TaxTMI 
TaxTMI 
2018 (5) TMI 1547
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....e on 29.09.2010. Such return was taken in scrutiny. Assessing Officer passed order of assessment under section 143(3) of the Income Tax Act, 1961 ['the Act' for short] on 28.02.2013. To reopen such assessment, the Assessing Officer issued notice under section 148 of the Act on 31.03.2015. In order to do so, he had recorded following reasons: "M/s. Marwadi Shares and Finance Pvt. Ltd (PAN:AABCM5192K), Rajkot-A.Y. 2010-11.: In this case, return of income for the A.Y. 2010-11 showing income of Rs. 33,31,55,229/- was filed on 29.09.2010 and the assessment was finalized vide assessment order u/s. 143(3) determining income of Rs. 33,31,80,070/-. Information has been received by this office in respect of fictitious losses created by some brokers by misusing the client code modifications facility in F & O segment on NSE during March 2010. The assessee M/s. Marwadi Shares and Finance Ltd. is reported to be one of the beneficiaries of such fictitious losses by misuse of client code modification facility. This fictitious loss have been adjusted by the assessee against the profits in the A.Y. 2010-11 which has resulted in suppression/reduction of taxable income to the tune of Rs. ....
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....ourse of hearing of this petition, we confronted the counsel for the Revenue with our prima facie impression that the reasons recorded by the Assessing Officer for issuing the notice may not satisfy the requirement of the Assessing Officer having a bona fide belief that income chargeable to tax had escaped assessment. In view of the unsatisfactory recording of reasons, the counsel for the Revenue had taken time to take instructions whether the Assessing Officer would like to withdraw the notice and issue a fresh notice of reopening after recording proper reasons. Under the instructions from the concerned authority, Shri P.G.Desai conveyed to us that the Assessing Officer would withdraw the notice for the purpose of issuing a fresh notice. However, he pointed out that original notice was issued within a period of four years and any fresh notice now would be beyond a period of four years from the end of the relevant assessment year. He, therefore, made a request that we should clarify that the fresh notice would also be treated as one having been issued within four years since it would be in continuation of the original notice. We conveyed our inability to do so in view of clear lega....
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....ary to decide the validity of the notice which is under challenge in this petition. Learned Counsel for the petitioner however submitted hat if fresh notice is issued, the petitioner may consider challenging it in accordance with law. Petition disposed off accordingly. 2. Based on the above direction. the DCIT Cir 1(1) had not recommended SLP. The Chief ClT Rajkot. vtde approval letter No. CC/RJT/HQ-1/JUD/SLP-22/2016-17 dated 15.7.2016, addressed to the Pt. ClT-1 Rajkot, agreed to the proposal of non-filing of SLP, but observed as under: NO SLP review petition may be filed On perusal of the GHC's order, it is seen that the Hon'ble GHC has mentioned that learned counsel for the petitioner, however submitted that if fresh notice is issued, the petitioner may consider challenging it in accordance with law. Thus, the Hon'ble GHC has taken note of the representation made by the learned Counsel for the petitioner. However, the Hon'ble GHC's order is silent about the prayer of the AO to treat the fresh notice issued as notice within four years from the end of the assessment year under consideration. Thus, the Hon'ble GHC has not taken note of the AO's ....
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....typing such that the original client code/name and the modified client code/name are similar to each other. ii) Modification within relatives. iii) Any similar genuine error. c. Some of the most popular Non genuine client code modification constituted as under:- i) Percentage of modified traded value is significantly higher than the total traded value of any trading members/clients. ii) Number of modified trades is significant to total number of trades of any trading members/clients. iii) Profit/loss arising on account of all modifications by trading member/client is significant in comparison to the profit/loss in the trades where no modifications have been carried out. iv) Profit/loss arising due to modification is significant. v) Trades have been modified to unrelated parties. vi) Both buy and sell leg of different trades have been modified to same client. vii) The same sets of client are observed to be making profit/loss due to the modifications carried out. viii) Total number of trade modifications increased before closing of the financial year. d. All the above non-genuine CCMS were observed while analyzing the data of the brokers including ....
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....ing the impugned notice. (iii) Counsel contended that the first notice dated 31.03.2015 was never withdrawn. Without withdrawal of such notice by the Officer who had issued it, it was not permissible for the Revenue to issue a fresh notice. The law does not recognize issuance of notice of reopening when the assessment or reassessment is still pending. (iv) In support of this contention counsel relied on the following decisions: In case of Aditya Medisales Ltd vs. Deputy Commissioner of Income Tax, Circle 1(1) reported in [2016] 73 Taxmann.com 197 [Guj.]; In case of Kunal Organics (P.) Ltd vs. Deputy Commissioner of Income Tax reported in [2014] 44 Taxman.323 (Gujarat) Inc case of India Gelatin and Chemicals Ltd. vs. Assistant Commissioner of Income Tax (No. 2) reported in [2014] 52 taxmann.com 141 (Gujarat) (v) Counsel next contended that the reasons recorded are invalid reasons and do not demonstrate that any income chargeable to tax in the hands of the assessee had escaped assessment. There was no failure on part of the assessee to disclose truly and fully all material facts. Notice of reopening which has been issued beyond a period of four years was therefore bad ....
