2022 (12) TMI 79 - HC - Income Tax

Reopening of assessment u/s 147 - Necessity of disposing of the objections - petitioner has claimed bogus LTCG on penny stock transaction - HELD THAT - We noticed that in today s date, this Court has disposed of two of the matters being Special Civil Application 2022 (11) TMI 1269 - GUJARAT HIGH COURT and 2022 (11) TMI 1268 - GUJARAT HIGH COURT wherein the assessment made is nil and they were the part of the very group, therefore, nothing can be presumed in advance and the stage of disposing of the objections will need to be made available to the respondent authority. Petition being prematured, this Court chooses not to entertain it at this stage. Let the disposal on the strength of the objections raised by the petitioner be made by the authority concerned within two weeks from the date of receipt of copy of this order, on availing opportunity in accordance with law. If any adverse order is passed, no effect be given to the same by the Revenue for two weeks. The petitioner will be at liberty to take legal course within this period of two weeks, if it so chooses.

Summary

Issues:
Challenge to notice seeking to reopen income tax assessment for the assessment year 2015-16 under Section 148 of the Income Tax Act.

Analysis:

1. Challenge to Notice under Article 226:
The petitioner, engaged in trading shares, challenged the notice dated 31.03.2021 seeking to reopen the income tax assessment for the year 2015-16. The reasons for reopening were based on the petitioner's alleged claim of bogus LTCG on penny stock transactions amounting to Rs. 1,35,65,738. The petitioner sought to quash the notice and stay further proceedings for the assessment year.

2. Court Proceedings and Objections:
The court issued notice and granted protection to the petitioner. The respondent, through Senior Standing Counsel Mr. Varun Patel, argued that the objections had not been disposed of, making the petition premature. The court heard arguments from both sides, with Senior Advocate Mr. Tushar Hemani representing the petitioner.

3. Decision and Disposal of Petition:
The court noted previous cases where assessments were nil and emphasized the need to dispose of objections before making assumptions. Considering the premature nature of the petition, the court chose not to entertain it at that stage. The authority concerned was directed to dispose of objections within two weeks, and any adverse order was to have no immediate effect. The petitioner was granted the liberty to take legal action within the two-week period.

4. Final Remarks:
The court clarified that it did not express any view on the merits of the matter, leaving it to be decided independently. The case was disposed of with these directions, ensuring the proper disposal of objections and allowing the petitioner the opportunity to challenge any adverse order within the specified timeframe.