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TMI Blog2023 (5) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... f the notice for reopening of the assessment is not required to be gone into at this stage of the reopening. It can never be said that the final outcome of the proceedings has been derived at by the authority by issuing a notice for reopening. On the basis of material before it as highlighted above, if the Assessing Officer was satisfied to harbour reasons to believe that there was escapement of income and if on such basis, he has exercised his powers under Sections 147, 148 no fault can be found. This Court is in complete agreement with the aforesaid two decisions relied upon by the learned advocate appearing for the respondent- Authority namely; Purviben Snehalbhai Panchhigar [ 2018 (11) TMI 139 - GUJARAT HIGH COURT] and Pushpa Uttamchand [ 2022 (5) TMI 1158 - GUJARAT HIGH COURT] - Special Civil Application dismissed. - R/SPECIAL CIVIL APPLICATION NO. 21938 of 2019 - - - Dated:- 5-5-2023 - HONOURABLE MR. JUSTICE N.V. ANJARIA and HONOURABLE MR. JUSTICE DEVAN M. DESAI Appearance: For the Petitioner(s) No. 1 : Mr. Hardik V Vora (7123) For the Respondent(s) No. 1 : Mrs Kalpanak Raval (1046) CAV ORDER (PER : HONOURABLE MR. JUSTICE DEVAN M. DE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penny scrips, relevant details and list of beneficiaries. 3.4 According tot he Income Tax Authorities, the assessee has traded in penny scrips of M/s. Twenty First Century (I) Limited for an amount of Rs. 6,49,000/- during the financial year 2011-12. As per the investigation carried out as regards scrip, it was established that the said scrip proved to be penny scrip and trading in the same having utilized by the beneficiaries in the nature of accommodation entries. The report of Investigation Wing, Kolkata also took into consideration the statement given by Mr. Anil Kumar Khemka under section 131 of the Income Tax Act, 1961. The respondent authority after perusal and having verified the findings of Investigation Wing, Kolkata was of the view that the assessee received accommodation entry in the penny scrip, which was bogus in nature and addition was required to the total income of assessee. 3.5 Pursuant to this, a notice came to be issued by the authority on 26.03.2019 under section 148 of the Income Tax Act, 1961. 4. Learned advocate for the petitioner has submitted that the purchase of shares of Twenty First Century (I) Limited was before more than 7 years and the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , goes to the very root of the matter. The sole object of providing reasons for reopening of the assessment is to prima facie supply the relevant material to the assessee to meet with his case and at the same time, it reflects the basic ingredients of reason to believe for Assessing Officer to assume the jurisdiction under Section 147 and 148 of the Income Tax Act. At the same time, such nonrecording of specific details lead us to belief that without proper application of mind, the Assessing Officer has solely and mechanically relying upon the information received from Investigation Wing, has issued impugned notice. Thus we are not convinced with the manner in which satisfaction is arrived at by the respondent, as recorded in the reasons supplied to the petitioner Company, for assuming jurisdiction to reopen the assessment of relevant A.Y. 2014-15/2015-16. 11. In our opinion, the condition precedent for resorting to the reopening of assessment under Section 147 of the Act are not satisfied in the present case. In overall view of the matter, we are not convinced with regard to the satisfaction arrived at by the respondent Assessing Officer to make out the case for reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner are not applicable to the facts of the case. 7. Per contra, the contention of the respondent is that the survey action was conducted by the Directorate of Investigation Wing, Kolkata, on various shares brokers during which the share brokers have accepted their role in the entire scheme of providing accommodation entry of bogus LTCG - STCL (Long Term Capital Gain - Short Term Capital Gain). 7.1 Learned advocate appearing for the respondent has contended that the case was reopened after recording the reasons to believe of reopening by the respondent and has also taking necessary approval from the Competent Authority, he has also submitted that the plea of the petitioner is baseless and far from truth. It was further submitted that before issuance of notice to reopen the assessment, statement of Anil Kumar Khemka was recorded and was also taken into consideration. 7.2 Learned advocate for the respondent has also submitted that a due procedure was done as prior permission of the Principal Commissioner of Income Tax, Surat-1 has been taken and the same has been granted vide Letter No. SRT / Pr.CIT-1 / HQ / Reopening / Rangel (1) / 121-124 / 2018-19 dated 15.03.2019. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Pvt Ltd. [1996 (217) ITR 597 (SC)]; Raymond Woollen Mills Ltd. v. ITO [1999 (236) ITR 34 (SC). 8. In the present case the Assessing Officer has heard the material on record which would prima facie suggest that the assessee had sold number of shares of a company which was found to be indulging in providing bogus claim of long term and short term capital gain. The company was prima facie was found to be a shell company. The assessee had claimed exempt of long term capital gain of Rs. 1.33 crores by way of sale of share of such company. The judgment in the case of Pr. CIT v. Gokul Ceramics [2016] 71 taxmann.com 341/241 taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say you accepted my lie, now your hands are tied and you can do nothing . It would be travesty of justice to allow the assessee that latitude. 9. In the facts and circumstances of the case, a notice under Section 148 of the Income Tax Act, 1961 was issued calling upon the petitioner to deliver a return in the prescribed form for the assessment year 2012-13. The authority received information from Investigation Wing, Kolkata during the year under consideration that the assessee made transaction in penny stock in the scrip of M/s Twenty First Century (I) Limited for an amount of Rs. 6,49,000/-. It is settled law that sufficiency or adequacy of the reasons for the issuance of the notice for reopening of the assessment is not required to be gone into at this stage of the reopening. It can never be said that the final outcome of the proceedings has been derived at by the authority by issuing a notice for reopening. On the basis of material before it as highlighted above, if the Assessing Officer was satisfied to harbour reasons to believe that there was escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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