Failure to make Proper Enquiry on Bogus Claim of LTCG by Sale of Shares: Calcutta HC upholds Revision Order [Read Order]
While quashing the order passed by the Tribunal, the Court upheld the order passed by the PCIT
Principal Commissioner of Income Tax – Assessing Officer – long-term capital gain – Calcutta High Court – taxscan
Principal Commissioner of Income Tax – Assessing Officer – long-term capital gain – Calcutta High Court – taxscan
In a recent case, the Calcutta High Court has upheld the revision order passed by the Principal Commissioner of Income Tax ( PCIT ) under Section 263 of the Income Tax Act, 1961. The Court found that the Assessing Officer ( AO ) failed to make a proper inquiry on the bogus claim of long-term capital gain ( LTCG ) by the sale of shares.
The appellant/department has challenged the order of the Tribunal in quashing the order under Section 263 of the Income Tax Act, 1961. The Tribunal allowed the appeal of Bina Gupta, the assessee and set aside the order passed by the Principal Commissioner of Income Tax (PCIT) passed under Section 263 for the assessment year 2014–15. The only ground on which the Tribunal has set aside the order passed under Section 263 is that the PCIT invoked his jurisdiction solely based upon a proposal received from the Assessing Officer.
The PCIT observed that the AO had failed to take a logical action on the information available to him and, therefore, the assessment was prima facie erroneous in so far as it was prejudicial to the interest of the revenue. The PCIT issued a show cause notice.
The assessee contended that it is not a case where the PCIT solely proceeded based on the report of the assessing officer, but on perusal of the report, the facts were examined. After taking note of the written submission filed by the assessee on December 6, 2018, the PCIT has examined the entire assessment records and flow chart, which show how some transactions were bogus when dealing with penny stock shares.
The division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that the assessing officer should have treated the entire credit as bogus and added back the same under Section 263 of the Act, rejecting the claim for exemption under Section 10(38) of the Income Tax Act. Therefore, PCIT has not solely proceeded based on the report of the assessing officer, but on perusal of the report, it has examined the facts.
While quashing the order passed by the Tribunal, the Court upheld the order passed by the PCIT. Vipul Kundalia appeared for the appellant and S.M. Surana appeared for the respondent.
To Read the full text of the Order CLICK HERE
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