TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 1521
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....ues involved are interconnected having the same assessment year and of the same assessee. 2.1 The grounds of appeal taken by the assessee in ITA No. 1191/JP/2024 for A.Y 2016-17 are as under; "1. Under facts and circumstances of the case and in law, the order dated 05.08.2024 passed by the Ld. CIT(A)/NFAC u/s 250 of the Income Tax Act, 1961, to the extent confirming action of the Ld. AO, is arbitrary, perverse, bad in law and without jurisdiction. 2. Under the facts and circumstances of the case and in law, Ld. CIT (A) erred in passing Impugned order u/s 250 of the Act without providing opportunity of being heard. 3. Under facts and circumstances of the case and in law, the Ld. CIT(A)/NFAC has grossly erred in confirming the assumption of jurisdiction by the Ld.AO u/s 147 of the Act. 4. Under facts and circumstances of the case and in law, the CIT (A) has erred in upholding the action of the Ld. AO in issuing the impugned notice u/s 148 of the Act and consequential assessment proceedings u/s 147 of the Act. 5. Under the facts and circumstances of the case and in law, Ld. CIT (A) erred in upholding addition of Rs. 11,10,170/- in respect of agricultural income. T....
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.... company YICL amounting to Rs. 4,77,46,835/-. As the assessee had made the transaction, in company, which was controlled to benefit certain pre-decided persons, being penny stock, is not genuine and the same was liable to be added to the income of the assessee which the assessee has claimed as exempt from tax for an amount of Rs. 4,65,16,639/- u/s. 10(38) of the Act. Based on that set of facts the case of the assessee was re-opened by issue of notice u/s. 147 of the Act. Before issue of notice necessary approval from competent authorities was taken and thereby the notice u/s. 148 of the Act was issued on 09.04.2021 and the assessee vide letter dated 09.09.2021 provided the reasons for re-opening of the assessee. The issue of notice after 31.03.2021 because of pre-amended provision of section 148 of the Act, resulted into largescale litigation all over India. On that as per the direction of the Hon'ble Supreme Court the assessee was provided with the information and documents which were available vide letter dated 25.05.2022 and the assessee was requested to file its response. The assessee filed the response which was discussed in the order passed u/s 148A(d) of the Act da....
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....o the search and survey conducted in case of Dutta and Tyagi Group on 16.05.2018 and post-search operation in that group. It was also informed to the AO that the appellant was also one of the persons who have taken benefit of share price manipulation in YICL. The AO referred to the return of income and found that the appellant has claimed Long Term Capital Gain of Rs. 4,64,99,603/- on sale of Rs. 4,77,46,835/- worth of shares of YICL allegedly held by the appellant for more than one year. On the basis of the above information the AO recorded the reason to believe that income has escaped assessment and jurisdiction to reassess the income of the assessee was assumed. It is matter of record that against the assumption of jurisdiction to reassess the assessee is in appeal before Hon'ble High Court of Jaipur. This appeal, has not been decided so far. However, the appellant, by his submission dated 30.07.2024 has now informed that the writ petition stands abandoned after (covered in) the decision of Hon'ble Supreme Court in the case of Ashish Aggrawal vs. UOI. 5.1.2 Notices u/s 142(1) were issued in this case on 30.01.2022, 04.05.2023, 11.04.2023, 17.05.2023 & 19.05.2....
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....s conclusion has been arrived by the AO. There is no mention of any incriminating document found during the course of search. Absence of any incriminating document found against the appellant also gets supported from the fact that no proceedings against the appellant have been initiated u/s 153C. Additionally, there is no mention of any recorded statement in which it has been alleged that the appellant was one of the beneficiary of price manipulation undertaken in the shares of YICL. After repetitive mention of conclusive information that the appellant is one of the pre-decided beneficiary of price manipulation in the shares of YICL, the AO concludes the following in para 4.6.2 of the impugned order: Hence, in the light of above discussions, it is concluded that the assessee has traded in the penny scrip of the M/s Yamini Investment Company Limited "YICL" amounting to Rs. 4,77,46,835/- during F.Y. 2015-16 relevant to AY 2016-17. The transactions in this scrip are bogus, coloured and not genuine. It has been done to accommodate unaccounted money of the assessee in the regular accounts and facilitate in the scheme of entry accommodation through penny stocks. Furthermore, asses....
