TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 537
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....st the return of income filed on 29/9/2014 at a total income of Rs. 68 lakhs. 03. The assessee has raised several grounds of appeal as under. "A. On the facts and in the circumstances of the case and in law, the CTT(DRP-1), Mumbai, erred in holding Form 35-A dated 28.04.2022 as filed before the Dispute Resolution Panel (the Panel') to be ineligible for any directions to be issued, by it 1. Rule 4 of the Income tax (Dispute Resolution Panel) Rules 2009 merely require Form 35-A to be filed either "in person" or "through his agent". It does not stipulate as to under whose signature the said Form 35-A is to be filed. 2. Form 35-A has duly been filed "in person" or physically on 28.04.2022 before the Secretariat, as required under sub-rules (1) & (2) of Rule 4. 3. The second proviso to clause (a) to Rule 4(3) specifically provides discretion to the Panel to accept or reject objections as filed, BEFORE notice as postulated in Rule 5 is issued, given that Rule 5 permits issuance of notice to an ELIGIBLE Assessee, specifying date and place of hearing of Objections. 4. Notice u/s.142(1) was issued to the Assessee on 26.08.2022, enquiring as to status of the matter, in res....
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....le ground, the Panel consistently proceeded on the basis the form 35A as filed had been accepted and was fit for being adjudicated upon. C. Without prejudice to contentions in Grounds A & B above, Form 35-A in the subject case is duly protected under section 292B of the Act for its regularity and validity which D. The Panel has arbitrarily ignored. On the facts and in the circumstances of the case and in law, the impugned order dated 23.01.2023 as passed u/s.144 read with section 147 of the Act, is bad in law and unsustainable, since none of the objections as raised in the 35A have been considered or adjudicated: 1. The impugned proceedings are time-barred, having been initiated on the basis of a notice u/s.148 of the Act dated 30.06.2021. A perusal of the approval memo u/s. 151 as provided to the Assessee demonstrates that Reasons Recorded have been submitted for approval by Assessing Officer from ADIT, International Tax Range 1(3), Mumbai, as well as from CIT(IT)-1, Mumbai, only on 20.04.2021, and also that approval by the said officers was granted only on 30.06.2021, which means that no valid notice u/s. 148 could have been issued on 31.03.2021. 2. The impugned proce....
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....ison of the Odyssey stock price is attempted with a public sector company engaged in hydro-electric power sector, which has no correlation whatsoever; f. All conclusions formed on the basis of the stock price of Odyssey are merely speculation, and in the nature of generic ratio analysis, not based on any evidence. Neither the Investigation Wing nor the AO are experts in stock market operations and valuations, and their opinion as to the movement of a quoted scrip transacted exclusively through stock market is of no evidentiary value; g. Even the conclusions and analysis as obtaining in the impugned order, as never confronted to the Assessee, is inane and amateurish, with findings of the tenor of the following, amongst other instances: i. Page 22-There is an attempt to show that Odyssey is a bogus company for the reasoning that employee expenses have increased in two years despite operating revenue reducing; ii. Page 45 to 83-Trading pattern of two investors unknown to the Assessee has been analysed. While in both cases, it is admitted that purchase and sale of the Odyssey scrip took place within mere days or months, the AO has failed to note that this very analysis demo....
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....efore him, b. Page 91-Specific submission as to NIL purchase during FY 2013-14, c. Page 92-Transaction statement upload on 14.03.2022, and d. Page 92 Reiteration that no shares of Odyssey have been purchased by the Assessee in FY 2013-14, and therefore, there could have been no STCL. 11. The AO has erred in disallowing claim of STCL, when no STCL. was in fact incurred or claimed by the Assessee. 12. The AO has erred in holding at Page 94 of the impugned order that traders or investors in the stock market such as the Assessee are required to justify their business decisions to the income tax authorities. 13. The AO has erred in making adverse inferences in respect of the Assessee's alleged non-compliance to the requirement to file return in response to the impugned notice u/s. 148, while at the relevant time, it was the AO's portal that was dis-functional. 14. The AO has erred in not giving provision for answer to the notice u/s. 133(6) sent to Bombay Stock Exchange (BSE), at the fag end of proceedings leading to draft order dated 31.03.2022, and not stating in the impugned order whether any response was indeed received thereafter for BSE. 15. The AO ....
