PCIT Vs Reena Jain (Calcutta High Court)
Calcutta High Court has set aside an order by the Income Tax Appellate Tribunal (ITAT), Kolkata, restoring the reassessment proceedings against Ms. Reena Jain concerning an addition of Rs. 9,16,444/- on account of alleged bogus long-term capital gains (LTCG). The High Court found that the Tribunal erroneously concluded the Assessing Officer (AO) had not applied proper mind during the reassessment, overlooking crucial evidence and the AO’s own satisfaction in identifying a larger tax evasion scam involving penny stocks.
The appeal was filed by the Principal Commissioner of Income Tax (PCIT) against the ITAT’s order dated January 9, 2024, for the assessment year 2015-16. The revenue raised several substantial questions of law, primarily challenging the Tribunal’s decision to delete the addition made by the AO and its failure to consider the evidence pointing towards manipulated transactions in penny stocks.
Background of the Case
The case originates from an assessment order dated September 9, 2021, passed by the AO under Section 147 of the Income Tax Act, 1961, which deals with income escaping assessment. The AO initiated reassessment proceedings based on information indicating that the assessee, Ms. Reena Jain, had received “accommodation entry of bogus LTCG” through trading in a penny stock identified as “NYSSA Corporation Ltd.” on the Bombay Stock Exchange (BSE)/National Stock Exchange (NSE)/Calcutta Stock Exchange (CSE).
