Since the investment was examined and accepted in scrutiny proceedings for AY 2015–16, the Revenue could not re-characterize the cost during the sale year. The Tribunal dismissed the appeal and upheld full LTCG exemption.
NAV approach using prevailing market value of land, the fair market value exceeded the issue price. The Tribunal ruled that the AO’s reliance on book value was unjustified and deleted the addition.
The ITAT Kolkata held that where assessment is completed under Section 143(3), alleged earlier non-compliance with notices stands impliedly condoned. Penalty under Section 271(1)(b) was therefore unsustainable and deleted.
The ITAT reaffirmed that Section 2(22)(e) cannot extend the definition of shareholder to a concern receiving the loan. The deemed dividend, if attracted, must be taxed in the hands of the substantial shareholder alone.
The Tribunal held that reopening based solely on investigation wing information without independent application of mind is invalid. Mechanical reasons cannot justify reassessment under Section 147.
The Tribunal found that the investors had substantial net worth far exceeding their investments. With PAN, ITRs, bank statements, and audited financials on record, the share capital could not be treated as unexplained.
The ITAT held that fresh allotment of shares at a value below fair market value attracts Section 56(2)(viia). The term receives includes allotment, and the differential amount was rightly taxed as income from other sources.
The ITAT held that absence of a valid notice under Section 143(2) is a jurisdictional defect. Since the notice was not properly issued by the competent officer, the entire assessment was declared void ab initio.
The Tribunal observed that ₹99.10 lakh allegedly added as unexplained credits may represent earlier year balances. The matter was remanded for verification to avoid wrongful taxation in the current assessment year.
The Tribunal held that reassessment proceedings fail when the Assessing Officer abandons the issue forming the basis of reopening. In such cases, other additions cannot be made without issuing a fresh notice under Section 148.
