Ratnakar M. Pujari Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, dismissed an appeal filed by assessee Ratnakar M. Pujari for the assessment year 2006-07, thereby upholding the disallowance of his claim for tax-exempt long-term capital gains (LTCG) under Section 10(38) of the Income Tax Act, 1961. The case involved gains allegedly arising from the sale of shares of M/s Shiv Om Investment and Consultancy Limited, identified by the Revenue as a penny stock company.
The assessment proceedings for AY 2006-07 were initiated through reassessment under Section 147/148, based on information received from the Income Tax Department’s investigation wing. This information suggested that the assessee had engaged in non-genuine transactions involving pre-dated contract notes from brokers to claim bogus LTCG. The ITAT first addressed the validity of this reassessment. It noted that no original scrutiny assessment (u/s 143(3)) had been conducted for the year. Therefore, the information received constituted fresh, tangible material leading to a belief that income had escaped assessment. Citing the Supreme Court’s decision in ACIT v. Rajesh Jhaveri Stock Brokers Private Limited, the Tribunal held that since no prior opinion was formed by the AO, there was no “change of opinion,” and upheld the validity of the reassessment proceedings.
