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TMI Blog2025 (4) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 passed by the Assessing Officer has been set aside. 4. As is available from the assessment order dated 17.05.2023, the Assessing Officer assessed total income of the assessee at Rs. 19,18,18,106. Assessment order was passed u/s 147/143(3) r.w.s. 144B of the Act. Thereby, variations have been made by the Assessing Officer. Said variations have been tabulated in para 5 of the assessment order, as under:- S. No. Description Amount (in INR) 1. Income as per return of income filed 4483340/- 2. Income as computed u/s 143(1)(a) 0 3. Variation in respect of issue as discussed above. 187334766/- 4. Variation in respect of issue of <> (if any) 5. Total income/loss determined as per the above proposal 19,18,18,106/- 5. It is a case of the department that its Investigation Wing on 16.05.2018 conducted a search and survey operation u/s 132/133 of the Act as regards the group known as Dutta and Tayagi Group. After enquiry, it was found that scrip of M/s Yamini Investment Company Ltd (in short 'YICL') listed in BSE having scrip code-511012" was managed and controlled to the benefit of certain persons by providing bogus long term capital gain/loss to the beneficiarie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain on sale of shares of M/s Yamini Investment Pvt. Ltd was specifically raised by the Assessing Officer during the original assessment however after considering the same the Ld. Assessing Officer passed the order u/s 143(3) on 11/12/2018 accepting the return of income of the assessee, thus the impugned assessment order passed dated 17.05.2023 is merely a review under garb of reassessment proceedings. Thus, the impugned assessment order dated 17.05.2023 deserved to be quashed." 11. As is available from page 14 to 17 of the impugned order, in support of abovesaid ground No.7, following submissions were put forth before NFAC, on behalf of the appellant-assessee, :- "Submissions of Appellant on above ground are as follows: 1. the scrutiny assessment in the case of the Appellant has already been completed u/s 143(3) of the Act and all the aspects in regard to the Capital gain arising on the sale of shares of Yamini Investment was considered various time, thus the present proceedings has been carried out for the verification purpose which is not permissible as per the reassessment provisions of the Income Tax Act, 1961. 2. b) In the present case the Ld. AO has already ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of broker note for sale of shares of Yamini Investment, Bank Statement for the year consideration, share certificate of Anax Trade Limited, Copy of Scheme of amalgamation of Anax Trade with Yamini Investment and contract bills of broker. Thus, the Ld.AO had all the documents with him before passing the scrutiny assessment order dated 11/12/2018 and after considering all such documents the return income of the Appellant was accepted. Thus, it is inte law that the reassessment can only be done on the basis of new material and in the present case. There is no new material to which a reference is to b found and the entire basis for reopening the assessment is the disclosure which has been made by the assessee in the course of the assessment proceedings. Further during the alleged reassessment proceedings the same information was provided by the Appellant to the Ld AO again and again as there was new material. Judgments relied by the Appellant in his defence 1. Hon'ble Apex Court in CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 561 held that one needs to give a schematic interpretation to the words reason to believe failing which, section 147 would give arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .09.2018 17.09.2018 2. 17.09.2018 20.09.2018 3. 29.09.2018 27.09.2018 4. 03.10.2018 07.10.2018 5. 10.10.2018 12.10.2018 6. 19.10.2018 24.10.2018 7. 05.11.2018 11.11.2018 8. 12.11.2018 13.11.2018 4.6 It is seen that AO during the scrutiny assessment issued the letter dated 12/09/2018 whereby appellant was asked to submit the details through e-filing which also included the demat account for F.Y. 2015-16, details of work done in F&O and form no 10DDB, computation of income of LTCG for the F.Y. 2015-16 and the source of investment in shares/F&O transaction with supporting evidences. The appellant in pursuance to the letter dated 12/09/2018 submitted the requisite details vide its reply dated 17/09/2018. The AO again vide letter dated 17/09/2018 directed the appellant to provide the ledger in the books of broker of the Share Transactions done in the A.Y. 2016-17. Appellant in pursuance to the same provided the ledger of Swastika Investment limited in which all the transactions of the shares were shown by the broker which was carried out by the Appellant during the year under consideration. The AO yet again vide clarification letter dated 26/9/2018 