Ajay Kumar Vs DCIT/ACIT (ITAT Delhi)
In Ajay Kumar Vs DCIT/ACIT, the Income Tax Appellate Tribunal, Delhi, adjudicated an appeal challenging an assessment framed under sections 143(3) read with 263 of the Income-tax Act. The assessee had originally filed a return declaring income of ₹16.76 crore, including long-term capital gains (LTCG) of ₹8.74 crore from sale of shares. The case was selected for manual scrutiny through a notice under section 143(2) dated 25.09.2017, citing Para 1(i) of CBDT Instruction No. 5/2017. During assessment, the assessee furnished details supporting the LTCG claim, and the original assessment was completed without any addition.
Subsequently, revision proceedings under section 263 were initiated based on an Investigation Wing report alleging that the shares involved were part of accommodation entries. Following the revision order, the Assessing Officer made additions of ₹8.74 crore under section 68, treating LTCG as unexplained income, and ₹2.26 crore under section 69C as alleged commission expenses. The CIT(A) upheld these additions.
Before the Tribunal, the assessee raised an additional legal ground challenging the validity of the notice issued under section 143(2), arguing that the case was wrongly selected for manual scrutiny. Para 1(i) of CBDT Instruction No. 5/2017 permits such selection only where additions exceeding specified thresholds were made in earlier years on recurring issues. The assessee demonstrated that no such additions existed in prior years, and this fact was not disputed by the Revenue.
