Law:

Section:

Prima facie satisfaction about escapement of income is suffi- cient for reopening of assessment Section 147 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 1996-97 - Assessee disclosed in return of income that he had purchased and sold certain shares through a broker and earned long-term capital gains - He submitted that transactions had been routed through current account standing in name of broker - Assessing authority accepted return - Subsequently, proprietor of broker concern clearly denied about having such current account in his own name and had further stated that if there was such an account, it might have been opened by someone fraudulently in his name with which he had no concern - Whether disclosure of these transactions in original return could not be said to be disclosure of true facts of case - Held, yes - Whether, therefore, reopening of assessment by Assessing Officer was justified - Held, yes FACTS The assessee filed a return disclosing that he had earned long-term capital gains of Rs. 1,93,492 on sale of 5000 shares and that these shares had been purchased and sold through a broker, 'M'. The assessee further claimed the income from capital gains to be exempt under section 54F. The Assessing Officer accepted the return. Subsequently, the Assessing Officer reopened the assessment for the reasons that as per the information available on record, the assessee had received an amount of Rs. 99,800 vide a DD and deposited the same into his bank account in Ludhiana, that the said DD was received by the assessee from 'S', the proprietor of concern 'M' against the cash payment of Rs. 99,800 and a commission of Rs. 4,990, that an investigation made by the DDI (Investigation) revealed that the transactions of shares were not genuine, that actually the assessee had simply taken an accommodation entry and that the assessee introduced his income from undisclosed sources through the bank draft entry to avoid payment of the tax. In writ, challenging the assessment proceedings, the assessee contended, inter alia, that the statements of 'S' on which the report of the DDI (Investigation) was based, did not specifically brand…

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