2022 (12) TMI 117 - HC - Income Tax

Reopening of assessment u./s 147 - Necessity of disposing of the objections - 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 under Section 148 of the Income Tax Act for reopening income tax assessment for the assessment year 2015-16.

Analysis:
The petitioner, engaged in trading shares, challenged a notice seeking to reopen their income tax assessment for the year 2015-16. The notice was based on the claim of bogus LTCG on penny stock transactions amounting to Rs. 90,37,264. The petitioner filed objections on 14.06.2021, but they were not disposed of, prompting the petitioner to approach the Court seeking to quash the notice. The prayers included setting aside the notice, staying its implementation, and seeking further relief. The Court granted protection to the petitioner and heard arguments from both parties.

The Senior Advocate for the petitioner argued that objections could be disposed of during the pendency of the petition, emphasizing that the respondent authority would likely maintain their stance. However, the respondent's counsel contended that the petition was premature as objections had not been addressed yet. The Court noted that two similar matters with nil assessments had been disposed of, indicating that the objections needed to be considered before any assumptions could be made.

Ultimately, the Court found the petition premature and chose not to entertain it at that stage. The authority was directed to dispose of the objections within two weeks from the date of the order, following due process. In case of an adverse order, the Revenue was instructed not to implement it for two weeks, allowing the petitioner to pursue legal options if necessary. The Court clarified that it had not expressed any opinion on the merits of the case, leaving the decision to be made based on its own merits. The case was disposed of without further commentary on the substantive issues.