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TMI Blog2023 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 r.w.s. 144 of the Act, itself has attained nullity, the grounds on merits are only academic in nature and the same are not dealt with. - Shri Rajesh Kumar, Hon ble Accountant Member And Shri Sonjoy Sarma, Hon ble Judicial Member For the Assessee : Shri Soumitra Choudhary, Advocate For the Revenue : Shri Chandan Dutta, D/R ORDER PER SHRI RAJESH KUMAR, ACCOUNTANT MEMBER : ITA No. 67/GTY/2023 is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeal), Central, North-East Region, Guwahati, (hereinafter the ld. CIT(A) ) dt. 21/03/2023, passed u/s 250 of the Income Tax Act, 1961 ( the Act ), for Assessment Year 2014-15 .ITA No. 68/GTY/2023 is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeal), Central, North-East Region, Guwahati, (hereinafter the ld. CIT(A) ) dt. 27/03/2023, passed u/s 250 of the Income Tax Act, 1961 ( the Act ), for Assessment Year 2015- 16. ITA No. 69/GTY/2023 is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeal), Central, North-East Region, Guwahati, (hereinafter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Aggrieved, the assessee carried the matter in appeal before the ld. First Appellate Authority. The ld. CIT(A), dismissed the appeal of the assessee both on the legal issue as well as on merits. 7. After hearing rival contentions, perusing the material available on record, as well as the case-laws cited by both the parties, we find that the instant Assessment Year is 2015-16 and undisputedly, in this Assessment Year assessment was framed u/s 143(3) of the Act vide order dt. 27/12/2017 and thereafter, the assessment was reopened by issuing notice on 31/03/2021, apparently after a period of four years from the end of the relevant Assessment Year. We find merit in the contentions of the ld. A/R that reopening beyond a period of four years can only be made subject to the satisfaction of the conditions laid down in the proviso to Section 147 of the Act which provides that where assessment u/s 143(3) of the Act has been framed and admittedly more than four years had elapsed, the assessment could have been reopened only if the additional condition precedent as laid down in the first proviso to section 147 of the Act namely, that the assessee had failed to disclose fully and truly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Hence the Assessing Officer had no jurisdiction to reopen the assessment proceedings. The notice was not valid and was liable to be quashed. The case of the assessee finds support from the decision of the Hon ble Apex Court in the case of New Delhi Television Ltd. vs DCIT ((116 taxmann.com 151) (SC), wherein it has been held that where the assessee has disclosed all material facts qua the issuance of convertible bonds, thus there was no failure on the part of the assessee to disclose material facts and therefore notice issued to the assessee u/s 147 of the Act after a period of 4 years has been quashed. Similarly in the case of CIT vs Multiplex Trading Industrial ((63 taxmann.com 170) (Delhi HC), the Hon ble Delhi High Court has held that since the assessee has disclosed all the material facts at the time of making assessment, initiation of reassessment proceedings after expiry of four years from the end of relevant assessment year on the basis of report of investigation cannot be sustained and has to be set aside. In this case, the assessment was completed u/s 143(3) and thereafter the AO received the information from Investigation Wing that the assessee has received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred on the sale of shares of Rs. 2,02,55,160/- was adjusted against the interest income of Rs. 2,87,65,844/-. However, the Assessing Officer rejected the said loss while referring to the investigation carried out by the DIT (Inv..), which revealed a large number of persons had taken entries of huge bogus long term capital gain/short term capital gain/loss in an organised manner. Thereafter the Assessing Officer after discussing the modus operandi followed by these companies/operators narrated in detail how the transactions were carried out in the stock exchange and unnecessary benefits were yielded to the beneficiaries in lieu of cash. The Assessing Officer has referred to the survey carried out u/s 133A of the Act on various entities and also the statements recorded in which these operators have admitted to have engaged in the manipulation of stock exchange thereby providing accommodation entries in the form of long term capital gain/loss. Finally, the Assessing Officer issued a show cause notice to the assessee fixing the date for filing the reply on or before 05/12/2016, but the same was not complied with by the assessee and finally the Assessing Officer disallowed the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid facts and legal position, the order passed by the ld. CIT(A) made kindly be set aside and the addition be deleted. 17. The ld. D/R while controverting the submissions of the assessee argued that the assessee has purchased and sold shares of penny stock companies. The prices were the shares were manipulated in a concerted and organised manner by a group of individuals/brokers and shell companies who where primarily engaged in providing accommodation entries to the beneficiaries in the form of long term capital gain/loss and this was revealed in the during the course of search and the investigation wing. The ld. D/R, therefore, submitted that the mere fact that the assessee has submitted the documents of sale and purchase of shares, copies of contract notes and DMAT Accounts, would not justify that the capital gain to be genuine. The ld. D/R further drew the attention of the Bench to the report of the Investigation wing wherein methodology of doing these transactions on the stock exchange was discussed in detail. So far as the various decisions relied are concerned, the ld. D/R submitted that though the contrary decisions are available of various Hon ble High Courts, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision passed by the Hon ble Apex Court in the case of Pr. CIT Vs Smt Renu Aggarwal (Supra) , the SLP filed by the revenue was dismissed by observing and as under: wherein the issue was decided affirming the decision of the Hon ble Allahabad High Court. The Hon ble High court has dismissed the appeal of the department that no question of law arose from the order of the tribunal affirming the order of ld. CIT(A) allowing the relief to the assessee. The ld. CIT(A) allowed the relief to the assessee on the ground that there was no adverse comment from the stock exchange or the company whose shares were involved in the transactions and the AO quoted the facts pertaining to completely unrelated persons whose statements were recorded and assessee s name did not appear in those statements. 20. Considering this factual positional and in the light of the above discussion, we are inclined to set aside the order of the ld. CIT(A) and direct the AO to allow the setting of the loss on shares by allowing the appeal of the assessee. 21. In the result, appeal of the assessee in ITA No. 67/GTY/2023, is allowed. 22. The issue raised in ITA No. 68/GTY/2023 Assessment Year: 2015-16 by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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