PCIT Vs Nikunj Dhanuka (Calcutta High Court)
The Calcutta High Court dismissed an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal for the assessment year 2012-13.
The Revenue contended that the Tribunal had erred in deleting additions made under Sections 68 and 69C of the Act relating to alleged bogus long-term capital gains from penny stock transactions involving the scrip of VMS Industries Ltd. The Revenue also questioned the Tribunal’s decision regarding exemption claimed under Section 10(38) and alleged that the assessee had failed to establish the genuineness of the transactions.
Read SC Judgment in this case: SC Upholds Reassessment Quashing as No Exempt LTCG Was Claimed in Penny Stock
The Court noted that the Tribunal had allowed the assessee’s appeal after examining the factual background and finding that the information forming the basis for reopening the assessment under Section 147 was factually incorrect. The reopening was initiated on the premise that the assessee had claimed an exemption of Rs.90,95,000 under Section 10(38) arising from transactions in VMS Industries Ltd., based on information received from the Investigation Wing, Mumbai.
However, the Tribunal found that the assessee had actually disclosed long-term capital gains of Rs.41,98,896, after adjustment of long-term capital losses, and had claimed exemption only on that amount. The amount of Rs.90,95,000 referred to by the Assessing Officer was stated by the assessee to represent short-term capital gains of Rs.57,46,787, which had already been offered to tax in the original proceedings. The Court further observed that there was no material on record indicating that the assessee had earned long-term capital gains from shares of VMS Industries Ltd. as alleged by the Assessing Officer.
