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2018 (5) TMI 622 - AT - Income TaxValidity of reopening of the assessment - addition on account of sale proceeds of shares of M/s Talent Infoways Ltd. by treating the transaction as bogus - claim of exemption u/s 54F of the Act against the long term capital gain arising from sale of shares M/s Talent Infoways Ltd. - indepedent application of mind by AO - Held that:- Sufficiently of correctness of material is not required to be considered at the stage of initiation proceeding u/s 147/148 of the Act. Therefore, if the material available with the AO is prima facie sufficient to form the belief that the income chargeable to tax has escaped assessment then it is immaterial whether the said material subsequently found to be not sufficient for making the addition, the commencement of reassessment proceeding cannot be held as invalid if the same is sufficient to form the belief at the time of initiation. Accordingly, hold that the Assessing officer has applied his mind on the relevant material comprising of return of income filed by the assessee, the transaction of purchase and sale of shares, claim of long term capital gain as well as deduction u/s 54F of the Act in light of information received from DDIT Udaipur along with the report of the DDIT Mumbai - Decided against assessee Undisclosed income - bogus share purchases - Held that:- This matter requires a proper investigation and verification of the relevant facts particularly the prevailing market price or fair market price of the shares of M/s Talent Infoways Ltd. at the time of alleged purchase as well as at the time of alleged sale of shares. Further, if the shares were dematerialized before the same were sold then the holding of the shares cannot be disputed as at the time of dematerialized and the purchase consideration can be considered on the date of dematerialization after considering the prevailing market price or fair market value of the shares on that date. Since, the transfers of purchase and sale are all market transactions and therefore, a proper investigation and inquiries is needed in this case. Accordingly the issue is set aside to the record of the AO for conducting the proper inquiry and for adjudication of issue without relying on the statement of Shri Mukesh Choksi alone.
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