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....s in his portfolio and accordingly has sold total 8,66,990 shares out of the total shares 12,00,000 held by him during the year under consideration. In effecting the sale of the share, the Appellant has also paid total STT. 64. Total sales value of the share sold of M/s Yamini Investment Company is Rs. 4,75,83,341/-. Accordingly, the Appellant claimed amount of Rs. 4,64,99,603/- as exempt income u/s 10(38) of the Act. 65. The exempt income claimed by the Appellant is supported by the following documentary evidence as mentioned below: * Purchase invoices issued from Myra Apparels for the purchase of share of M/s Anax Com Trade for total value of Rs. 15,00,000/- (PB Pg. No. 38) * Bank statement which duly establish the fact that the Appellant has purchased the share payment for which was made through banking channel only. (PB Pg. No. 40-41) * Account confirmation of Myra Apparels (PB No. 39) * DP statement which duly establish the fact that share purchased by the Appellant of M/s Anax Com Trade was then dematerialized in D-mat account on 25.04.2014. (PB No. 83-84) * Sales contract notes which duly establish the fact that the Appellant ....
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....t. 69. Further, the Ld.AO had made the impugned addition by invoking provision of Section 68 of the Act, which is not applicable in the present case 70. In this context, it is imperative to discuss section 68 of the Income Tax Act, 1961 reads as under; "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year." 71. On the bare perusal of Section 68 of the Act, it is clear that in a case where any sum is found credited in the books of account and the Assessee has not given any satisfactory explanation in respect of the same, the Assessing Officer can treat the same as income and add it to the income of the Assessee. 72. In view of the above, the first condition for invoking the provision of Section 68 of the Act is that the Assessee should maintain books of account and amount is found to be credited in the books of account maintained by the Appellant. In the present case....
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....aw. 78. The impugned addition u/s 68 of the Act is not justified as there is no sum found credited in books, rather the amount for which impugned addition is made is duly declared in the return of income, therefore, Section 68 of the Act is not applicable. For the purpose of Section 68, the first condition is that the amount must be credited in the books of accounts, Ld. AO has nowhere mentioned that he found any sum credited in appellant's books of accounts. Further, as stated above, the Appellant already submitted the sufficient documentary evidence to establish the genuineness of the exemption claimed by the Appellant u/s 10(38) of the Act, which veracity is also undisputed by the Ld.AO. therefore, the Appellant has sufficiently discharged his burden u/s 68 of the Act. 5.3.4 In support of the above proposition, the appellant has relied upon, among others, the authority of Hon'ble Supreme Court in the case of Pr. CIT vs. Krishna Devi [2022] 138 Taxmann.com 150 (SC) in which the SLP filed against the order of High Court by the Revenue was rejected, CIT vs. Smt. Pooja Aggrawal, double bench decision of Rajasthan High Court in ITA No. 385/2011, decision of jurisdict....
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....ability of gains arising out of trading or investing in the shares which have demonstrated unusual price movements. At one hand, Hon'ble Calcutta High Court in the case of Pr CIT vs. Swati Bajaj [2022] 139 Taxmann.com 352 (Calcutta), based upon preponderance of evidence has decided that the gains arising out of trading or investing in such shares can be treated as accommodation entries. However, most of the high courts including jurisdictional high court of rajasthan in the recent case of PCIT vs. Arnav Goyal ITA No. 14/2024 decided on 19.02.2024 has decided the issue in favour of assessee in fact situation of assessee successfully demonstrating the event of purchase of share, payment of purchase through banking channel, holding of shares in demat account and sale of the share through registered broker through an online transaction executed on registered stock exchange on prevailing share prices and receipt of share proceed to banking channel. In the present appeal the appellant had produced documentary evidence for entire chain of transaction starting from investment in the shares of Anax Com Trade, payment for purchase through banking channel, holding of shares of Anax C....
