9911796707
TMI Blog2024 (3) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... he IDS, 2016 is against the principles of natural justice and is not valid. Moreover, Respondents having issued a certificate under the IDS, 2016 after verifying the details filed by Petitioner, the declaration cannot be the basis to reopen the assessment of Petitioner. The reopening merely by deeming commission expenses of 5% of total sale consideration of the shares and arbitrarily and in an adhoc manner fixing 5% of the total sale consideration as commission expenses cannot be accepted. Ad-hoc disallowances without pointing out any specific defects cannot accepted. In fact, there is not even an allegation in the reasons to believe escapement of income that Petitioner had in fact paid any commission to any broker or operator. The AO proceeds on a surmise that there was no such free service available and, therefore, Petitioner would have paid brokerage. The AO having observed that the brokerage/commission varied between 0.5% to 5% does not even explain why he takes into account 5% as the brokerage paid and not 0.5% or any other figure in that band. We are also satisfied that there has been no failure on the part of Petitioner to disclose any material fact. By notice u/s 142(1) Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary, 2016 under Section 142(1) of the Act calling upon Petitioner to provide various details/documents including details of long term capital gains on sale of shares and short term capital gain of office premises. Petitioner, vide a letter dated 24th February, 2016, provided all the documents called for. By another letter dated 10th March, 2016, Petitioner provided further details. In the letter dated 10th March, 2016, Petitioner specifically provided details of the transactions reported in Bombay Stock Exchange for contracts of Rs. 10,00,000/- and above. Petitioner made specific disclosure about transactions pertaining to sale of shares in Sunrise Asian Limited ("SAL"). 3. Subsequently, an assessment order dated 26th April, 2016 came to be passed under Section 143(3) of the Act in which it is expressly mentioned that the case was selected for scrutiny under CASS scrutiny, notices under Section 142(1) of the Act was issued and served on Petitioner and Petitioner not only attended the case from time to time but also furnished the details called for. The assessment order also discusses about long-term capital loss, short-term capital loss, etc. which were carried forward. We shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, which Petitioner had disclosed in the computation of income filed along with the ROI and also during the assessment proceedings in response to query raised by the Assessing Officer ("AO"). 6. As per the reasons recorded for reopening, Respondent No. 1 refers to survey action under Section 133A of the Act conducted at Petitioner's office and observes that Petitioner has disclosed an amount of Rs. 6,44,61,220/- as net long term capital gain on sale of shares of SAL and Petitioner claimed long term capital gain as exempt under Section 10(38) of the Act for AY 2014-15. Respondent No. 1 observed that Petitioner had purchased these shares in AY 2012-13 for Rs. 26,68,780/- at Rs. 20/- per share and sold the shares at Rs. 6,71,29,995/- at an average price of Rs. 503/- per share resulting into net long term capital gain of Rs. 6,44,61,220/- and Petitioner had submitted broker's note, bank statements and documents related to the acquisition and sale of these shares and Petitioner has disclosed net long term capital gains under the IDS, 2016 under protest, shares of SAL is one of the penny shares as identified by the Income Tax Department and the entire long term capital gains realize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income, during the assessment proceedings and also in the IDS, 2016; (iv) The AO does not even allege in the reasons recorded that Petitioner has, in fact, paid Rs. 33,56,500/- as brokerage/commission. The entire basis adopted by the AO is purely speculative because the AO assumes that for doing these bogus transactions and set-up, the operators/broker charge a fixed commission from the beneficiary which might vary between 0.5% to 5% of the entire sale consideration. We agree with the counsel; (v) Further, under the IDS, 2016, Petitioner had disclosed the cost price of the shares in SAL, the sale price and capital gains made. If the AO felt that Petitioner could have paid such commission, which has not been disclosed in the IDS, 2016, the declaration filed by Petitioner should have been rejected, which has not been done; (vi) Moreover, under the IDS, 2016, and as per the clarifications of the IDS, 2016 dated 30th June, 2016 issued by the Central Board of Direct Taxes ("CBDT"), it is stated that the information contained in the declaration shall not be shared with any other law enforcement agency and not only that it will not be shared within the Income Tax Department for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.5% to 5% does not even explain why he takes into account 5% as the brokerage paid and not 0.5% or any other figure in that band. 14. We are also satisfied that there has been no failure on the part of Petitioner to disclose any material fact. We say this because in the computation of income filed by Petitioner, (a) Petitioner has disclosed long term capital gain on sale of shares of Rs. 6,44,61,214.58, (b) purchase of 1,33,439 equity shares of SAL on 16th September, 2011 for a total consideration of Rs. 26,68,780/-, (c) the sale of those shares between 30th July, 2013 upto 23rd October, 2014 for a total consideration of Rs. 6,71,29,994.58 and (d) the gain of Rs. 6,44,61,214.58. By notice dated 18th February, 2016 under Section 142(1) of the Act, Petitioner was called upon to give details of long term capital gain on sale of shares and short term capital gain of office premises and in response, vide letter dated 10th March, 2016, Petitioner gave the entire details relating to the transactions in shares of SAL and even in the assessment order, long term capital loss, short term capital loss, etc. are discussed. It is also recorded in the assessment order dated 26th Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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