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.... the assessee has allegedly bought 12,00,844 shares at Rs. 157,060,202 and sold the same quantity of shares at Rs. 126,182,597 resulting into a loss of Rs. 30,877,605. Thereafter, after obtaining the necessary approvals under section 151(1) of the Act, case of the assessee was reopened on 31/3/2021 by recording the reasons and issuing the notice on the same date. 07. In response to the above notice the assessee did not file any return of income. Assessee submitted its reply on 27 September 2021 stating that that assessee is making an effort to file the return of income in response to notice under section 148 of the act through e-filing portal but it is unable to file the return of income after the launch of new efiling income tax portal. Therefore assessee requested to not to take any adverse view for non-filing of income tax return under section 148 of the act as the reasons stated above are beyond the control of the assessee. The assessee also requested that that it will intimate the AO as soon as the e-filing acknowledgement is available. 08. As the assessee did not file any return of income, another notice under section 148 was issued on 30 June 2021. The assessee was also as....
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....hares and penny stock companies, financial analysis of the penny stock companies do not support the trading by the assessee, there is an adverse order of the securities and Exchange board of India, there is a cash trial available in the accounts of the entry providers and therefore these are arranged transactions and are bogus. The learned AO thereafter held that the claim of total short-term capital loss of the assessee amounting to Rs. 30,877,605 is not allowable to be carried forward to subsequent year and the amount of Rs. 157,060,202/- paid towards the alleged bogus purchase of share is chargeable to tax under section 69 of The Income Tax Act. Further sum of Rs. 4,711,806 is an alleged commission paid at the rate of 3% on obtaining the total purchase transaction of the above company chargeable to tax under section 69C of the act. Accordingly the draft assessment order was passed. 09. The assessee approached the learned Dispute Resolution Panel against the draft assessment order. The learned dispute resolution panel passed an order under section 144C (5) dated 29/12/2022 and stated that that the objections filed by the assessee against the draft order is neither signed by the ....
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....n 27 April 2022 verified by Mr. S Krishnan, Advocate by speed post which reached the office of the learned DRP. ii In response to a notice under section 142 (1) of the Act dated 26/8/2022, assessee intimated to the ld AO that the assessee has filed objection before the learned DRP by filing form number 35A. Copy of the acknowledgement dated 28/4/2022 was also submitted. iii On 13/10/2022 the learned income tax officer headquarter to DRP - 1, Western Zone , Mumbai issued a letter by way of a notice under section 144C (11) of The Income Tax Act to the assessee stating that the objection filed with the DRP on 28/4/2022 by the assessee is fixed for hearing on 21/10/2022. Assessee was directed to furnish the written submission. The assessee was also asked to submit soft copies of the status of the DRP for the last three years and the soft copies of details as per annexure attached. In the end of Assessee was asked form number 35A, grounds of appeal, statement of facts, submission in detail, synopsis of the submission in brief, table containing international transaction and if the matter is covered in the case of the assessee then the soft copy of such order along with the power of a....
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....ed as an agent of the assessee. Therefore the learned dispute resolution panel held that no directions are required to be given in respect of the objection filed by the assessee as they are not maintainable in the eyes of law. viii The learned authorized representative stated that (a) The draft order was sent to the assessee on 31/3/2022 and assessee has filed objection within 30 days on 28/4/2022. Merely because the objection in form number 35A has been signed by the advocate of the assessee, the learned dispute resolution panel could not have dismissed the objections filed on this ground only. (b) He extensively referred to rule 4 of The Dispute Resolution Panel Rules stated that such rule does not postulate that it should be signed in the manner and by the person who is required to verify the return of income of the assessee. (c) He further referred to The Income Tax Rules 1962 wherein for filing an appeal, there is a specific provision that same should be verified by the person who can file the return of income of the assessee. (d) He further referred to rule [5] wherein it is provided that the panel shall issue notice to the eligible assessee and the concerned assess....
