Case Law Details
Smt. Sonal D. Mehta Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that as per provisions of section 151(1) of the Income Tax Act reopening of assessment beyond four years period needs sanction from either Principal Chief Commissioner/ Chief Commissioner/ Principal Commissioner or Commissioner. However, sanction from Joint Commissioner in the present case makes the entire reopening proceedings bad in law.
Facts-
The assessee claimed LTCG on sale of various shares at conventional rate of tax @10%. In the subsequent A.Y. 2006-07, the same pattern was adopted by the assessee however, the Revenue treated the same “income for business” and taxed at higher rate vide assessment order dated 27.12.2011 passed u/s. 143(3) r.w.s. 263 of the Income Tax Act, 1961.
Accordingly, for the A.Y. 2005-06, the case of the assessee was reopened by issuance of notice u/s. 148, to tax the sale of shares as “business income”. AO completed the assessment on the ground that verification of records reveals that Vishal Exports Overseas Ltd., through a public limited company who subsequently owned by family members of Shri Sureshchandra C. Mehta. Due to 75% shareholding of family members, the share price was kept artificially high and the shares of assessee were sold within very short period. The entire exercise was stage managed. Eventually, the individual who purchased shares of M/s. VEOL showed “business losses” which were adjusted against their “business profits” while the individuals of the assessee, who claimed LTCG for sale of share which was treated on conventional rate of 10% only. In view of the above facts, the share transactions of the assessee is treated as “income from business” and added to the total income of the assessee and penalty proceedings is also be initiated.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
