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TMI Blog2025 (3) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... done. The relevant grounds as raised by the assessee are reproduced below; "JURISDICTIONAL GROUNDS (IMPUGNED REOPENING ACTION U/S148 IS TOTALLY INVALID) 10.1 That impugned order of passed u/s 250 by national faceless appeal centre /cita, dismissing appeal of assessee and sustaining impugned assessment order of Ld AO (National faceless assessment centre) and impugned reopening u/s 148 by ACIT Circle 1(1)(1) Meerut, are totally illegal, unlawful and contrary to mandate of 1961 Act as jurisdictional notice u/s 148 is issued on 01- 04-2021 for all practical purposes which is purportedly dated 31.03.2021 and thus invalid as issued in old law after enactment of Finance Act 2021; 10.2 That impugned order of passed u/s 250 by national faceless appeal centre /cita, dismissing appeal of assessee and sustaining impugned assessment order of Ld AO (National faceless assessment centre) and impugned reopening u/s 148 by ACIT Circle 1(1)(1) Meerut, are illegal and void ab initio for want of valid assumption of jurisdiction u/s 148 of 1961 Act (lack of valid reasons u/s 148(2); reopening made on basis of "borrowed satisfaction" and lack of valid sanction u/s 151); 10.3 That impugned order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elected for reopening and a notice for reopening was issued on 31.03.2021. The reopening was done for alleged bogus capital gain of Rs. 1,22,88,973/- on the basis that certain ante dated forged contract note through sub-brokers Karnam Services Pvt. Ltd. were found as part of sham transactions of bogus LTCG investigated by Directorate of Income-tax (Systems). 4. The ld. AR has submitted that in the reasons for reopening, no facts are mentioned which would show as to what information was examined. The ld. AR has submitted that objections to the show cause notice were filed along with the contract note and bank statement, copy of which is placed at pages 51-74 of the paper book. It was submitted that only a sum of Rs. 86,94,779/- was earned by the assessee in the form of LTCG. It is established by the ld. AR on the basis of computation of total income that capital gains (STT) u/s 10(38) of Rs. 86,94,779/- was claimed. The annexure giving details of the transactions show that the assessee had transacted in Eicher Motors's shares. Ld. AR has also submitted on the basis of material on record that there appears to be two set of reasons for reopening with the assessing officer. Further ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 18,24,660/-. Further, as per records the case of the assessee has not been assessed u/s 143(3) of the Act. 4. On the above mentioned facts and through independent opinion, I have reason to believe THAT an income to the tune of Rs. 1,22,88,973/- has escaped assessment for the aforesaid year." 8. Pertinent to mention is that the ld. AR submitted before us on the basis of the information received under the Right to Information Act, the copy of which is also placed on record that this is the very reopening reasons which was reproduced for the purpose of taking approval u/s 151 of the Act. 9. In contradiction to the aforesaid as we take into consideration the show cause notice issued to the assessee as to why proposed variation should not be made, the copy of which is available at page 35 to 50 of the paper book, we find that although in this notice dated 26.03.2022 in para No.2 the AO refers to a notice u/s 148 issued on 31.03.2021, however, the reasons for reopening narrated are very illustrative and not the same as we have reproduced above and for completeness we prefer to reproduce the same:- "Preliminary Assessee is an individual and has Income from Business, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts bring it in the conduit account in whose name shares are purchased on the exchange. The shares are then transferred off market either directly to the account of the assessee-beneficiary or from the conduit account to the account of broker and then to the account of assessee beneficiary. The assessee beneficiary then sells the shares on the exchange and sale proceeds are received in his bank account. To make the sale receipts as genuine exempt LTCG, the entry operator issued the ante-dated forged contract notes in the name of the assessee. Thus the assessee's own unaccounted money is brought in his books as exempt income by paying commission of 2-3% depending on how the assessee approached the operator directly or through an intermediary. The difference in this modus operandi from the modus of LTCG through penny stocks is that in this case, when the shares are sold through exchange by the assessee-beneficiary, the shares are purchased by genuine investors unlike penny stocks where shell companies act as purchasers of shares. Therefore, it is established beyond doubt based on the search and post search investigation that the assessee-beneficiary have claimed bogus exempt L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of trading in shares of M/s EICHER Limited in order to bring his unaccounted money which was in the cash form into his regular books/ bank accounts. It is clear from the report received from the Investigation Wing and the ITR filed by the assessee for the A.Y. 2017-18 that the assessee had received Rs. 1,22,88,973/- as price of shares and given Rs. 3,68,669/- @3% as commission to the entry provider in cash. 4. As discussed in Para 3 above the assessee had entered into this share transaction to bring his unaccounted money into his regular books/bank accounts. Therefore, I have reason to believe that the assessee's income of Rs. 1,22,88,973/- has escaped assessment for the A.Y. 2017-18. Applicability of the provisions of Section 147/151 to the facts of the case In this case, return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded as previous paras. It is pertinent to mention here that in this case the assessee has filed return of Income for the year under consideration but no assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information received from the Office of the DDIT (Inv.), Rohtak and arising out of search and seizure operation on Kundu group, Rohtak, the assessee was found to have transacted in shares of M/s Eicher Motors Ltd. for a total consideration of Rs. 1,22,88,973/-. In this show cause notice dated 26.03.2022, the ld. AO records that the assessee had filed return of income declaring total income of Rs. 18,24,660/- on 21.12.2017 but also records that no information relating to share transaction made by the assessee as informed by the Investigation Wing was given by the assessee in his ITR. Certainly, these observations of the ld. AO are incorrect. 15. It is also established that when the ld. AO was seeking approval u/s 151 of the Act, it was mentioned in the approval that income escaping assessment was '0'. Same shows lack of appreciation of facts of the case at time of giving approval. 16. Thus, we are of the considered view that the ld. AO had proceeded to reopen the case of the assessee by merely relying that the information, either received from Directorate of Income-tax (Systems) wherein the case of the assessee was considered to be a potential case for escapement or the Investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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