The Calcutta High Court has upheld the reassessment against the assessee who was beneficiary who received accommodation entry which was used to avail bogus Long Term Capital Gain (LTCG).
The bench of Chief Justice T.S Sivagnanam and Justice Chaitali Chatterjee (Das) has observed that Tribunal has not examined the reasons set out by the appellate authority which has re-examined the factual position, taken note of the grounds raised by the assessee and their oral submissions and has in detail discussed about the lowering of funds and how the funds reached the concerned beneficiaries and has factually found that the assessee is one of the beneficiaries who received accommodation entry which was used to avail bogus LTCG/STCL.
The appeal was filed by the assessee before the learned Tribunal challenging the order passed by the National Faceless Appeal Centre (NFAC). By the order the appellate authority confirmed the findings recorded by the assessing officer in the assessment order dated 25.09.2021 passed under Section 147 read with Section 144B of the Income Tax Act.
The assessee contended that the assessing officer has only acted on the information received from the investigation wing and has not recorded his satisfaction nor did any exercise to examine the transactions done by the assessee before recording the reasons for reopening.
The ITAT did not go into the merits of the matter but relied upon instruction given by the CBDT dated 10th January, 2018 which deals with standard procedure for recording satisfaction under Section 147 of the Income Tax Act. After referring to the instruction, the Tribunal came to the conclusion that the assessing officer has not adhered to the standard procedures as he has only referred to the information received from the investigation wing and the assessee is stated to be one of the beneficiaries for receiving accommodation entry to avail bogus short term capital gains and that it is incumbent upon the assessing officer after receiving information from the investigation wing, he should have examined the return filed by the assessee and the information vis-à-vis the computation of income and then forms an opinion that income has escaped assessment to tax.
The Tribunal held that the assessing officer has not applied his mind for reopening the case that too after four years as the assessee has furnished all details of the alleged transaction in his income tax return and has not adhered to the standard operating procedure.
The court held that the Tribunal committed a serious factual error in coming to the conclusion that there was no application of mind of the assessing officer and erroneously elevated the status of CBDT which is meant as a guiding note of the assessing officer to have an effect of regulation. Therefore, the order in the appeal deserves to be quashed.
Case Details
Case Title: Principal Commissioner Of Income Tax 9 Kolkata Vs P L Goenka HUF
Case No.: ITAT/241/2024
Date: May 6, 2025
Counsel For Petitioner: Tilak Mitra, Advocate
Counsel For Respondent: None