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.... paragraph number 3 - 14 of that decision. 015. The learned departmental representative submitted that i Only assessee can verify Form number 35A before DRP. He referred to definition of assessee u/s 2(7) and of Person u/s 2(31) of the Act. ii In the present case Mr. S Krishnan being an authorized representative of the appellant has verified the objections in form number 35A. iii He submitted that the form of verification categorically says that it is required to be filed by the assessee, Mr. Krishnan is merely is an authorized representative of the appellant and not an assessee therefore, even otherwise the objections filed before the learned dispute resolution panel are not maintainable. iv Rule 4 provides that objections are to be filed in person or through his agent within the specified period in form number 35A. Therefore only the assessee or his agent can file the objections. The authorized representative is not entitled to file such objections. v Learned dispute resolution panel has specifically considered by referring to provisions of section 163 of the income tax act that who is an agent. He submitted that the authorized representative who signed the form number....
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....nst the draft assessment order passed by the learned assessing officer on 31/3/2022, verified by one Mr. Krishnan, advocate, authorized representative of assessee. The letter of authority issued to Mr. S Krishnan authorizing him to file the objection before LD DRP is not produced before us. 017. Form number 35A is a form prescribed under Income Tax (Dispute Resolution Panel) Rules, 2009 (The DRP rules). This form prescribed verification as under:- I_______________ the assessee, do hereby declare that what is stated above is true to the best of my information and belief. 018. Thus from the above verification it is clear that it is only the 'assessee' who has to sign form number 35A. Rule 4 (1) provides that the objection if any, of the eligible assessee to the draft order may be filed in person or through his agent within the specified period in form number 35A. Therefore rule 4 (1) does not talk about the verification part of form number 35A but merely talks about who shall file the form. There is a basic distinction between the person who is filing the form and the person who is making a verification of the form. As the form is required to be verified by an assessee, assessee....
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....n 29/12/2022. In response to the hearing before the learned dispute resolution panel, same advocate who verified objections, appeared and represented, case was discussed with him. But the LD DRP did not indicate at anytime even once that the objections are not maintainable as not verified in accordance with the DRP Rules. Perhaps had this been intimated to the assessee upfront, assessee could have taken a remedial action. But such an opportunity was never granted to the assessee. In the first letter dated 13/10/2022 issued by the learned dispute resolution panel fixing the date of hearing on 21/10/2022 has clearly referred to the application filed by the assessee. This letter was issued by the ITO headquarter to DRP-1, WZ Mumbai. Subsequently after furnishing all the details virtual hearing took place. During the course of virtual hearing, the assessee was asked to file certain synopsis, the same were also filed. The last information submitted by the assessee was on 9/11/2022 to the learned dispute resolution panel. In that time the learned dispute resolution panel did not indicate to the assessee that the objections filed are not in conformity with the rules of the DRP. After 9/11....
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.... all confronted with the view of the learned dispute resolution panel that the form is not properly verified and not maintainable. That was also not the case where the hearing took place, assessee was heard on merits and later on objections were held to be invalid, without giving any opportunity to the assessee. The coordinate bench in that decision held that an agent is permitted to file the objection, there cannot be any dispute with that proposition as that is the mandate of rule 4 (1) of the DRP rules. But there is a basic distinction between 'verification' of form number 35A and filing of the objections. We also do not subscribe to the view that a chartered accountant or anybody else can verify form number 35A. We also failed to understand that how a chartered accountant or in advocate can declare that what is stated in form number 35A is true to the best of his information and belief. This is for the simple reason that a chartered accountant or any advocate cannot be privy to information about the truthfulness of facts stated in that form. Therefore certainly, according to us only assessee can verify form number 35A. 021. However in the present case, the form number 35A is v....