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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