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....e assessment proceeding the appellant in support of the exempt agricultural income claimed in return of income of Rs. 11,10,170/- submitted the Jamabandi (PB No. 294-306). The perusal of the Jamabandi duly establish the fact that the land indeed is an agricultural land and was used for agricultural purpose. Further, it is undisputed fact that the land is an agricultural land. 98. It is further apposite to highlight that in the previous assessment year the appellant has claimed exempt agricultural income, which was also allowed by the Ld. AO while assessing the return of income. Therefore, taking contrary stand in subsequent year is not justified when the department itself has accepted the agricultural income claimed by the appellant in previous years. 5.5.3 The Jamabandi filed by the appellant has been carefully perused. As per this document the appellant is owner of 75.11 bigah of land. The purchased document of the land submitted by the appellant only signifies that for the purpose of collection of the stamp duty this land is classified as agricultural land. Agriculture is an activity that needs to be carried out on the land which includes but is not restricted to p....
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....pted income of Rs. 4,65,16,639/- on account of long-term capital gain u/s 10(38) of the Act in respect of sale of shares in his return of income. 2. The Ld. AO disputed the said exemption and besides this made addition in respect of agricultural income without any basis. The impugned proceedings are perse without jurisdiction and authority of law in view of the following legal arguments taken during hearing before the Hon'ble Bench. S. No Legal Basis Argument in Brief P.B. Reference 1. Barred by Limitation Ld. AO does not have in possession any books of accounts or other documents or evidences which reveal that income chargeable to tax, represented in the form of asset, which has allegedly escaped assessment amounts to or is likely to amount Rs.50 lacs or more. Consequently, the notice is barred by limitation in terms of section 149(I)(b) of the Act (as amended vide Finance Act, 2021). Case law: IDFC Ltd. vs Deputy Commissioner of Income-tax [2023] 155 taxmann.com 602 (Madras) 238-242 (Impugned Order u/s 148A(d)) 243-244 (notice after Ashish Agarwal Case) 246(reasons to believe) 2. Approval not sought from Pr. CCIT Before issuing notice u/s 148(a)(b), a....
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....e laws: CBDT instruction no. F.NO. 299/10/2022-Dir (Inv. III) / 6 / 11 dated 01.08.2022 Divya Capital One (P) Ltd. v. Assistant Commissioner of Income - tax [2022] 139 taxmann.com 461 (Delhi) Rajhans Processors vs Union of India [2023] 149 taxmann.com 29 (Rajasthan) R.K. Buildcreations Private Limited vs Income Tax Officer Best Buildwell (P) Ltd. vs Income-tax Officer [2022] 141 taxmann.com 558 (Delhi) WS-5 05. Notice u/s 148 is in violation of the CBDT notification The CBDT notification No. 18/2022/F.No. 370142/16/2022TPL(Part 1) dated 29.03.2022 provides that the issuance of notice shall be in a faceless manner for reassessment. Thus, notice issued u/s 148 of the Act dated 25.07.2022 is without jurisdiction. Case Laws: Hexaware Technologies Limited vs Assistant Commissioner of Income Tax, Circle 15(1)(2), Writ Petition No. 1778 of 2023 WS-21 243-244 06. Addition made for Agricultural Income At the outset, the impugned addition is not sustainable as the very proceedings u/s 148 of the Act are bad in law and basis on which proceedings were initiated are non-existing and found to be non-existing by Ld. CIT(A) itself. Therefore, the subsequent addition for ot....
