Sanjay Jayantilal Shah Vs ITO (ITAT Ahmedabad)
CIT(A)’s Remand Power Checked – ITAT Sends Appeal Back for Full Disposal- ITAT Rules Against Mechanical Remand in Stock Gains Case- Decision Must Be on Merits ITAT Ahmedabad
Assessee filed a return declaring income of ₹17.25 lakh and claimed exempt Long-Term Capital Gain (LTCG) of ₹1.02 crore u/s 10(38) on sale of shares of Looks Health Services Ltd.
Based on Investigation Wing input identifying Looks Health as a penny-stock scrip used for accommodation entries, AO reopened assessment u/s 147 by notice dated 30-03-2021. During reassessment, AO found the scrip’s financials negligible, trading pattern erratic, & price rise/fall artificial. Relying on Sumati Dayal v. CIT, Durga Prasad More, & McDowell, he held the transactions were bogus LTCG used to launder unaccounted income. He treated the entire sale consideration of ₹1.05 crore as unexplained cash credit u/s 68, added 5% commission (₹5.25 lakh) u/s 69C as accommodation-entry expense, & assessed total income at ₹1.27 crore (as against ₹17.25 lakh). Penalty u/s 271(1)(c) & interest u/ss 234A/B/C were initiated.
Before CIT(A)/NFAC
Assessee produced bank statements, demat statements, & contract notes to prove genuineness & sought admission of additional evidence. CIT(A) invoked the new proviso to Sec 251(1)(a) (inserted w.e.f. 01-10-2024) which allows remand only where assessment is made u/s 144, holding that AO had passed the order “u/s 147 r.w.s 144.” On this basis, he set aside the assessment & directed AO to redo it de novo, without deciding the merits of additions.
