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TMI Blog2021 (7) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017. Therefore, it cannot be said that the revenue was unaware with regard to alleged bogus trading undertaken by M/s. Aarya Global and connected persons and their beneficiaries. Under such circumstances, contention raised by the revenue is not acceptable. - Decided in favour of assessee. - R/SPECIAL CIVIL APPLICATION NO. 17756 of 2018 - - - Dated:- 11-6-2021 - HONOURABLE MR. JUSTICE J.B. PARDIWALA AND AND HONOURABLE MR. JUSTICE ILESH J. VORA Appearance: MR RK PATEL WITH MR DARSHAN R PATEL(8486) for the Petitioner MRS MAUNA M BHATT(174) for the Respondent ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE ILESH J. VORA) 1. By filing this writ application under Article 226, the writ applicant seeks to challenge the notice dated 31.03.2018 issued by the respondent under Section 148 of the Income Tax Act, 1961 ( the act for short) seeking to reopen the applicant s income tax assessment for the A.Y 2011-12. 2. The brief facts can be summarized as under: 2.1 The writ applicant being individual had earned long term capital gain of ₹ 2,03,33,181/- on sale of shares and claimed it as exempt income under Section 10(38) of the Act, while filing re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16.07.2018 and same came to be rejected by the respondent vide order dated 20.09.2018. The reasons recorded for the reopening of the assessment reads thus: 1. In this case, assessee filed return of income on31.7.2011 declaring total income of ₹ 7,37,385/-. Thereafter, order U/s. 143(3) r.w.s. 147 of the Act was passed in this case on 26.12.2017 determining taxable income at ₹ 30,10,285/-. 2. In this case, information received from ADIT (Inv), Unit-8(2), Mumbai that .... Reliable information is received that M/s, Aarya Global Shares and Securities Limited, a penny stock listed on BSE with Scrip Code (531731) and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or short term capital loss in their books of accounts., it was noticed that share price of M/s. Aarya Global Shares and Securities Limited rose from ₹ 39.96 on 17th June 2009 to 967.86 on 22nd Sept. 2010 and dipped to ₹ 16.99 to ₹ 16.99 on 12th Jan. 2012. However, the financial of the company for the relevant period do not show any substantial change so as to support such as huge sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd is liable to be assessed as income having escaped assessment on the basis of belief that same is accommodation entry. In this context, it was further submitted that the claim of LTCG of M/s. Aarya Global was thoroughly examined at the time of framing assessment in pursuance of first reopening notice and the assessee had furnished all necessary details with supporting documents i.e. details of LTCG earned on shares of M/s. Aarya Global, amount of investment, source of investment, mode of payment, bank statement, demote account, copy of ledger etc. and the Assessing Officer did not have made any addition while framing the assessment vide order dated 26.12.2017. Under the circumstances, it was submitted that the impugned notice after expiry of 4 years from the end of the assessment year in the relation to LTCG earned on sale of shares of M/s. Aarya Global is, nothing but a case of reopening due to the change of opinion, which law does not permit. (b) It was submitted that in the present case, the reopening is beyond 4 years from the end of relevant assessment year and there is no any reference in the reasons recorded regarding failure on the part of the writ applicant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company. It was further submitted that the Assessing Officer has analyzed the information and made enquiries independently and had formed an opinion that the assessee being a beneficiaries of the bogus LTCG, the income has escaped assessment. Relying on the SEBI order dated 30.11.2017, it was submitted that the SEBI had conducted investigation in the scrip of M/s. Aarya Global for the period May 21, 2010 to December 31, 2011 for the alleged irregularity in the scrip and imposed monetary penalty. In this background facts and contentions raised hereinabove, the learned Senior Counsel would submit that since the revenue discover fresh tangible material subsequent to the assessment order dated 26.12.2017, it cannot be said that the Assessing Officer did not have reason to believe that income has escaped assessment. 8. In support of aforesaid contentions, heavy reliance is placed on the case of M/s. Phoolchand Bajranglal and another Vs. Income Tax officer (1993) 4 SCC 77, to contend that during the previous proceedings of the assessment, the assessee failed to disclose a transaction of shares of penny stock company i.e. Aarya Global and subsequently based on the informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to what is meant by true and full disclosure, has been succinctly laid down by a Constitution Bench of the Apex Court in Calcutta Discount Co. Ltd, Vs. Income Tax Officer, Companies District 1, Calcutta and 1 another, (AIR 1961 SC 372), wherein, the Apex Court held as follows : 8, 9, 10 and 11. 8. ..The words used are omission or failure to disclose fully and truly all material facts necessary for his assessment for that year . It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his Possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise-the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee--to tell the assessing authority what inferences-whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or law-he would draw from the primary facts. 11. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn? 14. In the present case, it is the case of the assessee that all the primary material facts were disclosed during the previous assessment proceedings and transaction with M/s. Aarya Global has been disclosed, despite of this disclosure of primary material fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of shares sold during the year and benefit of long term capital gain. Over and above, the assessee had furnished the ledger account of M/s. Aarya Global Shares, bank statements to show a transaction, share allotment certificate, the statement of stock broker JM Financial Service Ltd. Thereafter, the Assessing Officer had framed the assessment under Section 143(3) of the Act vide his order dated 26.12.2017, wherein, he made a reference to the notice under Section 142(1) of the Act, as referred above and finally framed the assessment with the addition of ₹ 22,72,895/-, the amount which had been claimed by the assessee towards LTCG from shares of KGN Industries Ltd., treated as bogus transaction. However, the Assessing Officer was silent with respect to the sale transaction of M/s. Aarya Global and the claim of LTCG. 16. In the aforesaid background facts, we are of the considered view that all the relevant facts with regard to M/s. Aarya Global Shares and Security Ltd was within the knowledge of the Assessing Officer as the material facts of the transaction was fully and truly disclosed by the assessee. Under such circumstances, it cannot be said that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to above, the impugned notice issued after end of 4 years in the present case on a mere a change of opinion is bad in law. 19. In the present case, undisputably the assessment is sought to be reopened after the expiry of period of 4 years from the end of the relevant assessment year and the condition precedent for exercise of powers under Section 147 of the Act as provided under proviso thereto are required to be satisfied before the Assessing Officer assumed jurisdiction to proceed further. A plain reading of the reasons recorded for the reassessment reveals that in the entire reasons recorded there is no satisfaction arrived at by the Assessing Officer that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee for disclose fully and truly all necessary facts for his assessment for the year under consideration. Therefore, the conditions precedent for exercise of power under Section 147 after expiry of period of 4 yeas from the end of relevant assessment are not satisfied. Thus, the impugned notice dated 31.03.2018 under Section 148 of the Act, assuming jurisdiction under Section 147 after expiry of period of 4 years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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