9911796707
TMI Blog2023 (5) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... iled its return of income for the assessment year 2012- 13, by declaring gross total income at Rs. 16,56,922/-. 3.2 On 26.03.2019, the respondent authority issued a notice under section 148 of the Act for re-assessing the income of the petitioner. The assessee vide reply dated 18.04.2019 asked for the reasons for reopening of the assessment. The main objections of the petitioner against the re-assessment proceedings are three fold:- (i) The main reason as can be curled out from the reasons recorded is that as per the information communicated from the Investigation wing, the petitioner has traded in penny scrips for the amount of Rs. 6,49,000/- whereas the correct transaction value is Rs. 6,49,295/-. (ii) It is objected that during the Scrutiny Assessment, the purchase of said shares stood accepted under section 143(3) and hence, the sale thereof cannot be held fully taxable in the subsequent year. Reasons are factually incorrect also for the reason that assessee has purchased the shares more than 5 years ago through demate account and payment has been made by debiting bank account through account payee demand draft. (iii) It is settled law that reopening cannot be made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the same, we could note that the entire base for reopening assessment is on the premise that there was "information" supplied by the Investigation Wing and the Assessing Officer has made cursorily reference to high value transaction of Rs.26,42,027/- as well as also referred to accommodation entry entered upon by the petitioner Company by way of bogus sales / purchases / fictitious loans etc. Thus, it appears that the reasons for reopening of the assessment in the case of petitioner Company for annual assessment year 2014-15/2015-16 by the Assessing Officer is based on the borrowed satisfaction and the Assessing Officer has not applied his independent mind to arrive at the conclusion that there was failure on the part of the assessee to disclose fully and truly all material facts. In fact, the Assessing Officer is under obligation to arrive at such conclusion that the assessee has failed to disclose all material facts and has to form independent opinion resulting into "reason to believe" with regard to escapement of income chargeable to tax in case of the petitioner. During the course of hearing, learned Senior Advocate for the Department has tried to improvise by referring to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order." 5. So far as the case of Surani Steel Tubes Limited (Supra) is concerned, the ratio laid down in the said judgment is not applicable to the facts of this case. In the said decision, it has been observed that during the course of hearing, the department tried to improvise there stand by referring to the original file of the department to emphasize that there is tangible material on record to show that the petitioner company has made purchase transactions. It has also been opined that specific details were absent as regards particulars of nature of transaction. 5.1. Whereas, in the present case, the revenue authority has taken into consideration the statement of Mr. Anil Kumar Khemka and on the basis of that statement and other material, notice came to be issued. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that at the stage of re-opening of the assessment, the court would not minutely examine the possible additions which Assessing Officer wishes to make. The scrutiny at that stage would be limited to examine whether the Assessing Officer had formed a valid belief on the basis of the material available with him that income chargeable to tax had escaped assessment. Both these aspects have been examined by the Supreme Court in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [2007] 161 Taxman 316/291 ITR 500 of which following: observations may be noted: "16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that Income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment. When thus the Assessing Officer had such material available with him which he perused. considered, applied his mind and recorded the finding of belief that income chargeable to tax hat escaped assessment, the re-opening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue." 8. The learned advocate for the respondent has also relied upon the decision of Pushpa Uttamchand Vs. Income Tax Officer Return [(2022) 139 taxman. 409 (Gujarat)]. Paragraph No. 14 of the said judgment has been relied upon by the respondent which is reproduced hereunder: "14. In Phool Chand Bajrang Lal v. ITO [1993] 69 Taxman 627/203 ITR 456 (SC), after reviewing the previous case law, and concluding that a valid re-opening is one, preceded by specific, reliable and relevant inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
