AHMEDABAD HIGH COURT
PURVIBEN SNEHALBHAI
PANCHHIGAR VS. ACIT
29-10-2018
A/ NO. 16725 of 2018
The petitioner has
challenged a notice of re-opening of assessment for the Assessment Year
2013-2014.
Petitioner is an
individual. For the Assessment Year 2013-2014 the petitioner had filed a return
of income on 8.10.2013 declaring the total income of Rs.3,10,980/ Such return
was accepted without scrutiny under Section 143(1) of the Income Tax Act, 1961.
To re-open such
assessment, impugned notice came to be issued by the Assessing Officer on
31.3.2018.with following reasons:-
It was mentioned that
the assessee had sold 31750 shares of TURBO TECH valued at s.1,33,43,352/-
thereby deriving exempt capital gain which was claimed u/s. 10(38) of the
Income Tax Act in A.Y. 2013-14
The Kolkatta
Investigation wing during the course of investigation had found and concluded
that the said company TURBO TECH was not engaged in any substantial activity.
The financials of the
company were poor,funds raised were not used for any business purposes and the
process of preferential allotment of shares was a pre-arranged and managed
process to allot preferential shares to beneficiaries of bogus LTCG claimants.
The prices of shares were rigged on the stock exchange through manipulation of
the stock market and various shares brokers and exit providers have in their
statements confirmed the fact that the shares of the said company were used for
providing bogus claim of LTCG/STCG.
The petitioner raised
detailed objection to the notice of re-opening under a communication dated
12.7.2018. Such objections were rejected by the Assessing Officer on 20.9.2018,
upon which this petition came to be filed.
Decision of court :-
In the present case the
Assessing Officer has heard the material on record which would prima facie
suggest that the assessee had sold number of shares of a company which was
found to be indulging in providing bogus claim of long term and short term
capital gain. The company was prima facie found to be a shell company. The assessee
had claimed exempt of long term capital gain of Rs.1.33 crores by way of sale
of share of such company. The judgment in the case of Principal Commissioner of
Income Tax, Rajkot-3 v. Gokul Ceramics [Taxman Vol. 241 {2016) 241], the
Division Bench had examined the contention of the Assessing Officer proceeded
on the basis of the information supplied by the department, and after referring
to the several judgments, made following observations in para 9 which read
thus:
“It can thus be seen
that the entire material collected by the DGCEI during the search, which
included incriminating documents and other such relevant materials, was along
with report and showcause notice placed at the disposal of the Assessing
Officer. These materials prima facie suggested suppression of sale
consideration of the tiles manufactured by the assessee to evade excise duty.
On the basis of such material, the Assessing Officer also formed a belief that
income chargeable to tax had also escaped assessment. When thus the Assessing
Officer had such material available with him which he perused, considered,
applied his mind and recorded the finding of belief that income chargeable to
tax had escaped assessment, the reopening could not and should not have been
declared as invalid, on the ground that he proceeded on the show-cause notice
issued by the Excise Department which had yet not culminated into final order.
At this stage the Assessing Officer was not required to hold conclusively that
additions invariably be made. He truly had to form a bonafide belief that
income had escaped assessment. In this context, we may refer to various
decisions cited by the counsel for the Revenue.”
In the result, the
petition is dismissed.
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