The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed adjudication as the assessment order was passed without proper examination of residential status.
The assessee, Ajay Jain was an individual who had derived income from house property, capital gain and other sources. During the assessment proceedings, upon verification of the computation of income, it was observed that the assessee had shown long-term capital gain
on the sale of shares.
The assessee submitted that it had offered long-term capital gains to tax @10% under Section 112 of the Income Tax Act, as an off-market transaction took place and no Securities Transaction Tax was paid on the same.
The assessee also furnished a copy of the confirmation of purchase of shares and copy of the bank statement reflecting the amount on the sale of shares.
The Assessing Officer passed order under Section 143(3) of the Income Tax Act did not agree with the submissions of the assessee regarding the cost of acquisition of shares and accordingly, computed the long-term capital gains treating the assessee as Resident.
Amit Bothra,on behalf of the revenue submitted that the assessee was a non-resident for the past 10 years and had been filing its return of income in the status as non-resident.Further, as per the assessee, he was in India, during the year under consideration, only for 65 days and AO had not examined the residential status properly
V.K. Chaturvedi appeared on behalf of the revenue.
The two-member Bench of B.R. Baskaran, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) allowed the appeal filed by the assessee holding that the Commissioner of Income Tax Appeals (CIT(A)) neither sought any remand report from the AO nor considered any of the aforesaid documents while dismissing the assessee‟s appeal in respect of the computation of long-term capital gains. Further, there was no examination of the correct residential status of the assessee by any of the lower authorities.
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