TaxTMI 
TaxTMI 
2021 (4) TMI 1150
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....,92,630/-. The return of income was processed u/s. 143(1). 2. In this case, information was received from the office ADIT(lnv.) Unit-1(3), Mumbai vide office letter No. ADIT(lnv.)/Unit-1(3)/DMC EDU/2017-18/1082 dated 21/03/2018 in this office on 27/03/2018. As per the information, it is gathered that M/s. DMC Education Ltd. (Script name DMC Education) is a penny stock listed on BSE with Script Code (517973) and trading in this script is highly suspicious and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or Short Term Capital Loss in their books of accounts. The financials of the company for the relevant period do not show any substantial change so as to support such as huge share price movement. The sharp rise in the market price of this entity is not supported by financial fundamentals of the company. Both purchase and sale of the shares are concentrated within few persons/entities. The exit providers do not have creditworthiness. They are either non-filers or have filed nominal return of income. Further, during it was also examined that that this script was also indulged in self-trading....
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....uired to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment." 6. It is pertinent to mention here that in this case, the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s. 2(40) of the Income Tax Act was made and the return of income was processed u/s. 143(1) of the income Tax Act. In view of the above, provisions of clause (b) of Explanation 2 to sec. 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case when income chargeable to tax has escaped assessment. 7. In this case, more than four years have elapsed from the end of assessment year under consideration. Hence, necessary approval u/s. 151(1) of the Income Tax Act may kindly be accorded for issuing Notice u/s. 148 of the Act for A.Y. 2011-12." 3. The Assessing Officer thereafter issued notice u/s. 148 of the Act on 30.03.2018 which was duly served on the assessee. The assessee in response to the same filed the return of income on 10.04.2018 declaring total income of Rs. 7,50,590/- and asked for reasons which were duly provided to the assessee. The assessee filed objections....
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....pugned addition of Rs. 1,90,800/-. 4.2 That in the absence of providing and confronting alleged adverse material and in the absence of cross examination being allowed, no cognizance of such material can be taken, thus the A.O. erred in law and on merits in making addition of Rs. 1,90,800/- on the basis of such material. 5. That there is no legality and justification for addition of Rs. 9,540/- as unexplained expenditure u/s. 69C for alleged commission expense @ 5% of Rs. 1,90,800/- although there is no material and evidence for the same." 6. The learned counsel for the assessee, referring to page 3 and 4 of the paper book drew the attention of the Bench to the reasons recorded by the Assessing Officer, according to which, the assessee has not declared the transaction of Rs. 1,90,800/- in his return of income and the income remained unaccounted for being not declared by the assessee before the Department. Referring to page 48 to 50 of the paper book, the learned counsel for the assessee drew the attention of the Bench to the copy of the return of income filed by the assessee, wherein, the assessee has declared Long Term Capital Gain of Rs. 1,29,903/- as per Schedule E-1 of the ....
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...., Further, bonus shares in the ratio of 1:1 were allotted by the Co. Hence, in this manner, assessee held 20,000/- shares in M/s. Swen Television Ltd. Thereafter, M/s. Swen television Ltd. was amalgamated with M/s. DMC International, and assessee was allotted 3 shares for every 4 shares held in M/s. Swen television Ltd. i.e. 15000 shares of DMC allotted against 20000 shares of Swen television. In this manner, the assessee got 15000 shares in M/s. DMC International. Such 15000 Shares were sold in A.Y. 2011-12. The LTCG arising on sale of shares are as under:- M/s DMC International Sale Consideration Rs. 1,90,227/- Less: Purchase cost Rs. 60,000/- Less: Trf Exp Rs. 324/- LTCG Rs. 1,29,903 9. Referring to various pages of the paper book, the learned counsel for the assessee submitted that the assessee has duly disclosed such Long Term Capital Gain on account of sale of the shares after deducting the purchase cost (Rs. 60,000/-) and the transfer expenses (Rs. 324/-) from the sale consideration of Rs. 1,92,227/-. Therefore, both legally and factually, the addition made by the Assessing Officer and sustained by the learned CIT(A) is not in accordance with law. Referring to t....
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....m the details furnished by the assessee before the Assessing Officer as well as before the learned CIT(A), I find the assessee has demonstrated that he had sold 15,000 shares of M/s. DMC Education Ltd., during the A.Y. 2011-12 for a consideration of Rs. 1,90,227/- and after deducting the purchase cost of Rs. 60,000, shares of which were acquired in A.Y. 2006-07 (5,000 shares) and subsequent bonus shares, the assessee after deducting the purchase cost and transfer expenses had declared Long Term Capital Gain of Rs. 1,29,903/-. Therefore, once, the assessee had declared such income and claimed the same as exempt, the Assessing Officer without verifying the return and without independent application of mind could not have reopened the assessment on the basis of report from the Investigation Wing, which is on account of borrowed satisfaction and not independent application of mind. Thus, I find merit in the argument of the learned counsel for the assessee that such reopening is based on wrong appreciation of facts and on borrowed satisfaction. 12.1. It has been held in various decisions that when the reopening of the assessment is based on incorrect or wrong appreciation of facts, suc....