The Tax Publishers2020 TaxPub(DT) 5047 (Jp-Trib)

INCOME TAX ACT, 1961

Section 153A Section 10(38)

Addition made by the AO by disallowing the claim of exemption under section 10(38) and reassessment completed under section 153A was undisputedly not based on any incriminating material found or seized during the course of search and seizure action under section 132. Therefore such addition was not granted.

Search and seizure - Assessment under section 153A - Alleged bogus LTCG, exemption under section 10(38) -

A search and seizure action under section 132 was carried out in case of Prakash Deep Finance Group on 4-3-2017 to which the assessee belongs. Pursuant to the search and seizure action, the AO issued notice under section 153A on 13-9-2017 and in response to the said notice, the assessee e-filed his return of income on 3-10-2017 declaring total income of Rs. 23,78,450 as declared in the return of income originally filed under section 139(1). Thereafter, notice under section 143(2) as well as notices under section 142(1) were issued and the AO disallowed the long-term capital gains exemption amounting to Rs. 3,60,05,017 claimed by the assessee under section 10(38) and the said amount was brought to tax as undisclosed income through bogus long-term capital gains under section 68. Further, commission amounting to Rs. 7,20,100 was brought to tax as unexplained expenditure for taking the accommodation entry. CIT(A) allowe the legal contention so raised by the assessee and held that there is no incriminating material found during the course of search in the case of assessee relating to disallowance of claim under section 10(38). Held: AO had reassessed the income of the assessee by disallowing the long-term capital gains exemption claimed under section 10(38) without making any reference to any incriminating material found during the course of search. There is no finding of the AO or any other material brought on record that these transactions of sale of shares were concealed and not reported to the Revenue while filing the original return of income on 30-8-2015 for the impugned assessment year. Once these transactions were reported in the return of income furnished before the date of search, the said transactions were duly disclosed to the department and thus, does not represent any undisclosed transactions so as to constitute incriminating material found during the course of search in case of the assessee. The addition made by the AO, therefore, by disallowing the claim of exemption under section 10(38) and reassessment completed under section 153A was undisputedly not based on any incriminating material found or seized during the course of search and seizure action under section 132.

Followed:Jai Steel (India) v. Asstt. CIT (2013) 88 DTR 1 (Raj) : 2013 TaxPub(DT) 1647 (Raj-HC) and CIT v. Kabul Chawla (2015) 126 DTR 130 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC) and CIT v. Continental Warehousing Corporation (2015) 120 DTR 89 (Bom-HC) : 2015 TaxPub(DT) 2182 (Bom-HC).

REFERRED : Pr. CIT v. Meeta Gutgutia (2018) 257 Taxman 441 (SC) : 2018 TaxPub(DT) 4130 (SC), Rajasthan Fort & Place Pvt. Ltd. v. Dy. CIT (ITA No. 597 to 599/JP/2017 Order, dated 24-1-2018) (JP-Trib.), Pr. CIT v. Dipak Jashvantlal Panchal (2017) 397 ITR 153 (Guj-HC) : 2017 TaxPub(DT) 4093 (Guj-HC), CIT v. Deepak Kumar Agarwal & Ors. (2017) 158 DTR 100 (Bom.), Jai Steel (India) v. Asstt. CIT (2013) 88 DTR 1 (Raj-HC) : 2013 TaxPub(DT) 1647 (Raj-HC), Pr. CIT v. Saumya Construction Pvt. Ltd. (2016) 387 ITR 529 (Guj-HC) : 2016 TaxPub(DT) 3466 (Guj-HC), Pr.CIT v. Devangi Alia Rupa (2017) 98 CCH 0051 (Guj-HC) : 2017 TaxPub(DT) 1376 (Guj-HC), CIT v. Kabul Chawla (2015) 126 DTR 130 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC) and CIT v. Continental Warehousing Corporation (2015) 120 DTR 89 (Bom-HC) : 2015 TaxPub(DT) 2182 (Bom-HC).

FAVOUR : In assessee's favour.

A.Y. : 2015-16


INCOME TAX ACT, 1961

Section 68 Section 69

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com