TaxTMI 
TaxTMI 
2021 (5) TMI 703
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....g feature noted above. However, inadvertently, the very same order as passed in the other cognate writ applications was transferred in the computer. The concerned stenographer was confronted in this regard and he offered his explanation stating that inadvertently the order in the present writ application also came to be transferred and that too without obtaining the signatures of the judges on the order. It appears that since the order came to be inadvertently transferred, the Revenue also obtained the certified copy of the same. 2. In fact, the present writ application was to be reheard on certain issues and when the same came to be notified once again for rehearing, the aforesaid fact came to our notice. 3. In such circumstances, referred to above, the present writ application was once again notified for hearing on 11th May, 2021 and was heard for some time. Thereafter, it was once again ordered to be notified today, i.e, on 13th May, 2021. We once again gave an opportunity of hearing to Mr. Tushar Hemani, the learned senior counsel appearing for the writ applicant and Mr. M.R. Bhatt, the learned senior counsel appearing for the Revenue and concluded the hearing. 4. By f....
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....s. 3540000/­ during F.Y.2011­-12 relevant to A.Y.2012­-13. The assessee has claimed exempt LTCG of Rs. 3438816/­ in the return of income. The share price movement in the captioned scrip was seen from public domain and observed that there is share price rise which is prima facie not supported by financial fundamentals of the scrip. Normally, the price manipulation is done by creating a syndicate by the promoters, brokers, managers, controllers etc. and the price of such shares is raised abnormally high to show fictitious LTCG. 4. Enquiries made by the AO as sequel to Information collected/ received : As per AIMS module in ITS/ITBA data available with this office, the assessee has made penny stock transaction in FY 2011­-12 and sell TUNI TEXTILE Ltd (scrip code ­531411) and the assessee has declared gross total income return of income at Rs. 1226170/­ only. Assessee has claimed Exempt income of LTCG at Rs. 348816/­ but no transaction details have been furnished which shows that the assessee has availed accommodation entry to the tune of sale consideration received on sale of such shares by way of entering into dubious transactions in penny sto....
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.... 8. Applicability of the provisions of section 147/151 of the facts of the case: NA In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income ­tax as per the provisions of section 151 of the Act." 8. The writ applicant raised the objections against the issuance of impugned notice and initiation of the reassessment proceedings, mainly on the following grounds : i. Lack/absence of valid sanction under Section 151 of the Act. ii. The reasons for reopening factually incorrect; iii. No 'reason to believe' that income chargeable to tax has escaped assessment; iv. No live nexus between the information received and material gathered from the different sources. v. Reopening is not permissible for proving and/or fishing inquiry or investigation without their being a specific findings as to escape of income; vi. Reopening is based on borrowed satisfaction. vii. Reopening is beyond a period of 4 years and there is no failure on the part of the writ applic....
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....itted that, the affidavit­in­reply filed by the revenue, the revenue seeks to supplement the reasons recorded by the Assessing Officer which cannot sustainable in law. g. It was submitted that the Assessing Officer has merely presumed that the transactions entered into by the writ applicant in the scrip in question is a penny stock transaction, which cannot be a legal ground to reopen the assessment for the year under consideration. h. It was contended that at the time of framing the assessment under Section 143(3) of the Act all the necessary particulars had been furnished to Assessing Officer, who while issuing notice under Section 142(1) of the Act, had specifically called upon the writ applicant to furnish the details in respect of alleged transaction. Under the circumstances, the Assessing Officer has framed the original assessment and did not make any addition with regard to long term capital gain. Thus, in view of the aforesaid facts, now it is not open for the Assessing Officer to change that opinion and take a different view based on the very same set of facts and information. 12. In view of the aforesaid contentions, the learned counsel submit....
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....ation with regard to transactions being received after assessment proceedings and same was not available at the stage of previous proceedings. 15. Mr. Manish Bhatt, learned Senior Counsel for the revenue submits that there being no merits in the writ application, the same deserves to be dismissed. 16. Having heard the learned counsel for the respective parties and having gone through the materials on record, the only question falls for our consideration is that, whether the revenue is justified in reopening the assessment for the year under consideration? 17. It is settled position of law that Section 147 of the Act empowers the Assessing Officer, if he has reasons to believe that, any income chargeable to tax has escaped assessment, to assess or reassess such income or recompute any allowance. This power is subject to the provisions of Section 148 to 153 of the Act. 18. A plain reading of reasons recorded reveals that, the case of the assessee is reopened under Section 147 of the Act, since the information was received as per AIMS module that as per the penny stock transaction data, the assessee had sold 40000 shares of Tuni Textile Ltd., for the consideration of Rs. 3....
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....ppears that, the Assessing Officer has made reference of the information received from the concerned investigation wing with regard to bogus accommodation entries of long term capital gain provided by the certain entities. Though, full details of the information and enquiry conducted by Kolkata wing having not been reflected in the reasons recoded, but a specific reference made in the reasons recorded by the Assessing Officer that, the transactions made by the assessee is penny stock. In this context, we may place reliance on the decision of this Court in the case of Aayojan Developers Vs. ITO, [335 ITR 234], wherein, this Court after referring the decision of the Calcutta High Court in the case of East Cost Commercial Com. Ltd., [128 ITR 324], held that, the income tax officer in his affidavit filed in the Court could explain or elaborate or clarify the reasons recorded by him, but he could not thereby introduce new grounds or new reasons or new materials which were not to be found in the recorded reasons, either expressly or by implication. 21. Applying the aforesaid principles of law, in the case of Aayojan Developers (supra) to the facts of the present case, we are of the vi....
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....that, on the basis of information received from the concerned wing, the Assessing Officer made independent enquiries and applied his mind to the information and upon due satisfaction and the materials gathered during the enquiries, finally formed a belief that, the income has escaped assessment. At the stage of issuing the notice, the court cannot investigate into adequacy or sufficiency of the reasons. When no scrutiny assessment made under section 143(1) of the Act, the requirement for reopening is only reason to believe. Considering the facts of the present case, the Assessing Officer has caused of justification that, the alleged transaction of penny stock, claiming amount of long term capital gain has escaped assessment. We may place reliance on the case of Central Prominces Mangnese Ore Company ltd. (191 ITR 662 SC), wherein the Apex Court interpreted the word "reason to believe". It was held that, the word "reason" in the phrase "reason to believe" in Section 147, would means cause or justification. If the assessing officer has cause or jurisdiction to know or suppose that income has escaped assessment he can be said to have reason to believe that income has escaped assessmen....
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....s conclusion that it constitutes a sufficient reason, cannot be overridden. What is, therefore, to be ascertained is, whether the alleged reason really existed, and if it did, whether it was so irrational as to be outside the limits of his administrative discretion with which the Assessing Officer is invested so as to be really in disregard of the statutory condition......." Evidently, the Assessing Officer purporting to exercise powers under Section 147 of the Act, is not a party who has to not only state but establish before anyone the so­called jurisdictional facts. 26. In view of the settled principles of law as propounded by the Apex Court as well as by this court and considering the contention of the reasons recorded for reopening and further clarification of the information made by the revenue, we are of the view that, the Assessing Officer himself was satisfied with regard to the information and other materials on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the TUNI Textiles Ltd., and the Assessing Officer had applied his....