| Question And Answer | |
|---|---|
| Subject: | PURCHASES OF SHARES ACCEPTED U/S 143(3)/147 IN A.Y. 11-12 , LTCG ON SALE OF SUCH SHARES IN AY 15-16 DOUBTED BY AO BY ISSUE OF NOTICE U/S 148 |
| Category: | Income-Tax |
| Querist: | KANIKA AGRAWAL |
| Answered by: | Advocate Neelam Jadhav |
| Tags: | Capital Gains, Reassessment, sale of shares |
| Date: | July 27, 2021 |
During FY. 10-11 Assessee purchased certain shares through banking channels . The shares were transferred in the D-mat account and the same were reflected in the Balance sheet as on 31.03.11. Case for the issue was reopened u/s 148 notice dated 31.03.18 . On the basis of information of DDIT (Inv.). The assessee objected to 148 and also furnished the details as regards the source of investment and after considering the details furnished the AO was satisfied and the assessment was completed on returned income u/s 143(3)/147.
The above referred shares were sold during F.Y. 14-15 (A.Y. 15-16) through stock broker . STT was paid and payment was received through banking channels and deduction u/s 10(38) of LTCG was claimed.
The case for A.Y. 15-16 has been reopened by issue of notice u/s 148 dated 31.03.2021.
Since the purchases of the shares have been accepted in assessment u/s 143(3)/147 for A.Y. 11-12 . Whether the sale of the same shares in claim of LTCG can be disputed by A.O.
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On the facts the AO has issued 148 notice for reopening of assessment beyond the 4 years from the end of relevant assessment year . One has to verify whether proper sanction was obtained or not and also whether the Commissioner while granting sanction has applied his mind .
On the facts in the year of purchase ie . AY 11 – 12 the Assessing Officer has accepted the purchase of shares as genuine and same were transfers to the Demat account. Assessee had filed complete details of its share transactions at time of completion of assessment u/s. 143(3) of the Act .
In Gateway Leasing (P.) Ltd. v. ACIT (2020) 426 ITR 228 (Bom)(HC) held Validity of reassessment proceedings could not be upheld that on ground that assessee earned bogus long term capital gain on sale of shares when assessee has furnished full details of its share transactions carried out in relevant year at time of completing assessment under section 143(3).
In CIT v. Foramer France (2003) 264 ITR 566/129 Taxman 72/185 CTR 512 (SC) held that the reassessment after the expiry of four years is held to be bad in law when there is no failure to disclose material facts .
On law and facts the reopening of assessment may not be valid in law.