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....n disapproved and proved false by the Ld. AO, no defect has been pointed out at the veracity of the documentary evidence placed on record, which beyond doubt establishes the genuineness of the transaction done by Assessee. Therefore, addition made u/s 68 is not justified. * Accordingly, the order of Ld. CIT(A) is supported and therefore it is incorrect to state that Ld. CIT(A) without adequately examining the material facts and evidences deleted the addition. There is no contrary evidence brought on record by the department to prove their contention except mere raising doubts on the documentary evidence duly supporting the case of the Assessee. . * Reliance placed on the order of SEBI is misconceived and factually incorrect, the said order does not name the Assessee to be beneficiary, thus, there is no link of the said order with the case of the Assessee. . * Kindly refer Para No. 65 of Written Submission and Ld. CIT(A) Order Page No. 19-21 Para No. 5.3.5 to 5.3.8. The Ld. CIT(A) has applied its mind to judgment of PCIT vs. Arnav Goyal which is squarely applicable in the facts of the present case. Thus, his decision on deleting addition on merit is justified without prejudice ....
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....g unverified invoices and non - compliance with notices under 133(6) proving that the transactions were not genuine. . * The Assessing Officer is empowered by Section 148 of the Income Tax Act 1961 to reopen an assessment after the completion of the original assessment under section 143(3). * The Ld. AO alleged that the Assessee is not a regular Investor in the shares, and a new investor does not invest in the company which are not listed or having week financials. * SEBI vide its order no. WTM/AB/IVD/ID11/29124/2023-24 dated September 4, 2023 (PB 307 - 394) has directed the list of 65 entities restrained from dealing in securities in any manner in the security market for a period of 2 years from the date of the aforesaid order. The name of the Assessee is nowhere mentioned in the aforesaid order and there is no such order that the shares of Yamini Investment CO Ltd were penny stock. In the list of 65 person banned from trading, no name of Assessee is there, thus allegation made is against the facts. * The allegation made by department are bereft of any basis and not emanating from SEBI order. In the order of SEBI, certain individual/persons were barred from trading and there....
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....gistered broker which were executed on registered stock exchange on which STT along with other charges were paid and receipt of sale proceed through banking channel. There are available in paper book of documents submitted. * In this context, it is submitted that the Appellant invested in the shares of M/s Yamini Investment Company based on advice given to him and after considering the potential growth of the company. It is a fact that the release of the company's earnings report influenced the stock price, as was the case with the scrip of M/s Yamini Investment Company Ltd. Therefore, no adverse inference against the Appellant is required. Further reference Para No. 9-11 of Written Submission, Ld. CIT(A) Order Page No. 3-4) * Department is not allowed to step in to the shoes of genuine investor and his decision making. Case Laws relied upon: IDFC Ltd. vs Deputy Commissioner of Incometax [2023] 155 taxmann.com 602 (Madras) Vodafone Idea Ltd. vs Deputy Commissioner of Income Tax and Others [2024] 468 ITR 346 (Bombay High Court) Balkrishna Barsha Sutar vs Income Tax Officer and Others [2024] 468 ITR 348 (BOMBAY HIGH COURT) CBDT instruction no. F.NO. 299/10/2022-Dir (Inv. ....
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....e judgement of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt Ltd is in relation to addition u/s 68 of the Act in respect of share capital issued to unidentified parties. The said decision is not with respect to capital gain exemption; thus, the case law is not applicable and hence distinguished. Moreover, in the case of the Assessee the sell transaction is through stock exchange and identity of scrip has been established, the shares of YICL are still traded on NSE/BSE, therefore, genuineness of transaction cannot be doubted. iii. Sajan Dass & Sons vs. CIT [2003] 264 ITR 435 Facts of the case law relied upon are entirely different, in this case law relied upon by department, the assessee made claim of gift, which he was unable to substantiate. Whereas, in the case of the Assessee, the claim of capital gain has been duly established and substantiated, therefore, onus of the Assessee has been duly discharged. Thus, facts of the case of Assessee is clearly distinguishable. iv. Pr CIT vs Bikram Singh 2017 85 taxmann.com 104 This judgment is on the directions to Hon'ble High Court to frame substantial question of law for appeal to be filed before Hon'ble High Court. Th....
