TaxTMI 
TaxTMI 
2021 (4) TMI 1192
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....rmation against the appellant from DIT (Inv.) ii. That the learned CIT (Appeals) erred in confirming an addition of Rs. 4154/- u/s 69C of the I.T. Act as alleged unexplained expenditure for procuring the above mentioned alleged bogus income." 2. The assessee in the present case is an individual who is engaged in trading business. The return of income for the year under consideration was filed by him on 08.12.2010 declaring a total income of Rs. 1,86,620/-. Although, the said return was initially processed u/s 143(1) of the Act, the assessment was subsequently reopened by the AO and the notice u/s 148 was issued by him to the assessee on 28.03.2017. During the course of the assessment proceedings, the issue relating to the claim of the assessee for exemption on account of long term capital gain arising from the sale of shares of M/s. Concrete Credit Ltd. amounting to Rs. 8,30,797/- was examined by the AO in the light of the report prepared by DIT(Inv.) Kolkata on the basis of detailed enquiry made in this regard. On such examination, the AO treated the long term capital gain claimed to be exempt by assessee as bogus and the amount of Rs. 8,30,797/- was added by him to th....
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....sessee filed his return of income for the relevant assessment year on 08.12.2010 declaring a total income as Rs. 1,86,620/-. As per the information the assessee has traded to Concrete Credit Ltd. for Rs. 8,53,620/- in Calcutta Stock Exchange. Information was received from the Pr DIT(Inv.), Kolkata vide his letter bearing No.35/2014-15/5053 dated 07.01.2015 that the investigation carried out by the Directorate revealed that a very large number of persons had taken entries of huge bogus Long Term Capital Gain in an organized manner through share transactions of penny stock companies listed with Calcutta Stock Exchange with the involvement of the promoters of the penny stock companies, unscrupulous brokers and entry operators. The letter is accompanied by a CD which contains investigation report, the details of transactions and other related information. The investigation focussed on 9 penny stock companies listed with Calcutta Stock Exchange. A close view of price movement of these 9 scrips revealed that there was common pattern in the trading of all such scrips. At first their prices start from a low range, then they are raised rapidly, stays there for a w....
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....explanation 2 to section 147 of the Income Tax Act, 1961." 6. The learned counsel for the assessee has submitted that similar reasons were recorded by the AO for reopening of the assessment in the case of Shri Udit Kumar Dugar and the issue raised by the assessee in the said case challenging the validity of the assessment made by the AO u/s 147/143(3) of the Act on the ground that the reopening of assessment itself was invalid was decided by the Tribunal in favour of the assessee vide its order dated 03.05.2019 passed in ITA No. 799/Kol/2018. He has also placed on record a copy of the said order, perusal of which shows that the assessment made by the AO in that case u/s 147/143(3) was held to be invalid by the Tribunal as the reopening of the assessment for the similar reasons as recorded in the present case itself was found to be bad in law for the following reasons given in paragraph no. 17 and 18 of its order: "17. From the aforesaid understanding of law governing the issue at hand, we have to examine the reasons already set out above and test whether the condition precedent necessary to usurp the re-opening jurisdiction can be discerned from perusal of the reasons r....
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....at there is reason to believe escapement of income, however needs further probe) and thereafter the AO observes that the matter is to be considered by applying the test of human probabilities. Thereafter referring to the Hon'ble Supreme Court decision in the case of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) and in the case of CIT Vs. P. Mohankala 291 ITR 278, he concludes that in view of the above facts and after analysing the information available on record, the AO says that he has reason to believe that the assessee has suppressed his income by using LTCG treating it as exempt to the tune of Rs. 2,38,54,750/- which is/are reported as bogus by the Directorate. (which means that as per the report of directorate LTCG claim of assessee is bogus) And thereafter, he concludes that he has reason to believe that income to the extent of Rs. 2.38 cr. has escaped assessment. Thus, from a reading of the reasons recorded by AO to justify re-opening of assessment, clearly show that the AO has taken note of the information from the DIT(Inv.) and taken the contents of the information given by DIT (inv) as gospel of truth against the assessee [without any verification or enquiry] to form a con....
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....m DIT (Inv.) because then it would be borrowed satisfaction of the jurisdictional fact & law which is not permitted by law and consequently vitiate the assumption of jurisdiction by AO to reopen u/s. 147 of the Act. In this case, as discussed above, we note that the AO after referring to the investigation report concludes that the information given by the DIT (Inv.) need to be looked into from the surrounding circumstances to find out the reality from the angle of human probability. Thereafter, the AO says that he has reason to believe that the assessee had suppressed its income by using LTCG treating it as exempted to the tune of Rs. 2,38,54,450/-; which is/are reported as bogus by the directorate. So it is clear from the aforesaid averments that AO based on directorate's report (DIT Investigation's Report) has taken a view that LTCG claim of assessee is bogus, and not as per his independent view after a preliminary enquiry. Because the AO himself records in the reasons to re-open that the claim of assessee (LTCG) need to be looked into from the surrounding circumstances to find out the reality, which admission of AO goes on to show that "AO had reason to suspect" only and not rea....