Assessing Officer cannot rely solely on borrowed information without independent verification or a rational connection to income escapement.
Tax Appellate Tribunal, Mumbai, in the case of Annu Anil Agrawal ( IA No. 5473/Mum/2024, A.Y. 20211-12)
allowed the appeal on legal as well as on Merit of the case by observing that Assessing Officer cannot rely solely on borrowed information (from DGIT, Kolkata) without independent verification or a rational connection to income escapement.
ISSUE: Assessee had claimed Long-
Term Capital Gain exemptions under Section 10(38) of the Income Tax Act amounting to Rs. 6.67 crore.
The Hon’ble Tribunal quashed the reassessment proceedings under Section 148, emphasizing that the Assessing Officer cannot rely solely on borrowed information (from DGIT, Kolkata) without independent verification or a rational connection to income escapement. Reliance in this regard is placed on the decision of the Hon’ble Bombay High Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar (2004) 190 CTR (BOM) 275 and PCIT 5. Mumbai vs. Shodiam Investment Private Limited ITA 1297 of 2015.
The Hon’ble Tribunal, with utmost humility and respect, submitted that the decision in the case of Swati Bajaj (Calcutta HC) cannot be followed because there are several decisions by the BHC. Therefore, placing reliance on Vegetable Products [88 ITR 192 (SC) followed the various decisions of the Hon’ble Bombay High Court.
The Tribunal also observed that SEBI’s Internal investigation report on JMD Telefilms did not name the assessee or her broker, and no notices were issued to her even once.
The copy of the order is as under:
