Raghav Agarwal (HUF) Vs ITO Ward-1(1)(3) (ITAT Lucknow)
Raghav Agarwal (HUF) had filed an appeal before the Income Tax Appellate Tribunal (ITAT), Lucknow, contesting an order dated 29.02.2024 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2015-16. The assessee challenged the validity of reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The grounds of appeal raised by the assessee included arguments that the reassessment was without jurisdiction, citing vague reasons recorded under Section 148(2) that lacked specific details regarding the alleged bogus Long Term Capital Gains (LTCG) and the underlying share transactions. The assessee also contended that there was no tangible material to form a belief that income had escaped assessment and alleged that the approval granted by the PCIT for initiating reassessment was mechanical and lacked proper application of mind. Further, the assessee argued that the reopening was based on borrowed satisfaction without independent inquiry by the Assessing Officer.
Beyond the procedural challenges to the reassessment initiation, the appeal also disputed the substantive additions made by the tax authorities. The assessee contested the addition of Rs. 84,85,078/- as unexplained cash credit under Section 68 of the Act. This addition was made against the LTCG claimed by the assessee as exempt under Section 10(38) of the Act, which the department considered bogus. The assessee maintained that it had provided substantial evidence to the lower authorities to prove the genuineness of the share purchase and sale transactions, which were conducted through banking channels and demat accounts. The appeal also challenged an addition of Rs. 84,851/- made under Section 69C, alleged to be expenditure incurred for procuring the disputed credit, arguing a lack of material to support that such expenditure was actually incurred. Finally, the assessee contested the invocation of Section 115BBE, which provides for taxation of unexplained income at a higher rate, arguing that the sale consideration of shares added under Section 68 was not unexplained and the submitted evidence had not been found to be false.
