9911796707
TMI Blog2022 (9) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience. The assessee s grounds are as follows:- 1. That the order of the authorities below in so far as it is against the assessee is against the law, facts, circumstances, jurisdiction, natural justice, equity all other known principles of law. 2. That the total income and total tax computed is hereby disputed. 3. The authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 4. That the notice, initiation and all subsequent proceedings u/s 148 is bad in law, is without jurisdiction, barred by limitation and requires to be cancelled. 5. The notice u/s 148 and service thereof is bad in law and the reassessment requires to be cancelled. 6. The overlapping issue of notices u/s 148 dt.30.03.2017 dt.31.03.2017 renders the entire proceeding bad in law. 7. The conditions precedent to justify the reopening of the assessment u/s 147 of the Act being absent, the reopening of the assessment is bad in law and the reassessment requires to be cancelled. 8. That the authorities below erred in framin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimating 3% of capital gains as the commission paid u/s 69C of the Act merely on surmise. 23. The appellant denies the liabilities for interest u/s 234B, 234C 234D of the Act. Further prays that the interest if any should be levied only on returned income. 24. The appellant denies the liability for interest u/s 234D of the Act. The levy of. interest u/s 234D is against the express provisions of law. 25. No opportunity has been given before levy of interest u/s 234B, 234C and 234D of the Act. 26. Without prejudice to the appellant's right of seeking waiver before appropriate authority, the appellant begs for consequential relief in the levy of interest u/s 234B, 234C and 234D of the Act. 27. For the above and other grounds and reasons which may be submitted during the course of hearing of the appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered. 2. Facts of the case are that the assessee filed its return of income for the Assessment Year 2012-13 on 30/07/2012 declaring total income of Rs. 33,17,770/-. The return of income was processed under section 143(1) of the Income-tax Act,1961 ['the Act' for sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of predetermined penny stock company where the price of the shares of the penny stock companies, are rigged and are raised subsequently through circular trading. These operators provide accommodation entries for bogus LTCG and arrange the same using the scrips of these penny stock companies. The AO has issued a detailed show cause notice to the assessee giving a complete picture of the modus operandi and giving reasons as to why the claim of capital gain by the assessee was not genuine. The response of the assessee to the show cause notice has been considered by the AO and the reasons for not accepting the same have been advanced in the order. The assessee has been confronted about the findings and observations by way of recording the statement of the father of the assessee u/s 131. The AO has recorded that the rise in share value of these companies is totally disproportionate to their financial profile and market standing. Therefore, the AO brought to tax LTCG claimed at Rs. 1,99,52,625/-, Rs 2,41,14,754/- and Rs 5,70,12,623/- respectively for AYs 2012-13, 2013-14 2014-15 u/s 68 of the Act. Considering all the aspects in the case, the decision of the AO was upheld by the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcle Services Ltd and PSIT Infrastructure Services Ltd, thus factually the case before Calcutta High Court and the impugned case are materially different. (ii) The Calcutta High Court in para 4 and para 63 has made elaborate reference to the report of the Directorate of Investigation Kolkata dated 27.04.2015 and 03.07.2015 whereas in the present case since reasons have not been furnished, it is not clear as to what was the material before AO for issue of notice u/s 148. (iii) The case before Calcutta High Court was regular assessment and revision u/s 263 whereas the case herein is reopening u/s 148 and non-adherance to the procedure prescribed by Hon ble Supreme Court in GKN Driveshaft case. (iv) In the assessment order in para 3 it is mentioned that the AO had received information from Directorate of Income Tax (I CI) and DGIT(Inv)-Kolkata based on which survey was conducted in the assessee's premises on 12.05.2015 and 20.09.2016. Ld. A.R. stated that the factual matrix obtaining in this case is different from that was before Calcutta High Court . Further there was nothing incriminating found against the assessee in the aforesaid survey. When the survey was conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 141 of the Constitution, however it is seen that the said decision has not been considered by the Calcutta High Court and to that extent the decision of Calcutta High Court is at variance with decision of Hon ble Supreme Court. Hence Calcutta High Court decision cannot be relied on. 5.5 The ratio laid down by the Hon ble Supreme Court in Kishinchand chellaram (125 ITR 713) and Andaman Timber Industries (281 CTR 241) though reference has been made in page 50 para 23 of the Calcutta High Court , the Calcutta High Court has not discussed the binding ratio of the above decisions and has charted a ratio different from that of the Hon ble Supreme court. 