directed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Anax Com Trade. The AO further vide its show cause notice dated 05/11/2018 directed the appellant to provide some other detail in regard to the payment made for allotment of shares of Anax Com Trade Limited to which the Appellant replied and submitted the details vide its reply dated 11/11/2018. The AO further vide its clarification letter dated 12/11/2018 again requested the details in regard to the share transaction to which the appellant replied and submitted the reply dated 13/11/2018 along with ledger showing the loan amount to repaid to Vistaar Infra Property Pvt Ltd taken for purchase of shares of Anax in the year2012. It is seen that the AO after considering all the documents and replies of the appellant on various occasions passed the order u/s143(3) dated 11/12/2018 accepting the returned income of the appellant at Rs. 45,83,340 without making any addition or disallowances. 4.9 The appellant submitted all the documents during the scrutiny assessment such as copy of demat account, demat transaction statement, copy of broker note for sale of shares of Yamini Investment, Bank Statement for the year consideration, share certificate of Anax Trade Limited, Copy of Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r inference as to whether the amounts represented by the drafts could be treated as part of the total income of the appellant. This the officer did not do It was plainly a case of oversight and it could not be said that income chargeable to tax had escaped assessment by reason of the omission or failure on the part of the appellant to disclose fully and truly all material facts He could not, thereafter, take recourse to Section 147(a) to remedy the error resulting from his own oversight." 4.13 In the case of Calcutta Discount co. v. ITO (1961) 41 ITR 191, the Hon'ble Supreme Court held that once the assessee disclosed all primary facts, his duty ends and it is for the AO to draw conclusion from the same "Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing auchonty, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else far less the assessee to tol the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that was available at time of original proceedings would tantamount to change of opinion and thus would be liable to be set aside. In the said case, the Hon'ble Bombay High Court had held as under:- "6 Therefore, all material facts had been disclosed by petitioner in the course of the regular assessment proceedings and the reasons recorded for initiation of reassessment too give reference only to the details already submitted by petitioner in the course of the original assessment proceedings and nothing more. It is a well settled judicial principle that the true test of income chargeable to tax escaping assessment is whether there exists fresh "tangible material" on the basis of which an appropriate conclusion can be reached. In the absence of such fresh material, the reassessment proceedings would be invalid. This principle has been upheld by the Hon'ble Supreme Court and the jurisdictional High Court in various rulings. This Court has held that reassessment based on a reconsideration of material already available on record at the time of the original assessment proceedings Gauri Gaekwad 5/6 420.WP-3497- 2019.doc tantamounts to a change of opinion and would be invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has claimed delay of 86 days in filing thereof. Even Learned DR for the department has rightly pointed out that cross-objections are delayed not only by 11 days, and that same have been filed only after this fact was pointed out in the course of arguments on appeal that the assessee could not raise legal ground for want of any cross-objection. Assessee-applicant has alleged that the assessee was required to file Cross Objections u/s 253(4) of the Act within 30 days of the receipt of notice i.e. by 17.11.2024. As per record, notice of appeal filed by the department was issued by the Registry to the assessee on 16.10.2024. As per column No.7 of the Cross-objections, the assessee was in receipt of notice of appeal on 17.10.2024 i.e. on the very next day of its issuance by the Registry. Period of 30 days was to be counted from 18.10.2024, while excluding the day the notice was delivered. Therefore, it can safely be said that the report made by the Registry about the period of delay is wrong. Registry to be diligent in making report about delay in filing of the appeals. 