Validity of reassessment on the basis of information of shell companies

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Validity of reassessment on the basis of information of shell companies

Validity of reassessment on the basis of information of shell companies

 

Where assessee filed his return claiming capital gain arising from sale of shares of company ‘T’ as exempt under section 10(38), in view of fact that said return was accepted under section 143(1) without scrutiny, AO was justified in initiating reassessment proceedings on basis of information received from Investigation Wing that company ‘T’ was a shell company and shares of said company were basically used for providing bogus claim of long-term or short-term capital gain

[2019] 101 taxmann.com 393 (Gujarat)
HIGH COURT OF GUJARAT
Purviben Snehalbhai Panchhigar
 S

 Income arising from transfer of long-term securities (Reassessment)
  Assessment year 2013-14
 
For relevant year, assessee filed its return which was accepted without scrutiny under section 143(1) 
 In said return assessee had claimed capital gain arising from sale of shares of company ‘T’ as exempt under section 10(38) 
 Subsequently, Assessing Officer received information from Investigation Wing that company ‘T’ was a shell company and shares of said company were basically used for providing bogus claim of long-term or short-term capital gain – Assessing Officer thus taking a view that assessee had raised a false claim for exemption of capital gain, initiated reassessment proceedings
 
Whether since there was no scrutiny assessment, Assessing Officer had no occasion to form any opinion on any of issue arising out of return filed by assessee – Held, yes 
 Whether, therefore, concept of change of opinion would have no application and, as a consequence, validity of impugned reassessment proceedings was to be upheld – 
Held, yes [Para 6] [In favour of revenue]

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