ITAT is required to follow Jurisdictional High Court instead of order of Co-ordinate Bench

ITAT is required to follow the Hon’ble Jurisdictional High Court instead of orders of Co-ordinate Bench – ITAT

In a recent judgment, the ITAT Kolkata has held that Tribunal being subordinate to Hon’ble High Court is required to follow the judgment of the Hon’ble Jurisdictional High Court instead of following the orders of the Co-ordinate Bench

ABCAUS Case Law Citation:
ABCAUS 4079 (2024) (06) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC) in inter alia confirming the addition u/s 10(38) made by the Assessing Officer (AO) denying the benefit of long-term capital gain.

The return of the assessee was processed under section 143(1) of the Act. The Assessing Officer thereafter received an information from the Investigation Wing exhibiting the fact that certain individuals and Companies were engaged in arranging bogus long-term capital gain/loss benefit. The Assessing Officer has recorded the reasons and issued notice under section 148 of the Act.

In response to the notice under section 148, the assessee filed a letter submitting therein that the original return filed by it be treated as filed in response to the notice under section 148 of the Act.

The Assessing Officer depicted the modus operandi adopted for bogus long-term capital gain and rejecting the claim of the assessee made the impugned addition.

The Tribunal observed that the assessee had adopted delaying tactics and did not submit the complete details. The Assessing Officer had made an elaborate inquiry and found out that shares were stage managed.

The Tribunal further observed that this aspect has been dealt by the Hon’ble Jurisdictional High Court. In the detailed judgment running into more than 80 pages, Hon’ble High Court had considered the problem of penny stock companies and how long-term capital gain had been earned by certain companies/individuals in a staged manner modus operandi. While taking note of the report of the DIT (Investigation), the Hon’ble Court had observed that to cast the net wide the department adopted a different approach of investigation which acquired a character of a project.

The Tribunal further noted that Hon’ble Jurisdictional High Court had dealt with all the possible questions raised by the assessee. The assessee had admitted that the decision of the jurisdictional High Court was against him but he further relied upon three decisions of the ITAT.

The Tribunal stated that the ITAT being subordinate to the Hon’ble High Court is required to follow the judgment of the Hon’ble Jurisdictional High Court instead of following the orders of the Co-ordinate Bench on this issue.

Therefore, the Tribunal held that assessment in dispute was squarely covered by the decision of the Hon’ble Jurisdictional High Court and the appeal of the assessee was rejected.

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