Vishal Aggarwal Vs ITO (ITAT Delhi)
ITAT held that Income Tax reassessment initiated on the basis of borrowed satisfaction without any independent application of mind by Assessing Officer is liable to be quashed.
ITAT find that there has been no independent application of mind by the Assessing Officer and the satisfaction is completely based on the input by the Investigation Wing. The facts have not been correlated and there is no linkage between the documents received, sum of the quantity of shares purchased, sum of the trade value as alleged and sum of the quantity of shares purchased, sum of the quantity as entered by the assessee. The AO held that the sum of the trade value of sale was Rs.66.01 lacs whereas the sum of the trade value of sale was only Rs.40.08 lacs. Similarly, the sum of the purchase value of the trade mentioned by the AO of Rs.4.71 lacs is totally different from that of the assessee of Rs.20.32 lacs and same is the case with regard to number of trade while we agree that there has to be minimal sufficiency of the primary satisfaction for reopening of the case, in the instant case, we find that even the minimal sufficiency of the fact is absolutely lacking. The quantity, value and the number of trades are also incorrect the reasons recorded.
Hence, owing to the entire factual content, we hold that the reasons recorded are faulty, incorrect and not based on the facts, we hold that the notice of reopening cannot be held to be sustainable in law. The whole reassessment proceedings and the resultant order of assessment passed under Section 143(3)/148 of the Act have become vitiated entailing in nullifying proceedings and, accordingly, the orders of assessment under Section 143(3)/148 are quashed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal has been filed by the assessee against the order of ld. CIT(A)-8, New Delhi dated 11.11.2019.
2. Following grounds have been raised by the assessee:
“1. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding action initiated u/s 147 by the AO is legal and doesn’t suffer from any irregularities or illegality.
2. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that action u/s 147 has been rightly and legally taken.
3. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that Long Term capital Gain on sale of shares of Rs 40,47,573/- was a bogus transactions and was only an accommodation entry.
4. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the transactions relating to sale and purchase of shares resulted in bogus Long Term capital Gain and was a sham transaction.
5. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in confirming the addition of Rs 40,47,573/- incorrectly and invalidly made by the AO.
6. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in rejecting, the claim of the assessee of earning genuine Long Term capital Gain, only on the basis of doubt, suspicion and human probability.
7. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in rejecting the claim Long Term capital Gain even when the purchase of the shares in earlier years stands approved, accepted and not treated as bogus.”
3. The assessee filed return of income on 26.07.2011 declaring income of Rs.18,28,537/-. The assessee has shown income from salary being Director of M/s Shree Hari Developers P. Ltd., income from house property, income from business, income from capital gains and other sources.
4. The assessee purchased following shares of GCML on recognized stock exchange i.e. Bombay Stock Exchange (BSE) through its broker M/s Adinath Capital Services Ltd. and DSC on payment of Securities Transaction Tax (STT) which were credited to his D-mat a/c with above broker:
