The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has held that disallowance considering the allegation of Bogus Long Term Capital Gain (LTCG) is not valid in the absence of incriminating material.
The Revenue challenged the order of the Commissioner of Income Tax (Appeals) in the case of Bajrang Lal Bamalwa. The Revenue argued that CIT(A) has erred in deleting the addition to the tune of Rs.4,76,18,448/- (i.e., the impugned addition in each case) on the ground that no incriminating documents related to the disallowance of bogus Long Term Capital Gain is available with department when the entry operator and the directors of shell companies themselves have accepted under Oath that they are involved in providing accommodation entries during various departmental investigations which is incriminating in itself.
The assessees have filed returns before the search carried out upon them. The assessees have claimed exemption under section 10(38) of the Income Tax Act. A search and seizure operation under section 132(1) of the Income Tax Act was conducted in the case of M/s. Nemichand Bamalwa & Sons Group at its Head Office in Malaya Road, Dibrugarh and the residential premises of the assessees.
A notice under section 153A was issued to all these assessees and they have filed their details. The cases of all these assessees were centralized with Central Circle 4(3), Kolkata. Still, the assessees challenged such centralisation before the Hon’ble Guwahati High Court by way of a Writ Petition and ultimately the assessments were framed by ACIT, Central Circle, Dibrugarh. No dispute notice under section 143(2) of the Income Tax Act, 1961 was duly served on all these assessees.
A two-member bench of Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member observed that “In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153 A relates to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings.”
A perusal of these assessment orders would indicate that in five scrutiny cases of the sale of shares, i.e. TFCIL, gain earned by the assessee was accepted as genuine by the Department itself. Out of these five cases, two are in the re-assessment under section 147 and these assessment orders have been framed after more than one year of the search.
The ITAT dismissed the appeal of the revenue.
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