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....tinguishable. viii. Pr. CIT vs. Vaman International Ltd. [2020] 113 taxmman.com 400 (BOMHC) There is no such finding in the order of Hon'ble Bombay High court regarding insufficiency of banking payments. The case law relates to addition u/s 69C in respect of alleged bogus purchases, thus, the facts of the case are entirely distinguishable and thus, this judgment is not applicable in the case of the Assessee in hand. ix. CIT vs Neminath Enterprises [2018] 97 taxmann.com 402 There is no such finding regarding payment through banking channels. The findings alleged are only view of the Assessing officer, which has not been upheld by the Hon'ble Court. The facts of the case of judgment relied upon by department is entirely different as addition made was with respect to loans and advances from certain parties, which creditors were not established. Whereas in the case of the Assessee-Appellant in hand, there is no case of any creditor and books of accounts. x. Deepak Nagar vs. DCIT [2022] ITAT Delhi Bench This is not a reported judgment and does not hold good law. Moreover, the fact of the case were such that there was established case of penny stock, which Appellant could not....
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.... the Act as far as claim of exemption of capital gain is concerned. Moreover, agricultural claim is also justified and no further addition required, when after due verification, the basis of exemption is found correct and justified. Since the very basis of proceeding is non-existent and found to be non-existent despite there being lack of approval under the law, therefore, reassessment proceedings are without jurisdiction and accordingly, on very ground of lack of jurisdiction, the assessment order is bad in law, perverse and arbitrary and without authority of law. 6.1 To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: Sr. No Document Title Page No. 1. Copy of Written Submission before Ld. CIT(A) WS1-WS52 2. Copy of return of income filed u/s 139(1) of the Act dated 10.10.2016 1 3. Copy of notice dated 09.04.2021 issued u/s 148 of the Act 2 4. Copy of impugned reason recorded 3-7 5. Copy of notice dated 28.05.2022 issued u/s 148A(b) of the Act 13-15 6. Copy of objection dated 10.06.2022 filed in response to the notice issued u/s 148A(b) of the Act 16-26 7. Copy of further reply d....
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....l was available with the Assessing Authority so as to initiate the reassessment proceedings against the petitioner by taking recourse to the provisions under section 148 and 143 (2) of the Income-tax Act. 13. As a consequence, the impugned notice under section 148 of the Income-tax Act dated 31-3-2021 (Annex.5), the reasons to believe conveyed vide notice under section 143(2) of the Income-tax Act dated 28-6- 2021 (Annex.8), the order dated 13-9-2021 (Annex.12) disposing of the objection of the petitioner and all consequential proceedings sought to be taken in pursuance thereof deserve to be and are hereby quashed and struck down. 1-5 2. B.U. Bhandari Autolines P. Ltd. v. ACIT [2023] 149 taxmann.com 219 (Bombay) 8. In the reasoning recorded, it is not clear as to how M/s Magnum Tradex Pvt. Ltd. is sought to be connected with Rajeev Khushwaha. It has not been alleged in the reasons that M/s Magnum Tradex Pvt. Ltd., with whom the Petitioner made an alleged sale was being run by Rajeev Khushwaha, although, in the reply affidavit, it is stated by the revenue that M/s Magnum Tradex Pvt Ltd, was one of the entities which was floated by Rajeev Khushwaha for the purpose of provid....
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.... risk management strategy and that the assessment shall be in faceless manner to the extent provided in section 144B of the Act." The Scheme is categoric as stated aforesaid that the notice under Section 148 of the Act shall be issued through automated allocation and in a faceless manner. The Scheme clearly provides that the notice under Section 148 of the Act is required to be issued by NFAC and not the JAO Further, unlike as canvassed by Revenue that only the assessment shall be in faceless manner, the Scheme is very clear that both the issuance of notice and assessment shall be in faceless manner. 10-60 4. Kankanala Ravindra Reddy v. Incometax Office, [2023] 156 taxmann.com 178 (TELANGANA): 27. In the present case, both the proceedings i.e., the impugned proceedings under section 148A of the Act, as well as the consequential notices under section 148 of the Act were issued by the local jurisdictional officer and not in the prescribed faceless manner. The order under section 148A(d) of the Act and the notices under section 148 of the Act are issued on 29-4-2022, i.e., after the "Faceless Jurisdiction of the Incometax Authorities Scheme, 2022" and the "e-Assessment of Incom....
