Arvind Bhaguji Kangane Vs DCIT, Circle – 27(1), Mumbai

Parties Involved

Facts Summary

The assessee, Arvind Bhaguji Kangane, claimed to have been engaged in investment in shares. He filed his return of income for assessment year 2016-17 declaring income of Rs. 30,85,930/-. The case was reopened under section 147 based on information received from DDIT (Inv.) Ajmer that Sanasa Tech Fab Ltd. (earlier known as Jeevo Motors Finance Company Limited) was identified as a penny stock script company used for generating bogus capital gain or loss. The assessee traded in the script of such company. During the assessment, the assessing officer found that the assessee claimed long-term capital gain and exemption under section 10(38) of Rs. 2.40 crore on the sale of shares of Sanasa Tech Fab Ltd. The assessing officer recorded that the company was not having tangible assets nor any substantial investment, and the shares were artificially rigged. The assessing officer issued a show cause notice, and the assessee filed a reply, which was not accepted. The assessing officer added the sale consideration of Rs. 2.50 crore as unexplained and taxed the same under section 115BBE.…

Legal Issues

• 1. Validity of notice u/s 148 issued in mechanical manner.
• 2. Addition made u/s 68 of entire sale consideration of STT paid listed shares.
• 3. Validity of assessment order passed by faceless assessing officer.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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