S K Hisaria HUF Vs ITO (ITAT Ahmedabad)
Reopening Quashed for Borrowed Satisfaction – LTCG on Shares Cannot Be Taxed u/s 68
The Ahmedabad Bench of the Income Tax Appellate Tribunal allowed the assessee-HUF’s appeals for AYs 2017-18 and 2018-19, holding that the reassessment proceedings initiated under section 147 were invalid for lack of independent application of mind by the Assessing Officer.
The reassessment was triggered solely on the basis of information received from the Insight Portal alleging accommodation entries in the form of bogus long-term capital gains from shares of M/s Kushal Tradelink Ltd. The Tribunal noted that the reasons recorded did not demonstrate any tangible material or specific nexus linking the assessee to price manipulation or sham transactions. There was no discussion on how the assessee’s purchase or sale of shares was doubtful, nor any independent verification by the AO—amounting to mere “borrowed satisfaction”.
Since the reopening itself was held to be bad in law, the Tribunal ruled that the consequent additions—where exempt LTCG under section 10(38) was denied and taxed under section 68—could not survive. Accordingly, both reassessments were quashed and the assessee’s appeals were allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These both the appeals are filed against the order dated 03-09-2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment years 2017-18 and 2018-19.
