PCIT Vs P L Goenka HUF (Calcutta High Court)
Calcutta High Court held that reopening of assessment u/s. 147 for claim of bogus capital gain sustained fundamentals of company are very weak and abnormal price rise in share is artificially manipulated.
Facts- Revenue has preferred the present appeal mainly contesting that ITAT was not justified in law by not considering the fact that assessee had indulged in manipulation of the share prices of penny stock M/s. Tuni Textiles Mils Ltd with an intention to record fictitious long Term Capital Gains of Rs.5,36,750/-claiming these as exempt from taxation.
ITAT was not justified in law by not considering the fact that the “tangible information for the purpose of reassessment contemplated under Section 147 of the Act would include “borrowed information” and the same ought not to be mistaken with “borrowed satisfaction” as there exists a striking distinction between the two concepts. Hence, conclusion arrived at by the Assessing Officer based upon his own satisfaction drawn from the information received from the investigation wing cannot be said to be borrowed satisfaction.
Conclusion- Held that the transaction in shares of M/s. Tuni Textiles Mills Ltd. by the assessee was a pre-arranged transaction in the form of accommodation entry managed through collusive transactions by group of entry operators and shell entities. Thereafter the assessing officer has taken note of the various decisions, namely, CIT Vs. Durga Prasad More reported in (1971) 82 ITR 540(SC), Sumati Dayal Vs. Commissioner of Income Tax reported in (1995) 214 ITR 801 (SC), applied the test of human probabilities as propounded in the said decisions and then completed the assessment and has pointed out that before finalizing the assessment a final show cause notice was issued on 18.09.2021 for which the assessee submitted reply on 22.09.2021 and the said reply was also considered and the assessing officer has pointed out that the assessee has not submitted any new evidence in response to the show cause notice. Therefore, the learned Tribunal committed an error in coming to a conclusion that the assessing officer has not applied his mind for reopening the assessment under Section 147 of the Act.
