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TMI Blog2023 (12) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh penny stocks. Besides we also note that the ld. AO has stated sometimes in the said reasons recorded his/her . We find merit in the contentions of the A.R. that the reasons have to be read as they are recorded and there has to be an independent application of mind by the AO and a objective satisfaction has to be recorded whereas the AO acted on the borrowed satisfaction which is a clear-cut non-application of mind by the AO. The case of the assessee finds support from the decision of Hindustan Lever Limited vs.- R.B. Wadkar, Asst. CIT [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] wherein it has been held that the reasons have to be read as they are recorded and it cannot be substituted. The Hon ble Court has held that there has to be sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly the same is condoned. 4. The assessee has challenged reopening of assessment by the ld. Assessing Officer under section 147 of the Act, which was upheld by the ld. CIT(Appeals). 5. The facts in brief are that the assessee filed his return of income on 31.03.2014 declaring total income of Rs. 1,90,560/-. Thereafter the case of the assessee was reopened under section 147 of the Act by issuance of notice under section 148 on 19.03.2020 after obtaining approval from the competent authority. The said reopening was done on the basis of information received from the Investigation Wing that the assessee has earned long-term capital gain of Rs. 8,30,000/- from transfer of shares of Quest Financial Service Limited, which is a penny stock co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- during the F:Y: 2012- 13. The assessee has earned profit of penny stock amounting to Rs. 8,30,000/- and the assessee involvement in prearranged bogus LTCG/STCG in the scrip of penny stock M/s Quest Financial Services Ltd. , bogus LTCG value of penny stock was Rs. 8,30,000/- during the F:Y: 2012-13 relevant to the A:Y: 2013-14. In this case, Directorate of Investigation has conducted survey in the case of entry operators/middlemen, Broker etc.and also recorded their statement on oath u/.s 133A/- 131 of the 1.1. Act, Inview of analysis of several incriminating documents/evidences found during survey and the statement of Key persons, it has finally been found that the share broker accepted their role in the entire scheme of providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after due application of mind, I have reasons to belief that there is live link with the information received and the assessee failed to disclose fully and truly all material facts necessary for her assessment and escape income at least to the extent of(Rs. 8,30,000/-) which being chargeable 147 of the Income Tax Act. In order to assess / reassess the said income of Rs. 8,30,000/- chargeable to tax which has escaped assessment for the A.Y. 2013-14 and in order to assess / reassess any other income chargeable to tax which has escaped assessment and which may come to my notice subsequently in the course of this proceedings as the case may be, a proceeding u/s. 147 needs to be initiated. Since four years have expired from the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here has to be satisfaction of the Assessing Officer for reopening of the assessment and reopening cannot be made for borrowed satisfaction in a mechanical manner. The Hon ble Bombay High Court in the above decision has held as under: 20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. 21. Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and does not comply with the requirements of proviso to section 147 of the Act, the Assessing Officer had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under section 143(3) of the Act. On this short count alone the impugned notice is liable to be quashed and set aside. 7.1. I, therefore, respectfully following the said decision of the Hon ble Bombay High Court quash the reopening of assessment and direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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