TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1141
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....6. 2. The assessee is an individual and for the assessment year 2005-06, the assessee filed her return of income on 31.10.2005 showing total income of Rs. 7,38,93,068/- wherein the assessee claimed Long Term Capital Gain of Rs. 7,24,24,241/- on sale of various shares at conventional rate of tax @ 10%. In the subsequent assessment year 2006-07, the same pattern was adopted by the assessee however, the Revenue treated the same "income for business" and taxed at higher rate vide assessment order dated 27.12.2011 passed u/s. 143(3) r.w.s. 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act). Accordingly, for the Assessment Year 2005-06, the case of the assessee was reopened by issuance of notice u/s. 148, to tax the sale of shares as "business income". As against the notices issued u/s. 143(2) and 142(1), the assessee sent a letter dated 11.01.2013, however the assessee has not given proper reply to the notices. Therefore, the assessing officer completed the assessment on the ground that verification of records reveals that Vishal Exports Overseas Ltd., through a public limited company who subsequently owned by family members of Shri Sureshchandra C. Mehta. Due to 75% ....
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....therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 5. Ld. Counsel for the assessee Mr. Bandish Soparkar submitted before us the reasons recorded for reopening of assessment u/s. 148 as follows: Shri Subhash C. Mehta and his family members, namely, Pradip S. Mehta, Dipak S. Mehta, Kantaben S. Mehta, Usha P. Mehta, Sonal D. Mehta, Raksha S. Mehta and Rachna Y. Parikh are promoters of Vishal Exports Overseas Ltd., some of these promoters, namely, Kantaben S. Mehta, Usha P. Mehta, Sonal D. Mehta, Raksha S. Mehta and Rachna Y. Parikh off loaded some shares at the time of IPO of Vishal Exports Overseas Ltd. in F.Y. 2004-05. The aforesaid letter mainly discusses sale of shares of Vishal Exports Overseas Ltd. by Usha P. Mehta, Sonal D. Mehta, Raksha S. Mehta and Rachna Y. Parikh during F.Y. 2005-06. The transactions are suspicious in view of the following fact. 1. "Usha P. Mehta, Sonal D. Mehta, Raksha S. Mehta and Rachna Y. Parikh sold shares of Vishal Exports Overseas Ltd. on different dated in July and August, 2005. The timing of these transactions is well-synchronized. One starts selling after ....
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.... sanctioned for issuance of this 148 notice, which is against Section 151 of the I.T. Act. Since Joint Commissioner is the competent authority to issue 148 notice within four years period only, it if is beyond four years period only, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner are the sanctioning authority as per Section 151 of the Act. Therefore the initiation of the 148 proceedings itself is bad in law and liable to be quashed. 5.3. The Ld. Counsel Mr. Bandish Soparkar further submitted that the reasons recorded by the assessing officer is also bad in law without application of mind. The body of reasons recorded for reopening clearly shows that the reasons are recorded discusses about the transactions having taken place in F.Y. 2005-06 which are believed to be suspicious. Moreover, specific instances of transactions in July and August 2005 are cited, which are relating to the assessment year 2006-07 not the present assessment year 2005-06. And thus the assessing officer concluded that the income arising from the said transaction in F.Y. 2005-06 is required to be taxed as "business income" and not "capital gains". Therefore, th....
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....n assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice: Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. 7.1. Sub-section (1) of Section 151 deals ....