namely whether reopening of assessment under Sections 147 and 148 of the Act was legally valid.
The Tribunal had found that the reassessment proceedings were initiated on the basis that the assessee had traded in shares of Appu Marketing & Manufacturing Ltd./Ejecta Marketing Ltd. However, the Tribunal observed that this information was already available on record when the original assessment had been completed under Section 143(3) of the Act.
After examining the factual aspects, the High Court agreed with the Tribunal’s findings. The Court held that there was no valid “reason to believe” that income chargeable to tax had escaped assessment and no failure on the part of the assessee to fully and truly disclose material facts necessary for assessment. The High Court observed that the reasons recorded by the Assessing Officer amounted to “reason to suspect” rather than “reason to believe.”
The High Court concluded that the Tribunal was justified in holding the reopening invalid and further held that no substantial question of law arose for consideration in the appeal. Consequently, the Revenue’s appeal was dismissed along with the connected application.
Thereafter, the Revenue filed a Special Leave Petition before the Supreme Court of India. The Supreme Court condoned the delay in filing the petition. During the hearing, counsel for the petitioner fairly submitted that another Special Leave Petition arising from the same common impugned order dated 21.08.2025 had already been dismissed by the Supreme Court on 24.04.2026.
In view of the earlier dismissal, the Supreme Court dismissed the present Special Leave Petition as well. The Court also disposed of all pending applications.
Accordingly, the order of the Calcutta High Court dismissing the Revenue’s appeal against the Tribunal’s decision remained undisturbed.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned.
2. The learned counsel for the petitioner fairly states that arising from common impugned order dated 21.08.2025, Special Leave Petition (C) No. 15013/2026 has been dismissed by this Court vide order dated 24.04.2026.
3. In view of the above, the special leave petition stands dismissed.
4. Pending application(s), if any, shall stand disposed of.
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