9911796707
TMI Blog2021 (6) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion 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 belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. Valid sanction as raised by the learned counsel for the writ applicant - We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the asessee as per information received from the ITO/CIB)1, Mumbai on 02.04.2013 at DIT (I CI) Mumbai uploaded in the ITS data. 3. Analysis of information collected /received :As per the penny stock transaction data available, assessee has made sell transactions of shares of Karma Ispat Limited trade qty. 3400 shares for ₹ 934490/-. 4. Enquiries made by the AO as sequel to information collected/received: As per information received from the ITO(CIB)1, Mumbai on 02.04.2013 at DIT (I CI), Mumbai uploaded in the ITS data. 5. Findings of the AO: As per information received the ITO(CIB)I, Mumbai on 02.04.2013 at DIT (I CI), Mumbai uploaded in the ITS data that the shares sell are of penny stock. On perusal ROI it is noticed and found that assessee has not shown shown LTCG claimed as exempt in ROI of ₹ 850611. Assessee has not shown in balance sheet as investment. Further, as per ITS data the assesse transaction of sell of penny stock to the extent of ₹ 934490/-. As the assessee has not fully disclosed the said transaction in his return of income. 6. Basis of forming reason to believe and details of escapement of income:- As the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ application. 7. We have heard learned Senior Counsel Mr. Tushar Hemani, assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant and Mr. Manish Bhatt, the learned Senior Counsel assisted Mrs. Mauna Bhatt, learned Sr. Standing Counsel and Mr.Karan Sangani, the learned advocate appearing for the revenue. 8. Mr. Tushar Hemani, the learned Senior Counsel appearing for the writ applicant raised the following contentions: a. It was submitted that the impugned notice is bad in law and it has been issued in contravention with Section 147 of the Act. b. It was submitted that, reasonable belief as contemplated under Section 147 /148 of the Act must be that of an honest and reasonable person based upon reasonable ground and it should not be based on some suspicious and vague reason. Whereas, in this case, the reasons are vague and do not reveal any income having escaped assessment and furthermore, reasons recorded made it clear that, this is a case of borrowed satisfaction without any independent application of mind. c. It was further submitted that, in case of reopening beyond period of 4 years, it is mandatory to obtain sanction from the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he writ application, contending that the AO was in receipt of information from the Investigation wing I CI wing through AIMS Module of the ITBA, that the writ applicant had sold 3400 shares of Karma Ispat Limited and earned long term capital gain of ₹ 9,28,998/- and after in depth investigation into the transaction of the scrip of Karma Ispat Ltd., it was found that the transaction was penny stock and the assessee had 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 this background of the facts, the writ applicant is the beneficiary of the accommodation entries of long term capital gain on penny stock transactions and therefore, the AO has reasons to believe that the income chargeable to tax has escaped assessment. Mr. Bhatt placed reliance upon the decision of this Court in the case of Purvi Snehalbhai Pachhigar Vs. Asst. Commissioner of Income Tax, (2019) 101 Taxman.com.393, to submit that, in a similar set of facts, this Court had dismissed the petition challenging the notice issued under Section 148 of the Act. 12.Mr. Manish Bhatt, learned Senior Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions, has reason to believe that the income of ₹ 9,34,490/- chargeable to tax has escaped assessment. While forming the opinion with regard to income has escaped assessment, the AO has noticed that the price rise in the shares of Karma Ispat Ltd, for the relevant year had not been supported by financial fundamental scrip and there was a manipulation by group of syndicate like promoters, brothers and controllers who played major role in rising the price for fictitious long term capital gain and the assessee has availed accommodation of entry to the tune of sale consideration received on sale of such shares by way of entering into transaction in penny stock scrip. 17. It appears that, in the affidavit in reply filed by the revenue, it has been stated that, as per the information, the Director of investigation, Kolkata, conducted enquiries and found that, some big syndicates involved in providing accommodation entries of long term capital gain and identified 84 listed penny stocks. It has been further stated by the revenue in their affidavit that, the search was conducted in the premises of 32 share broking entities, who have accepted and admitted that, they were involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not term as new ground or new reasons to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. 20.The next contention is that, the AO failed to record an independent finding as to how the income has escaped assessment. Under such facts and circumstances, it is vehemently contended that, the AO while recording the reasons for reopening the assessment did not have any valid reasons to believe that, the income earned by the assessee by way of long term capital gain has escaped assessment. 21. A bare perusal of the reasons recorded and further clarification of the information made by the revenue by way of affidavit in reply would make it clear that, the company Karma Ispat Ltd., was used in providing bogus accommodation entries of long term capital gain by certain entities like broker etc. Undisputedly, the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the AO is not required to base his belief on any final adjudication of the matter . And, .....His formation of belief is not a judicial decision but an administrative decision. It does not determine anything at the initial stage, but the AO has a duty to proceed so as to obtain, what the taxpayer was always bound to pay if the increase is justified at all. The decision to initiate the proceedings is not to be preceded by any judicial or quasi-judicial enquiry. His reasoning may be the result of official information or his own investigation or may come from any source that he considers reliable. His reason is not to be judged by a Court by the standard of what the ideal man would think. He is the actual man trusted by the legislature and charged with the duty of forming of a belief for the mere purposes of determining whether he should proceed to collect what is strictly due by law, and no other authority can substitute, its standard of sufficient reason in the circumstances, or his opinion or belief for his. Unless the ground or material on which his belief is based, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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