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MUMBAI: The Bombay high court has quashed an ITAT order that upheld additional ‘unaccounted income’ as taxable for an individual who is alleged to have engaged in rigging of stocks, observing the tribunal has gone beyond its scope.
The Income Tax Appellate Tribunal (Mumbai bench) had upheld the addition of ‘unaccounted income’ of Rs 90 crore in the hands of a defaulting taxpayer, Naresh Manakchand Jain, purported to have engaged in rigging of prices of select scrips and in money launderingby providing bogus entries like tax-exempt long-term capital gains to other parties.In addition, the ITAT had said that the names of 30,000-odd parties, who had benefited from these transactions, should be shared with regularity authorities.
The orders were quashed on technical grounds, as the tax tribunal had passed them ex-parte (without giving a hearing opportunity to Jain). Further, the high court held that the powers of the ITAT are limited to passing an order which is confined to the issues placed before it, in appeal. The high court has directed the ITAT to hear the matter afresh.
In this case, as reported by TOI in its edition dated September 9, the ITAT had referred to Jain as a kingpin and had gone beyond upholding the order of lower I-T authorities. It had directed Jain’s jurisdictional income-tax official to provide details of over 30,000 individuals and entities involved in the modus operandi to various regulatory authorities, such as jurisdictional I-T officials of these parties concerned, Sebi, stock exchanges, RBI, and the Registrar of Companies, for investigation and action. These details were to be provided within 90 days of the ITAT order.
Subsequent to the ITAT’s order, the Bombay high court granted an interim stay. Now, in its final order, the high court stated: “These directions could not and in any case, should not have been passed because this was an appeal filed by the taxpayer and not an appeal that was filed by revenue authorities.”
The Income Tax Appellate Tribunal (Mumbai bench) had upheld the addition of ‘unaccounted income’ of Rs 90 crore in the hands of a defaulting taxpayer, Naresh Manakchand Jain, purported to have engaged in rigging of prices of select scrips and in money launderingby providing bogus entries like tax-exempt long-term capital gains to other parties.In addition, the ITAT had said that the names of 30,000-odd parties, who had benefited from these transactions, should be shared with regularity authorities.
The orders were quashed on technical grounds, as the tax tribunal had passed them ex-parte (without giving a hearing opportunity to Jain). Further, the high court held that the powers of the ITAT are limited to passing an order which is confined to the issues placed before it, in appeal. The high court has directed the ITAT to hear the matter afresh.
In this case, as reported by TOI in its edition dated September 9, the ITAT had referred to Jain as a kingpin and had gone beyond upholding the order of lower I-T authorities. It had directed Jain’s jurisdictional income-tax official to provide details of over 30,000 individuals and entities involved in the modus operandi to various regulatory authorities, such as jurisdictional I-T officials of these parties concerned, Sebi, stock exchanges, RBI, and the Registrar of Companies, for investigation and action. These details were to be provided within 90 days of the ITAT order.
Subsequent to the ITAT’s order, the Bombay high court granted an interim stay. Now, in its final order, the high court stated: “These directions could not and in any case, should not have been passed because this was an appeal filed by the taxpayer and not an appeal that was filed by revenue authorities.”
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