PCIT Vs Pradip Kumar Jajodia (Supreme Court of India)
The matter arose from an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 against the order dated December 30, 2024 passed by the Income Tax Appellate Tribunal, Kolkata Bench, for the assessment year 2016-17.
Before the Calcutta High Court, the Revenue challenged the Tribunal’s decision deleting an addition of Rs.9,87,300 allegedly linked to bogus long-term capital gains through penny stock transactions. The Revenue argued that the Tribunal failed to consider investigations conducted by the Assessing Officer, the Investigation Wing of the Income Tax Department, and SEBI concerning the abnormal rise in prices of shares of companies allegedly lacking financial foundation. It was also contended that the Tribunal failed to apply the test of human probabilities and ignored the principles laid down in the earlier Calcutta High Court decision in Swati Bajaj relating to bogus LTCG claims.
Read HC Judgment in this case: Reassessment Invalid as AO Had Only ‘Reason to Suspect’ and Not ‘Reason to Believe’ in Bogus LTCG Case
The High Court first condoned a delay of 40 days in filing the appeal after noting that the delay had been properly explained. The Court then examined the issue considered by the Tribunal, namely whether reopening of assessment under Sections 147 and 148 of the Act was legally valid.
