This case involves Shrikanta Bajaj’s appeal against the revision under Section 263 by the Principal Commissioner of Income Tax (Central) – 3, New Delhi, for the assessment year 2017-18. The main issue revolves around the assessment of capital gains from property transactions deemed to be incorrectly assessed.
The appellants, Shrikanta Bajaj and Vikram Bajaj, faced a reassessment under Section 263 regarding the sale of immovable property, which was initially handled on a protective basis due to alleged on-money transactions. The property in question, registered under their names, was actually owned by M/s RNB Mercantile Pvt. Ltd., where both appellants are directors. This case addresses the complexities of nominee transactions in property deals, especially when corporate entities are involved.
During the reassessment process, the ITAT considered whether the capital gains should be assessed in the hands of the registered owners or the actual owner, M/s RNB Mercantile Pvt. Ltd. The company had disclosed these gains in its returns and settled the on-money transactions via a Settlement Commission. Despite this, the Pr.CIT moved to assess the gains substantively in the hands of the appellants, leading to this appeal.
The Tribunal noted that sufficient enquiries were made during the original assessment, and the protective basis was correctly applied given the circumstances. Furthermore, the Settlement Commission’s decision, which favored the actual owner as the taxable entity, was highlighted to argue against the revision’s validity under Section 263.
The ITAT ruled in favor of Shrikanta Bajaj, stating that the revision by the Pr.CIT was unjustified and based on an incorrect assumption of jurisdiction. This case underscores the significance of clear ownership and proper assessment of transactions in tax law, providing a precedent for similar future disputes.
ITA 553/DEL/2021: Shrikanta Bajaj vs Pr.CIT(Central) – 3, New Delhi
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