TaxTMI 
TaxTMI 
2021 (2) TMI 1127
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.... appellate authority failed to consider the written submissions filed during the course of hearing. He did not afford reasonable opportunities to the appellant before coming to conclusions. He did not provide any opportunity before applying the case law quoted by him in the order. He did not discuss any of the decisions relied on by the appellant and referred to in the written submissions. 4. Assessment order: The assessment order uls 143 read with section 147 is based on conjectures, pre-concluded mindset enquires and materials not directly related to the appellants role. 5. Assesses conduct: The Honourable CIT (Appeals) has failed to appreciate the fact that the assessee had discharged his responsibility in proving the transactions and it is for the A.O. to disprove them before making an addition or disallowing the claims made by the assessee in the return. He had failed to take note of the fact that the share prices of the company under reference has seen ups and downs during a period of 21 months as noted by the A.O in her assessment order and the assessee had no role in these fluctuations. 6. Materials used against the assessee : ....
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....ellant: The CIT (Appeals) has failed to note that there is no direct or indirect evidence that the appellant entered into any collision direct, deliberate, conscious and systematic actions towards converting unaccounted money into long term profit on sale of shares. Neither the AO nor the CIT (Appeals) could show any direct evidence from any source about such an activity on the part of the appellant. 10. Appellant had no control over the share price: The AO and the CIT (Appeals) have failed to note that in the case of the assessee the genuineness of the company MIs. PS IT Infra Services Ltd which is a third part and not under the control of the assessee and whose shares assessee had purchased and sold is the issue. Moreover the purchase and sales of shares were made through recognized stock exchange in the open market from unknown and unconnected peTsons. Therefore the final reason given by the CIT(Appeal) for upholding the Assessment order is without any evidence but merely an unproved allegation on the assessee 11. Long term capital gains exemption: The CIT (Appeals) and the AO have failed to note that the assessee did not sell the sha....
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....ted that assessee has failed to make out a case for admission of additional grounds and also facts with regard to said additional grounds was already on record and hence, additional grounds of appeal filed by assessee should not be admitted. 5. We have heard both parties and considered petition filed by assessee for admission of additional grounds and we find that additional grounds taken by assessee challenging reassessment proceedings in light of notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) is purely a legal ground for which there is no requirement of examining any facts and hence in view of specific ratio laid down by Hon'ble Supreme Court in the case of M/s. National Thermal Power Corporation Ltd. Vs. CIT (supra), additional grounds of appeal filed by assessee are admitted. 6. The assessee has raised following additional grounds of appeal:- "1. The learned CIT (Appeals) ought to have noted that the notice u/s 148 issued even before the expiry of time limit for issue of notice u/s l43(2)and thereby re-assessment proceedings are null and void. 2. The learned CIT (Appeals) failed to note that the Assessing Officer never i....
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....t and on analysis of financials of company has come to the conclusion that scrip sold by assessee is penny stock and share price was rigged in collusion with certain parties and accordingly, made additions towards entire sale consideration received from sale of M/s. PS IT Infra & Services Ltd., as unexplained cash credits and brought to tax u/s. 68 of the Act. 8. The assessee carried the matter in appeal before learned CIT(A) but could not succeed. The learned CIT(A) for the reasons recorded in appellate order dated 19.11.2018 has confirmed additions made by Assessing Officer towards sale consideration received from transfer of equity shares on the ground that entire transaction was fraudulent to create undue and illegal benefit to the assessee . It is immaterial whether assessee has used banking channels or not, but what is relevant to decide whether particular transaction is genuine or not is the substance of transaction between the parties. From the facts gathered during assessment proceedings, it is very clear that assessee has created transaction knowing well that company, agents and other persons involved in the organized racket are aiding assessee to create bogus share tr....
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.... of amendments brought in to Explanation 2(b) to section 147 of the Act, the law laid down by Hon'ble Jurisdictional High Court of Madras in the case of CIT vs. K.M Pachayappan (supra) is no more applicable, because when there is no assessment framed, the Assessing Officer is well within his powers to reopen the assessment, but such reopening can be made even before expiry of time limit for issue of notice u/s.143(2) of the Act. 11. We have heard both parties, perused materials available on record and gone through orders of the authorities below. The solitary question that came up for our consideration in the given facts and circumstances of the case is whether notice issued u/s.148 dated 23.09.2016 is valid and consequent reassessment order passed u/s.143(3) r.w.s 147 dated 30.12.2017 is valid or not? The admitted facts borne out from records clearly indicate that assessee filed return of income for impugned assessment year on 30.09.2015 and said return was processed u/s.143(1) of the Act on 10.08.2016. Further, time limit for issue of scrutiny assessment notice u/s.143(2) was available upto 30.09.2016. It is also an admitted fact that before expiry of time limit for issue ....
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.... "It is settled law that unless the return of income already filed is disposed of, notice for reassessment under section 148 cannot be issued, i.e., no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated. According to the Revenue it is immaterial whether the order is communicated or not and the only bar to the reassessment proceedings is that proceedings on the return already filed should have been terminated." ".... A mere glance at this note would show that it could not be said that the Income-tax Officer gave finality to the refund since no refund is granted either in the hands of the trust or in the hands of the beneficiaries. It is an inconclusive note where the Income-tax Officer left the matter at the stage of consideration even with regard to refund in the hands of the beneficiaries. This note was also not communicated to the trustees. When we examine the note dated November 10, 1965, on the file of 1963-64 nothing flows from that as well. In any case if it is an order, it would be appealable under section 249 of the Act. Since the period of limitation starts from the da....
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....he time available for framing the assessment. This is not permissible in law." Applying the principles enunciated in the judgments of the Supreme Court as well as the Delhi High Court, cited supra, the Tribunal is right in coming to a conclusion that no action could be initiated under Section 147 of the Act, when there is a pendency of the Return before the Assessing Officer. The reasons given by the Tribunal are based on valid materials and evidence and we do not find any error or illegality in the order of the Tribunal so as to warrant interference." 12. We further noted that the Hon'ble Supreme Court in the case of Trustees of H.E.H. The Nizam's Supplemental Family Trust v. CIT (supra) has considered an identical issue and held that it is well settled law that unless return of income already filed is disposed of, notice for reassessment u/s.148 cannot be issued i.e. no reassessment proceedings can be initiated so long as valid return filed by assessee is attained finality. The Hon'ble Supreme Court further held that if assessment is not framed before expiry of period of limitation for the particular assessment year, it would have to be assumed that since proceedi....
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....claimed excessive loss, deduction, allowance or relief in the return. From plain reading of Explanation 2(b) of section 147, it is very clear that even if no assessment was made u/s.143(1) or 143(3), still assessment can be reopened u/s.147 of the Act, if the Assessing Officer noticed escapement or understatement of income. In this case, issue is entirely different because question before us is whether Assessing Officer was right in issuing reassessment notice u/s. 148 of the Act, when valid return filed by assessee is not attained finality. Therefore, we are of the considered view that Explanation 2(b) has no relevance to decide the issue whether Assessing Officer was right in reopening of assessment u/s. 147, when he could have issued assessment notice u/s. 143(2) on valid return filed by assessee and the time limit for issue of such notice is not expired when reassessment notice was issued. 14. In this view of the matter, and considering facts and circumstances of the case and by respectfully following decisions of Hon'ble Jurisdictional High Court of Madras in the cases of CIT Vs M/s.Qatalys Software Technologies Ltd.(supra) and in the case of CIT vs. K.M Pachayappan (su....