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....upra) we hold that the assessment or reassessment of income of the person other than search persons based on seized material can be only be made u/s 153C r.w.s. 153A and the provisions of section 147/148 of the Act are not applicable in such cases. No contrary decision has been brought to our notice. Accordingly, we hold that initiation of proceedings u/s 147/148 by the AO to reassess the income is illegal being without jurisdiction and consequently the reassessment order passed u/s 147 r.w.s. 143(3) is also illegal and void abinitio and is liable to be quashed. 83-106 Material or basis relied upon to be shared with Assessee 7. CBDT instruction no. F. NO.299/10/2022-Dir (Inv.III)/6/11 dated 01.08.2022 xvi. Information relevant to the case of the assessees' income escaping assessment must be provided and Information not relevant to the case of the assessee must be along redacted. 107-118 8. Divya Capital One (P.) Ltd. v. Assistant Commissioner of Income-tax [2022] 139 taxmann.com 461 (Delhi), 11. This Court further finds that the information/material stated in the impugned show cause notice dated 17th March, 2022 issued under section 148A(b) of the Act have not bee....
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....whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. The ld. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. I do not find any adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others had allowed relief to various assessees." 127-130 11. Commissioner of Income Tax-I, New Central Revenue Building Statue Circle, Jaipur vs Smt. Pooja Agarwal, 1783, Telepada. Jaipur, D.B. Income Tax Appeal No. 385 / 2011 12. However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of....
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....of Sh. Pawan Purohit there is no mention of Sh. P. K. Agarwal. It was also submitted that there was no mention of Sh. P. K. Agarwal in the order of Settlement Commission in the case of Sh. Sushil Kumar Purohit. Copy of the order of settlement commission was submitted. The AO has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all the material facts available on record does not help much. The AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohi. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot be held as n....
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....t with the technical grounds raised by the assessee. Before ld. CIT(A), assessee contended that in his case ld. AO has not recorded what material he has received and what information he has [even he has not provided that material to the assessee], he has not done any independent enquiry on the issue and has not recorded his satisfaction before the issue of notice of re-opening of the case but ld. CIT (A) without dealing with the technical flow in the order invoking the jurisdiction has decided the appeal on the merits of the issue and therefore the assessee challenges that order of the ld. CIT (A) on its legality. Ld. AR of the assessee referring to page 237 of the paper book wherein the order u/s. 148A(d) dated 25.07.2022 placed on record, this shows that the notice was issued in the new regime i.e. after 01.04.2022, ld. AO without proving that there was an assets and invoking the provision beyond 3 years is without jurisdictional and thus required to be quashed. Even the ld. AO failed to prove with any tangible material or information / evidence suggesting escapement of income and therefore, revenue has to proceeding without authority of law. Ld. AR of the assessee also submitted....
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....he genuineness of the transaction. 2.3. Findings of SEBI: SEBI's order dated 04.09.2023 (WTM/AB/IVD/ID11/29124/23-24) confirms that YICL was a manipulated scrip used for accommodation entries, involving a pre-determined set of beneficiaries, including the assessee. 2.4. Circumstantial Evidence and Human Probabilities: The AO relied on circumstantial evidence and the principle of human probabilities, as upheld in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC), to conclude that the transaction was bogus. 2.5. Violation of Rule 46A: The CIT (A) admitted additional evidence such as invoices and confirmations without remanding the matter back to the AO for verification, violating Rule 46A of the Income Tax Rules 3. Distinctions from Judicial Precedents 3.1. Distinction from PCIT vs. Arnav Goyal 3.1.1. Key Facts in Arnav Goyal: * The Court ruled that there was no adverse material found directly against the assessee. * The name of the assessee did not appear in the investigation report or statements recorded during the enquiry. * SEBI findings did not implicate the assessee. 3.1.2. Distinction in the Present Case: * SEBI findings directly implicate YICL as a penny stoc....
