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TMI Blog2018 (10) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... t permitted as hit by proviso to Section 147 - Quash the reopening of the assessment being invalid - decided in favour of assessee. - ITA No. 511/JP/2016 - - - Dated:- 29-10-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Sanjeev Jain (CA) For The Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 09/02/2016 of ld. CIT(A), Ajmer for the A.Y. 2005-06. The assessee has raised following grounds of appeal: 1. The ld. CIT(A) has erred in law as well as on facts of the case by confirming initiation of reassessment proceedings by the A.O. after the expiry of four years from the end of the assessment year. 2. The ld. CIT(A) has erred in law as well as on facts of the case by confirming addition made by the ld. A.O. by treating income of ₹ 5,11,026/- from sale of shares, held for investment purposes, as income from other sources instead of income from capital gains. 3. The ld. CIT(A) has erred in law as well as on facts of the case by confirming addition made by the ld. A.O. by disallowing exemption U/s 54EC of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has submitted that initially the assessment was completed U/s 143(3) read with Section 147 of the Act and thereafter the Assessing Officer has again reopened the assessment after expiry of four years from the end of the assessment year. The ld AR has referred to the reasons recorded by the Assessing Officer A.O. at page 5 to 7 of the paper book and submitted that once the assessee has made full disclosure of all relevant facts and material in respect of the transaction of purchase and sale of shares then the reopening after four years is not valid as the sale is hit by proviso to Section 147 of the Act. The ld AR has submitted that during the original assessment proceedings U/s 143(3) read with Section 147 of the Act, the Assessing Officer verified the source of investment in the shares of NTPC and TCS. During the course of proceedings, the assessee duly explained the source of investment in the shares which includes the sale proceeds of ₹ 5,19,611.22 on account of 7300 shares of M/s Talent Infoway Ltd.. Thus, the Assessing Officer duly examined the details furnished by the assessee while passing the reassessment order dated 25/8/2009. The ld AR has asserted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale of shares of M/s Talent Infoway Ltd. as well as long term capital gain was not either the subject matter or the matter of enquiry by the Assessing Officer, therefore, once this issue was not considered during the original assessment then it cannot be said that the assessee has disclosed fully and truly all material facts necessary for the assessment. The ld DR has submitted that after the original assessment passed on 25/8/2009 there was a search U/s 132 of the Act in the month of November, 2009 wherein the new facts were discovered that the brokers which are group companies of M/s Mukesh M. Choksi were indulged in providing accommodation entries of bogus long term capital gains in respect of penny stocks including the shares of M/s Talent Infoway Ltd.. The assessee has claimed to have purchased the shares through the broker M/s Mahasagar Securities Pvt. Ltd., which is one of the group companies of M/s Mukesh M. Choksi, therefore, once the fact of bogus accommodation entries of long term capital gain was discovered in the search and investigation carried out by the Investigation Wing, the Assessing Officer was having a tangible material to form the believe that the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment that the reopening is based on the information received from the Investigation Wing, which was gathered during the search and seizure action in case of M/s Mahasagar Securities Pvt. Ltd., which is a share broker through whom the assessee has purchased and sold the share of M/s Talent Infoway Ltd.. Though the information received from the Investigation Wing was subsequent to the original assessment passed U/s 143(3) read with Section 147 of the Act on 25/8/2009, however, the Assessing Officer himself has not alleged in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all relevant material facts necessary for assessment. Therefore, once the Assessing Officer himself has not stated in the reasons that there is a failure on the part of the assessee to disclose fully and truly all relevant facts necessary for assessment then the reopening of assessment after four years from the end of the assessment year is not permitted as hit by proviso to Section 147 of the Act. The Hon ble Bombay High Court in the case of Titanor Components Limited Vs ACIT (supra) while dealing with the issue of validity of reopening has observed and held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the asst. yr. 1997-98. What is recorded is that the petitioner has wrongly claimed certain deductions which he was not entitled to. There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts fully and truly. It is only in the latter case that the AO would be entitled to proceed under s. 147. We are supported in this view by a decision of a Division Bench of this Court in Hindustan Lever Ltd. v. R.B. Wadkar, Asstt. CIT [2004] 190 CTR (Bom) 166 : [2004] 268 ITR 332 (Bom) where in a similar case the Division Bench held that reason that there was a failure to disclose fully and truly that all material facts must be read as recorded by the AO and it would not be permissible to delete or add to those reasons and that the AO must be able to justify the same based on material record. The Division Bench observed as follows : He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and trul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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