ITO Vs Manoj Hirachand Motta (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), which had quashed the reassessment proceedings for Assessment Year 2010-11 and deleted the consequential additions.
The assessee had originally not filed a return under Section 139(1). Based on information that the assessee had executed bulk transactions in shares of Channel Guide India Limited recorded as suspicious by the FIU, the Assessing Officer recorded reasons under Section 147 and issued a notice under Section 148 on 30.03.2017. In response, the assessee requested that the manually filed return dated 28.09.2010 declaring income of ₹1,57,870 be treated as the return filed in response to the notice and specifically sought a copy of the recorded reasons for reopening.
The Assessing Officer thereafter issued notices under Sections 143(2) and 142(1), completed the reassessment under Section 143(3) read with Section 147, and treated the assessee’s claim of exemption under Section 10(38) on long-term capital gains from sale of shares of Channel Guide India Limited as unexplained income under Section 69. The assessed income was determined at ₹2,70,69,564.
Before the CIT(A), the assessee challenged the reassessment on the ground that despite repeated requests, including letters dated 03.04.2017 and 01.09.2017, the Assessing Officer never supplied the recorded reasons for reopening. The assessee relied upon GKN Driveshafts (India) Ltd. v. ITO and Commissioner of Income-tax (Large Tax Payer Unit), Mumbai vs. IDBI Ltd. in support of the contention that non-supply of recorded reasons rendered the reassessment invalid.