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.... the Assessing Officer to reopen an assessment if there is reason to believe that income has escaped assessment, even when the original assessment was completed under Section 143(3). This principle has been upheld by several courts, emphasizing the necessity of tangible material and the importance of avoiding mere change of opinion. III. Sudden Rise in Share Price and Genuineness of Gains: It is a well-established principle under the Income Tax Act, 1961, that a sudden and disproportionate rise in the share price of a company with a low balance sheet, no substantial business activity, or minimal operations, cannot be presumed as a genuine gain without adequate justification. The courts have consistently held that such circumstances warrant deeper scrutiny to determine the authenticity of the capital gains claimed. The Securities Appellate Tribunal (SAT) has also emphasized that companies with weak financials, poor fundamentals, and low operational activity exhibiting sudden price surges should be treated as potential cases of accommodation entries rather than genuine market performance. IV. Burden of Proof: The burden of proof lies on the assessee to substantiate the genuin....
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....gh Court Payments through banking channels do not automatically establish genuineness where creditworthiness is unproven. 11 Deepak Nagar v. DCIT [2022] ITAT Delhi Bench ITAT Delhi Mere price surge without credible news, corporate actions, or market reputation raises doubt on gains' genuineness. 12 Sumati Dayal v. CIT [1995] 214 ITR 801 Supreme Court The principle of human probabilities applies, and unexplained cash credits can be added to income. 13 CIT v. Durga Prasad More [1971] 82 ITR 540 Supreme Court The burden of proof lies on the assessee to prove the genuineness of transactions and income sources. VI. Conclusion: Based on the above judicial precedents, it is respectfully submitted that: * Transactions merely routed through banking channels, accompanied by STT payments and executed via online platforms, cannot be presumed genuine unless substantiated by proper evidence. * Reassessment under Section 148 is valid when supported by new tangible material suggesting income has escaped assessment. * A sudden and disproportionate rise in the share price of a company with minimal financial strength and business activity cannot be presumed genuine, especi....
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....ranted thereby legally proceeded to make the assessment which is in accordance with the provisions of the law and after following the due procedure. As regards the agricultural income claimed as exempt the assessee has not provided any information so she relied upon the finding recorded in the order of the ld. CIT(A). 11. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee has taken ground no. 1, 3 and 4 raised by the assessee challenges the jurisdiction of the ld.AO by invoking the provision of section 148 of the Act. Apropos to this ground the related facts are that the assessee - appellant is an Individual filed his return of income on 10.10.2016 wherein he declared income of Rs. 77,67,630/-. That return of income was processed u/s. 143(1)(a) of the Act. As per information, with the department that the script of M/s Yamini Investment Company Limited "YICL" was managed and controlled to benefit certain pre-decided persons. The assessee sold shares of the company YICL amounting to Rs. 4,77,46,835/-. As the assessee had made the transaction, in the company, which was controlled to benefit certain pre-decided p....
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....bserved so that revenue may proceed on that notice even though now we come the other part of the role of taking the approval before issue of notice even after the direction of the apex court in the case of Ashish Agarwal's case. The bench also takes into consideration the speech of Hon'ble Finance Minister introducing the new scheme of re-assessment. The Hon'ble Minister stated that; "Reduction in Time for Income-tax Proceedings 153. Honourable Speaker, presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time. 154. I therefore propose to reduce this time-limit for re-opening of assessment to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of Rs. 50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income-tax Department." Thus, the new scheme and provisions have thus to be interpreted in line with legislative intent and mandate that they ushe....