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TMI Blog2021 (5) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the very same order as passed in the other cognate writ applications was transferred in the computer. The concerned stenographer was confronted in this regard and he offered his explanation stating that inadvertently the order in the present writ application also came to be transferred and that too without obtaining the signatures of the judges on the order. It appears that since the order came to be inadvertently transferred, the Revenue also obtained the certified copy of the same. 2. In fact, the present writ application was to be reheard on certain issues and when the same came to be notified once again for rehearing, the aforesaid fact came to our notice. 3. In such circumstances, referred to above, the present writ application was once again notified for hearing on 11th May, 2021 and was heard for some time. Thereafter, it was once again ordered to be notified today, i.e, on 13th May, 2021. We once again gave an opportunity of hearing to Mr. Tushar Hemani, the learned senior counsel appearing for the writ applicant and Mr. M.R. Bhatt, the learned senior counsel appearing for the Revenue and concluded the hearing. 4. By filing this writ application under Article 226 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has claimed exempt LTCG of Rs. 3438816/ in the return of income. The share price movement in the captioned scrip was seen from public domain and observed that there is share price rise which is prima facie not supported by financial fundamentals of the scrip. Normally, the price manipulation is done by creating a syndicate by the promoters, brokers, managers, controllers etc. and the price of such shares is raised abnormally high to show fictitious LTCG. 4. Enquiries made by the AO as sequel to Information collected/ received : As per AIMS module in ITS/ITBA data available with this office, the assessee has made penny stock transaction in FY 2011-12 and sell TUNI TEXTILE Ltd (scrip code 531411) and the assessee has declared gross total income return of income at Rs. 1226170/ only. Assessee has claimed Exempt income of LTCG at Rs. 348816/ but no transaction details have been furnished which shows that the assessee has availed accommodation entry to the tune of sale consideration received on sale of such shares by way of entering into dubious transactions in penny stock scrip. In view of the facts discussed above, I have reason to believe that income of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income tax as per the provisions of section 151 of the Act." 8. The writ applicant raised the objections against the issuance of impugned notice and initiation of the reassessment proceedings, mainly on the following grounds : i. Lack/absence of valid sanction under Section 151 of the Act. ii. The reasons for reopening factually incorrect; iii. No 'reason to believe' that income chargeable to tax has escaped assessment; iv. No live nexus between the information received and material gathered from the different sources. v. Reopening is not permissible for proving and/or fishing inquiry or investigation without their being a specific findings as to escape of income; vi. Reopening is based on borrowed satisfaction. vii. Reopening is beyond a period of 4 years and there is no failure on the part of the writ applicant as to full and true disclosure viii. Reopening based on change of opinion. 9. Being aggrieved by the order of disposal of the objections, against the notice for reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely presumed that the transactions entered into by the writ applicant in the scrip in question is a penny stock transaction, which cannot be a legal ground to reopen the assessment for the year under consideration. h. It was contended that at the time of framing the assessment under Section 143(3) of the Act all the necessary particulars had been furnished to Assessing Officer, who while issuing notice under Section 142(1) of the Act, had specifically called upon the writ applicant to furnish the details in respect of alleged transaction. Under the circumstances, the Assessing Officer has framed the original assessment and did not make any addition with regard to long term capital gain. Thus, in view of the aforesaid facts, now it is not open for the Assessing Officer to change that opinion and take a different view based on the very same set of facts and information. 12. In view of the aforesaid contentions, the learned counsel submitted that reopening of the assessment is, therefore, without jurisdiction and hence, the impugned notice deserves to be quashed and set aside. 13. In support of the aforesaid submissions, the learned Senior Counsel Mr. Tushar Hemani has relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. 16. Having heard the learned counsel for the respective parties and having gone through the materials on record, the only question falls for our consideration is that, whether the revenue is justified in reopening the assessment for the year under consideration? 17. It is settled position of law that Section 147 of the Act empowers the Assessing Officer, if he has reasons to believe that, any income chargeable to tax has escaped assessment, to assess or reassess such income or recompute any allowance. This power is subject to the provisions of Section 148 to 153 of the Act. 18. A plain reading of reasons recorded reveals that, the case of the assessee is reopened under Section 147 of the Act, since the information was received as per AIMS module that as per the penny stock transaction data, the assessee had sold 40000 shares of Tuni Textile Ltd., for the consideration of Rs. 35,72,261/. After receiving the information, the Assessing Officer made enquiries and gathered the information of the assessee and noticed that, the shares sold by the assessee are penny stock. The Assessing Officer has observed that, the transactions with the Tuni Textile Ltd. being a penny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having not been reflected in the reasons recoded, but a specific reference made in the reasons recorded by the Assessing Officer that, the transactions made by the assessee is penny stock. In this context, we may place reliance on the decision of this Court in the case of Aayojan Developers Vs. ITO, [335 ITR 234], wherein, this Court after referring the decision of the Calcutta High Court in the case of East Cost Commercial Com. Ltd., [128 ITR 324], held that, the income tax officer in his affidavit filed in the Court could explain or elaborate or clarify the reasons recorded by him, but he could not thereby introduce new grounds or new reasons or new materials which were not to be found in the recorded reasons, either expressly or by implication. 21. Applying the aforesaid principles of law, in the case of Aayojan Developers (supra) to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as "new ground" or "new reasons" to supplement the reasons recorded by the Assessing Officer. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of issuing the notice, the court cannot investigate into adequacy or sufficiency of the reasons. When no scrutiny assessment made under section 143(1) of the Act, the requirement for reopening is only reason to believe. Considering the facts of the present case, the Assessing Officer has caused of justification that, the alleged transaction of penny stock, claiming amount of long term capital gain has escaped assessment. We may place reliance on the case of Central Prominces Mangnese Ore Company ltd. (191 ITR 662 SC), wherein the Apex Court interpreted the word "reason to believe". It was held that, the word "reason" in the phrase "reason to believe" in Section 147, would means cause or justification. If the assessing officer has cause or jurisdiction to know or suppose that income has escaped assessment he can be said to have reason to believe that income has escaped assessment. The expression cannot be read to mean that the assessing officer should have finally ascertained the fact by legal evidence or conclusion. 25. In Praful Chunilal Patel Vs. M.J.Makwana Vs. CIT, [236 ITR 832], this court while interpreting the term 'reason to believe', held that, the word "reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to be really in disregard of the statutory condition......." Evidently, the Assessing Officer purporting to exercise powers under Section 147 of the Act, is not a party who has to not only state but establish before anyone the socalled jurisdictional facts. 26. In view of the settled principles of law as propounded by the Apex Court as well as by this court and considering the contention of the reasons recorded for reopening and further clarification of the information made by the revenue, we are of the view that, the Assessing Officer himself was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the TUNI Textiles Ltd., and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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