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....etition should be dismissed. 11. Though in our opinion the petition could have been decided on only one of the several contentions raised by the petitioner, in view of the possibility that the aggrieved party may carry the matter further, we would like to express our opinion on all contentions raised before us. For consideration of such contentions, we would club all arguments except of withdrawal of the first notice of reopening which would be considered separately. We may recall, the department previously issued a notice dated 31.03.2015. We have reproduced the reasons recorded by the Assessing Officer for issuing such notice. This notice was challenged by the petitioner before this Court. After some discussion at the bar, counsel for the Revenue, under instructions, stated that the notice of reopening of the assessment would be withdrawn by the Assessing Officer with a view to issuing a fresh notice after recording fresh reasons. Thereupon, fresh notice came to be issued on 29.03.2017. We have also reproduced reasons recorded by the Assessing Officer for issuance of such notice. In the previous notice, the reasons recorded merely stated that the information was received by the ....
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....ssessee. What is required to be seen is whether the Assessing Officer had some tangible material at his command permitting him to form a bona fide belief that income chargeable to tax had escaped assessment. The petitioner's contentions of the previous reasons and the fresh reasons being identical that there was lack of application of mind on part of the Assessing Officer; he having acted on borrowed satisfaction; that notice could not have been issued beyond the period of four years since there was no failure on part of the assessee to disclose truly and fully all material facts or that the reasons are invalid, must fail. 13. Coming to the question of unauthorized transfer of jurisdiction, we notice that there is no formal challenge to such transfer. However, when a legal issue has been raised, we have examined the same. In an affidavit dated 20.11.2017, respondent No.2 has stated that though the petitioner has not challenged the transfer of the case, to complete the record, copy of the order under section 127(2)(a) read with section 127(3) of the Act is produced. Since there is no formal challenge to the transfer of the assessment, the respondents cannot be faulted for not m....
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....ce of notice under section 148. He had in his own writing remarked "yes it is a fit case". It appears that simultaneously submissions were also placed before him on 28.03.2017 for placing the case for his consideration and approval. He had placed his signature approving the same. Thus, there was clear application of mind on part of the sanctioning authority who had, after perusing the reasons recorded by the Assessing Officer and other materials, granted necessary sanction. 15. Despite such observations and conclusions recorded above, the question is, should the reassessment process be allowed to continue? Answer to this question would depend on the question of validity of the fresh notice, without, as contended by the counsel for the petitioner, withdrawing the previous notice. In this regard, we may peruse the materials on record more minutely. We may recall that in the earlier round of litigation before the High Court, the Assessing Officer made statement through the counsel that he would withdraw the impugned notice which was based on the reasons supplied to the petitioner "with a view to issue a fresh notice after recording fresh reasons." Counsel for the petitioner had howev....
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....ke into consideration various judgements of High Courts and Supreme Court in background of facts which were thus. The petitioner had filed the return of income for the assessment year 2005-06. Notice of reopening the assessment issued by the Assessing Officer. Such notice was challenged by the petitioner before the High Court. High Court had admitted the petition and granted interim relief staying further proceedings pursuant to such notice. When the petition was pending, the Assessing Officer issued yet another notice under section 147 of the Act seeking to reopen the petitioner's assessment for the same assessment year, however, on the basis of independent reasons possibly upon availability of fresh material. This second notice of reopening was challenged on various grounds including on the ground that in face of the pendency of the first notice of reopening, there could not be successive second reopening of the assessment. The Court held and observed as under: "7. There cannot be two parallel assessments based on two notices. As long as first assessment is not completed, question of reassessment would not arise. Once a notice is issued under section 148 of the Act, it trig....
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....ly and fully all material facts. However, such difficulty in making a choice, would not govern the interpretation of statutory provisions or would permit us to enlarge the scope of reassessment by holding that the second notice of reopening pending reassessment would also be permissible. We do not discern any concept of alternative or protective notice of reassessment. In the result, impugned notice of reopening is bad in law. This is despite the fact that the first notice came to be quashed on the ground that on the basis of reasons recorded, it cannot be stated that income chargeable to tax had escaped assessment. 9. To this conclusion, we may however add a caveat. In a given case, if it is found that the notice itself is invalid being nonest or ab initio void, it would be no valid notice in eye of law, pursuant to which any valid assessment proceedings would initiate. For example, if the notice is issued by an authority who was simply not competent or was issued without the sanction of the Commissioner when so required, the notice would be void, nonest and having no effect in eye of law. Such a notice would not reopen an assessment, would not commence assessment proceedings a....