5.6 The Calcutta High Court was considering the decision of the ITAT wherein the entire addition was deleted and the assessment was thus vacated whereas in the 'present case the issue is about applicability of 148 of the Act, non-furnishing of reasons and also a case of best judgment assessment u/s 144 of the Act, wherein the assessee was not given an opportunity as required under law. 5.7 The Calcutta High Court decision being a non-jurisdictional one is not binding in the impugned case especially when it is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by the income tax authorities at Mumbai on M /s. Mahasagar Securities and Mukesh Choksi Group. At that time,, Mr. Mukesh Choksi had admitted to have made accommodation entries in his books to enable the clients to declare speculation profit/loss, shorter gains, etc., and had identified the petitioner herein and certain others as some of the beneficiaries of the fraudulent entries/transactions by giving a sworn statement in that regard and it is based on the said sworn statement of Mukesh Choksi, respondent has re- opened the proceedings. It is in this background, petitioner had made a request to the respondent on 31.01.2014 to provide a copy of the sworn statement, so that petitioner could take further course of action. 4. It is not in dispute that petitioner was not furnished with the copy of the statement said to he.ve been made by Mukesh Choksi. Petitioner was not aware of the contents of the said statement. However, he filed objections contending inter alia that it was not known how a statement made by third party could be made applicable and made basis for the proceedings that were sought to be initiated. He also points out by way of objection that in dlr.: abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement and related details regarding the alleged share amount , I am of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner arid by furnishing the details/copy of the statement based on which the impugned assessment order has been passed. 9. In the result, this writ petition is allowed. The impugned order is quashed. The matter is remitted for fresh consideration in accordance with law and in the light of the observations made above. 7. Further, in the case of Sarita Dudheria cited (supra), wherein held as under: 5.1. The Ld.AR challenged the issuance of notice under section 147 of the Act, on the ground that the reasons do not mention about any new/ tangible material/ information against the assessee based on which the Ld.AO had reason to believe to reopen the concluded assessment. It is argued that the materials based on which the assessment has been reopened does not contain the name of assessee and hence irrelevant. 5.2. We note that no assessment under section 143(3) was passed in the case of assessee for assessment year 2013-14. Hence the argument of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also rely on the decisions of Hon'ble Supreme Court in case of ITO vs. Selected Dalutband Co.Pvt.Ltd., reported in (1996) 2171TR 597 and Raymond Wollen Mills Ltd. vs. ITO reported in (1999) 236 ITR 34. Hon'ble Supreme Court in these cases held that, so long as the ingredients of section 147 are fulfilled, the Ld.AO is free to initiate proceeding under section 147 and failure to take steps under 143(3) will not render the Ld.AO powerless to initiate reassessment proceedings even when intimidation under section 143(1) had been issued. 5.5. In present facts of the case we note that, the Ld.AO received information from investigation wing regarding the company Blue Circles Services Ltd being penny stock. And it is an admitted fact that assessee had sold the shares in Blue Circles Services Ltd and had earned LTCG. Therefore in order to investigate regarding the purchase/sale of shares in Blue Circles Services Ltd., by assessee, the assessment was reopened by the Ld.AO. The decisions by Ld.AR by Hon ble Courts on challenge of the validity of reopening in the paper book are distinguishable on facts based on the above discussions. We therefore do find any infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport issued by Investigation Wing, Kolkata. The Assessee having purchased shares of this company in huge volumes, should have possessed all required documents, as a prudent investor. The Assessee thus did not establish activities/business of companies, financial statements, annual income tax returns etc., in respect of alleged companies. 6.6. In the above list of decisions, relied by the Ld.AR, we note that the Hon'ble Mumbai Tribunal deleted the addition on the basis that the assessee therein established the sale of shares to be genuine and therefore the disallowance of LTCG is unwarranted for. However in the present facts of the case, the Ld. AO has doubted the capacity of assessee in making such huge investment in the alleged companies during the year in which they were purchased. 6.7. The decision of Hon'ble Delhi, Bombay and Madras High Courts is also on distinguishing facts. In those cases, the statements. of third person recorded were direct evidence against the assessed person and cross examination was denied by the revenue. Under such circumstances, Hon ble Courts held that there was violation of natural justice. 6.8 Therefore in our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be decided on facts and circumstances of that case. In our considered opinion, relevant factors to be considered are surrounding circumstances , objective fact s , evidence adduced, presumption of facts based on common human experience in life and reasonable conclusions . 6.13 Under such circumstances, the assessee was liable to discharge onus regarding purchase of shares by way of cogent documentary evidences. We note that assessee has not placed anything on record regarding the source of investments and capacity to invest such huge monies during the year in which the investments were made. Be that as it may, we also note that, the assessee having invested huge monies in these alleged companies, has not been able to provide any documents to establish sound financial of these companies and that, the fluctuation in price was market driven. Assessee is therefore directed to provide all relevant documents to establish source of investment and capacity to invest in the alleged companies in the year of investment. Ld.AO shall take all evidences into consideration and then decide the issue as per law. 6.14. At the outset we also hold that the statements recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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