14. Be that as it may, on the point of condonation of delay, Ld. AR for the assessee-applicant has submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, is sought to be raised. This fact is not being disputed even from the side of the department. As is available from the grounds of appeal submitted before NFAC, the assessee raised a specific ground No.4 that the assessment order under section 147 read with section 144 read with section 144B of the Act was invalid for want of sanction under section 151. Section 151 pertains to sanction for issue of notice under section 148 and section 148A. 20. In the given situation, when AR for the applicant has candidly pleaded that he was under the bonafide impression that for raising such a legal ground no cross-objection was required to be filed, and that he could straightway argue the same in the appeal filed by the department, we deem it a fit case to condone the delay in filing of the cross-objections. We order accordingly. Cross-Objections by the Assessee 21. By way of Cross Objections, the assessee has challenged the impugned order raising the ground that Learned CIT(A), NFAC erred in not holding the notice u/s 148 of the Act as invalid, and bad in law. Ld. AR for the assessee has submitted that said notice u/s 148 of the Act was issued beyond the prescribed period of 3 years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Hon'ble Apex Court in Ashish Agarwal's case. 26. Here, the question involved is not that the reassessment notice came to be issued beyond the surviving time limit. The question is about grant of sanction under section 151 of the Act by the proper authority. 27. In Rajeev Bansal's case, the Hon'ble Supreme Court, while dealing with the issue of approval and the competent authority, as regards notice u/s 148 of the Act, observed as under:- "73. Section 151 imposex a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151(1) the old regime After expiry of four years from the end of the relevant assessment year Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151 (ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the "relevant assessment year. Thus, noncompliance by the assessing officer with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under Section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre-conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the prior approval of the specified authority under Section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under Section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law. 130 81 This Court in Ashish Agarwal (supra) directed the assessing officers to '' pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned.'' Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under Section 148-A.'' Although this Court waived off the requirement of obtaining prior approval under Section 148A(a) and Section 148.4(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Apex Court would reveal that said order was passed with the approval of the Principal Commissioner of Income tax-2, Jaipur. This fact also finds mention in Order under section 148A(d) of the Act issued on 27.7.2022. Conclusion 30. In view of the above discussion, we hold that the notice under section 148 of the Act is invalid in the eye of law. Result 31. As a result of the above findings, the reassessment order dated 17.5.2023 deserves to be set aside on this legal ground. ITA No.1253/JPR/2024-Appeal by the Department 32. As noticed above, the Assessing Officer concluded in view of the discussion in the preceding paragraphs i.e. from 4.1 onwards that the above named company-YICL had weak financial statement; that the movement of the share price was not correlated and not supported by its financial statement, which revealed that the prices were rigged and manipulated by way pre arranged or artificial transaction to book bogus LTCS, and that the LTCG claimed by the assessee from the said scrip was only in order to evade taxation, on the basis of accommodation entries made by the above said company. 33. In para 4.17 of the impugned order, the ld. CIT(A) observed that scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid to the assessee. Another notice u/s 142(1) of the Act was issued by the AO to the assessee on 30-03-2018 raising a specific query in respect of shares of YICL and to provide D-mat account from the date of purchase of shares of the said company upto 31-03-2016, in addition to purchase bills/contract notes of shares purchased of YICL. It was in response to the said notice that the assessee submitted reply dated 7-10-2018. Therein, the assessee also explained that Anax Com Trade Ltd of which assessee was allotted 4 lacs shares in the year 2012, was dematerialized in DP Anax Trade Assignments Ltd. on 11-02- 201; that sharers of said Anax Trade Company were split into Re.1/- instead of Rs. 10/- shares and accordingly, assessee was allotted 40 lacs shares of Anax Com Trade Ltd., each share being of Re.1/-; that lateron, said Anax Com Trade Ltd. got merged with YICL and thereby assessee was allotted 32 lacs shares of said company i.e. YICL as against above said 40 lacs shares. Other details and documents required by the AO vide letter dated 10- 10-2018 were submitted by the assessee vide response dated 12-10-2018; vide response dated 11-11-2018, in reply to the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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