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TMI Blog2025 (1) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... s then that would be wholly without jurisdiction in the absence of satisfaction of the condition prescribed in first proviso to Section 147 of the Act. The reasons recorded clearly proves that condition as per first proviso are not satisfied. In the reasons recorded there is no mention as to what are the material facts which the petitioner-assessee ought to have disclosed and which came to the notice of the AO post the assessment order from any source outside the assessment records. Co-ordinate Bench of this Court in the case of Hindustan Lever Ltd. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] have observed that the reasons should disclose as to which fact or material was not disclosed by the assessee fully which was necessary for assessment so as to establish the vital link between the reasons and evidence. Mere mentioning that there was a failure to disclose fully and truly material facts does not confer jurisdiction on the Assessing Officer to reopen the case after the expiry of four years. The original assessment of the petitioner was selected for limited scrutiny which was converted into complete scrutiny to examine the transactions of capital gains. The petitioner in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 (3) of the Act came to be passed assessing income about Rs.72.84 crore. In the assessment order, addition/ disallowance was made on account of deemed rent, disallowance of commission, profit from sale of shares, withdrawal of long term capital gain, etc. 7. The petitioner challenged the assessment order by filing an appeal before the Commissioner of Income Tax (Appeals), who vide order dated 19 November 2018 gave partial relief. The order of the Commissioner (Appeal) was challenged by the petitioner and the respondents before the Income Tax Appellate Tribunal. 8. While the appeal before the Appellate Tribunal was pending, the respondents issued a notice dated 23 March 2021 under section 148 of the Act proposing to reassess the income for the Assessment Year 2015-16. The petitioner filed his return of income in response to the said notice on 1 April 2021 and also requested for reasons recorded for the issue of the notice. 9. The Assessing Officer without furnishing reasons recorded for reopening the case, issued notice under Section 142(1) dated 26 November 2021 seeking various details. The petitioner in response to the said notice under section 142(1) once again reiterated his r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 8836528 -10519902 20/03/2015 2. Tech Mahindra 16,942 1:1 11.03.2015 24466130 25.03.2015 11145656 -13320474 20/03/2015 3. Tech Mahindra 25,000 1:1 11.03.2015 36102777 26.03.2015 16467505 -19635272 20/03/2015 4. HCL Technologies 43,755 1:1 09.03.2015 89199991 24.03.2015 42772914 -46427077 20/03/2015 5. HCL Technologies 14,890 1:1 11.03.2015 30691839 24.03.2015 14555792 -16136047 11/03/2015 6. Persistent System 26,700 1:1 09.03.2015 50133327 18.03.2015 20580036 -29553291 Total 249950494 114358431 -135592063 From the above, it is clear that assessee has created a Short-Term Capital Loss within a span of two weeks with a view to reduce its tax liability by setting off against Long Term Capital Gain which was taxable @ 20% and bonus shares held for one year and could be sold there after by showing Long Term Capital Gain without paying any taxes. These facts clearly shows that the large-scale purchase and sale of shares during March 2015 have been carried out only with a view to create Short Term Capital Loss during F.Y.2015-16 to avoid payment of taxes on the entire Long Term Capital Gain. Supreme Court case of McDowell And Co. Vs CTO 154 ITR 148 (SC) is clearly applicable to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able devices cannot be permitted to be part of tax planning and it is wrong to encourage or entertain the belief that payment of tax can be avoided by resorting to dubious methods. Thus, Short Term Capital Loss of Rs. 13,18,27,767/- to be disallowed and added back to the total income. Thus resulted in under assessment of income by Rs. 13,18,27,767/-. 5. Findings of the AO:- The office of the undersigned perused the details available on record and found that the assessee has created a Short Term Capital Loss within a span of two weeks with a view to reduce its tax liability by setting off against Long Term Capital Gain which was taxable @ 20% and bonus shares held for one year and could be sold there after by showing Long Term Capital Gain without paying any taxes. These facts clearly shows that the large scale purchase and sale of shares during March 2015 have been carried out only with a view to create Short Term Capital Loss during F.Y.2015-16 to avoid payment of taxes on the entire Long Term Capital Gain. Supreme Court case of McDowell And Co. Vs CTO 154 ITR 148 (SC) is clearly applicable to the facts of this case. The Apex Court has held that colorable devices cannot be permitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the above mentioned material facts, necessary for its assessment for the year under consideration. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed a copy of annual report and audited P L A/c and balance sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned proceedings are without jurisdiction. 17. Mr. Naniwadekar in support of his various submissions relied upon the following decisions: (i) Hindustan Lever Ltd. Vs. R.B.Wadkar, Assistant Commissioner of Income Tax and Ors. (2004) 268 ITR 332 (Bom). (ii) Bombay Stock Exchange Ltd. Vs Deputy Director of Income Tax (2014) 52 taxmann.com 29 (Bombay) (iii) Aroni Commercials Ltd. Vs Deputy Commissioner of Income Tax 2(1) (2014) 44 taxmann.com 304 (Bombay) (iv) Ananta Landmark (P.) Ltd. Vs Deputy Commissioner of Income-tax, Central Circle 5(3), Mumbai (2021) 131 taxmann.com 52 (Bombay) (v) Imperial Consultants and Securities Ltd. Vs Deputy Commissioner of Income Tax (2024) 169 taxmann.com 587 (Bombay). 18. Mr. Suresh Kumar, learned Counsel for the respondents vehemently opposed the submissions made by the petitioner and placed heavy reliance on Explanation-I to Section 147 of the Act to justify the reopening. The learned Counsel for the respondents did not make any other submissions except what is recorded herein. 19. We have heard Mr. Naniwadekar, learned counsel for the petitioner and Mr. Suresh Kumar for the respondents and with their assistance have perused the documents which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to disclose at the time of his assessment. Mere reproducing the wordings of the proviso does not satisfy the jurisdictional condition which the Assessing Officer is required to satisfy prior to reopening the case. Having said so, the reasons themselves record that the same is based on the case records of the petitioner. This statement is appearing in paragraphs 1 to 6 of the reasons recorded. Therefore, if based on these case records which case records are filed by the petitioner- assessee during the course of the assessment proceedings and are forming part of the assessment records, if a reopening is sought to be done after a period of four years then that would be wholly without jurisdiction in the absence of satisfaction of the condition prescribed in first proviso to Section 147 of the Act. The reasons recorded clearly proves that condition as per first proviso are not satisfied. 23. In the reasons recorded there is no mention as to what are the material facts which the petitioner-assessee ought to have disclosed and which came to the notice of the Assessing Officer post the assessment order from any source outside the assessment records. The Co-ordinate Bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the preceding proviso. We may observe that this is certainly not a case where on the materials which are already produced before the Assessing Officer, the Assessing Officer has gathered or discovered further material evidence so as to construe that there was failure on the part of the assessee to make a disclosure of such materials. Moreover, there is no further tangible material which has been gathered on due diligence from the existing material and hence it is quite futile for the respondents to take recourse to this provision. 26. Reliance placed by the respondent-revenue on Explanation 1 of Section 147 is not applicable to the facts of the present case. In the instant case, the Assessing Officer in the course of the regular assessment proceedings examined the issue of capital gain and the petitioner-assessee filed all the details relating to long term capital gain/loss and short term capital gain/capital loss. It was after considering these details, the assessing officer in order under Section 143 (3) of the Act made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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