TaxTMI 
TaxTMI 
2022 (12) TMI 230
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice u/s 148 is bad in law and needs to be quashed. The appellant further, contend that the reasons recorded by the Assessing Officer are vague, insufficient and without application of mind and hence, the consequent assessment proceedings are void and illegal. 2. We have heard rival submission of the parties on the admissibility of the additional ground. The additional grounds raised by the assessee being legal in nature and no investigation of fresh facts required, same was admitted in view of settled principle in the case of decision of the Hon'ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383. 3. Brief facts relevant to adjudication of the issue in dispute are that assessee filed return of income for the year under consideration i.e. AY 2014-15 on 28/03/2016 declaring total income of Rs.4,66,879/-. The return of income filed by the assessee was processed under section 143(1) of the Income-tax Act, 1961 (in short 'the Act'). 3.1 Thereafter, on the receipt of information from the Directorate of Income-tax (Investigation), Kolkata, the Assessing Officer recorded reasons to believe that income had escaped assessment and he issued notice under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ished a copy of purchase invoice at pp 29 of paper book. This is clearly an off market transaction. The demat account was credited with 30,000 shares on 13.12.2012. The appellant has furnished contract notes for sale of Matra Kaushalya Enterprise Ltd through Dhwaja Shares & Securities Pvt Ltd from 21.01.2014 to 29.01.2014 for 1,67,70,453/-where the sale price per share is approximately Rs. 558/-; the bank statement at pp 38 of the PB of bank account in Bank of Baroda where the appellant has highlighted Rs. 55,29,416, Rs. 49,38,584, Rs.52,42,363 received on 28.01.2014, 29.01.2014 and 30.01.2014 respectively from Dhwaja Shares & Securities Pvt Ltd reveals that the total is Rs 1,57,10,363/-. The demat account of appellant in Indusind Bank at pp 39 of the paper reveals that 30000 shares of Matra Kaushalya Enterprises Ltd was debited on 21.01.2014 - this is strange as the last sale took place on 29.01.2014. These are placed at Annexure. This transaction of purchase is an off - market transaction. The sale is debited in the demat account prior to the sale which is purportedly through the stock exchange. There is a spectacular gain in price from Rs. 10/-per share to Rs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecorded it is mentioned that information was received from directorate of investigation, Kolkata based on search/survey on the premises of certain operators/intermediaries/beneficiaries and found that long-term capital gain LTCG or long-term capital loss (LTCL) was provided to beneficiaries by way of accommodation entries. But in the material supplied by the investigation, name of the assessee is not appearing. The information under reference including the statement of alleged operators or intermediaries or beneficiaries for brokers have never been provided to the assessee. (c) Reasons recorded based on suspicion The Assessing Officer in Para 5 of the assessment order has mentioned that quantum of long-term capital gain in the case of the assessee was found suspicious and therefore detailed investigation was undertaken (i.e. by way of reopening the assessment) applying various tools of Income-tax Department data, BSE data, money control website etc. 6.1 The Ld. Counsel of in support of his contention that assessment cannot be reopened merely on reason to suspect, relied on the decision in the case of Coronation Agro industries Ltd Vs DCIT Writ Petition No. 2627....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es is an exempt income. Further, the Kolkata Investigation Directorate informed that all such brokers through whom such transaction were carried out, admitted that they charged commission on the amount involved in these transactions. It was also informed that the assessee has traded in the shares of penny stock companies to generate bogus LTCG income and thereby converted undisclosed income into tax free income without paying taxes. Information was received that the SEBI has suspended trading in shares of several penny stock companies consequent to its investigation. The Investigation Wing Kolkata had carried search action u/s 132 and survey action u/s 133A of the I.T. Act on various operators who were indulging in trading in shares of penny stock companies. It was found during the search and survey that the operator were artificially rigging the prices of several such companies for the purpose of giving accommodation entries in the form of long term capital gains against equivalent amount of cash after deducting their commission. The list of such companies included the penny stock company M/s Matra Kaushal Enterprises Ltd. (MKEL). 3. As per the information available on re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), but nowhere pointed out whether any trading in the shares of the MKEL was ever suspended. Suspension of trading in the shares other than MKEL is not relevant for making belief that income escaped assessment in the case of the assessee. The Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Private limited 291 ITR 500 (SC), held that at the stage of issue of notice, the question is whether there was relevant material on which a reasonable person could have formed a requisite belief that income escaped assessment. But, in the present case the information referred that SEBI suspended trading in some penny stock shares is not relevant for forming belief that income arising from sale of shares of MKEL has escaped assessment. 8.3 Thirdly, the Assessing Officer in assessment order has recorded that case was reopened in view of the suspicion that income escaped assessment and therefore wanted detailed investigation. The relevant finding of the Assessing Officer is reproduced as under: "5. Suspicion of Revenue 5.1 The assessee earned long term capital gain in the current year and claimed it as exempt u/s 10(38) of the act. This quantum of huge long ter....