TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 105
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....f Mandamus by setting aside the order dated 23.01.2023 passed by respondent No.3 under Section 144BA(6) of the Income Tax Act, 1961 (for short the 'Act') for the Assessment Year 2020-21, as being ex facie arbitrary, illegal, erroneous and contrary to the scheme and provisions. (for short, 'the impugned order') 2. Heard Mr. B. Gangadhara Reddy, learned counsel for the petitioner; and Mr. N. Praveen Reddy, learned Senior Standing Counsel for Income Tax Department, for the respondents. 3. Vide the impugned order, respondent No.3 had found certain material and evidence to declare an impermissible avoidance arrangement done by the petitioner, and a further direction was given to the Assessing Officer with regard to the impugned transaction....
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....Pvt. Ltd. in the open market and sale of shares thereafter resulted in loss of Rs. 17.65 crores to the petitioner for the same Financial Year 2019-20. However, the respondent-authorities found that the transaction of purchase and sale of shares of M/s.HCL Technologies Pvt. Ltd. undertaken by the petitioner during the year 2019-20 amounted to Impermissible Avoidance Arrangement (for short, 'IAA'), and therefore the provisions of Chapter X-A, General Anti-Avoidance Rule (for short, 'GAAR') would become applicable to the said transactions. Accordingly, the matter, by way of a reference, was made to respondent No.3, i.e., the approving panel for GAAR which finally passed the impugned order on 21.03.2023 holding that the transactions undertaken ....
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....r the petitioner that the findings recorded by respondent No.3 in the impugned order are factually incorrect inasmuch as, according to respondent No.3, the petitioner did not furnish her reply before respondent No.1 to the notice issued under Sub-Rule 1 of Rule 10UB of the Act. Whereas, the petitioner had in fact filed a detailed reply to respondent No.1 on 23.03.2022 and had also obtained e-filing acknowledgment of the same, and for which reason also the impugned order is bad in law. According to the learned counsel for the petitioner, all the sale and purchase transactions were undertaken through the stock market and the petitioner is totally unaware of the buyer and seller; and therefore, the said transactions would not be subjected to G....
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....ing of the purchase and sale of shares by the petitioner which according to him is the most important factor and which weighed in the mind of the Assessing Officer in applying the GAAR provision envisaged in Sub-Chapter X-A. According to him, it is a case where what was needed to be appreciated by the authorities was to look into the entire transaction and reach to the conclusion as to whether it was a normal routine purchase and sale of shares, or was, strategically a tax planning mechanism adopted by the petitioner with an intention of tax avoidance and off-set the gain. 10. On a query put by the Bench to the learned Senior Standing Counsel as to 'whether the respondent-authorities had collected any material other than the timing of pu....
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....ut is that, in order to hold a transaction of purchase and sale of shares to be impermissible avoidance arrangement, first of all there has to be an arrangement arrived at between two or more parties and secondly, the said arrangement has the four ingredients those which are envisaged in clauses (a) to (d) of Sub-Section (1) of Section 96. 13. The four ingredients which would constitute an impermissible avoidance arrangement are:- a) The arrangement creating rights or obligations which are otherwise not ordinarily created between persons dealing at an arm's length; b) There has to be cogent proof of misuse or abuse of the provisions of the Income Tax Act either directly or indirectly; c) The transaction should ....
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....ng it to be an impermissible avoidance arrangement. As has been already discussed, some of the admitted facts are that:- 1) The Department has not been able to show or has collected any material to prove that the purchase and sale of shares made by the petitioner was with any of their known persons or entity; 2) There was no nexus which could be established between purchase and sale of shares of M/s. HCL Technologies Pvt. Ltd. made by the petitioner; 3) All the shares have been sold through stock exchange; 4) The petitioner is an investor and has been carrying on the sale and purchase of shares continuously which would establish that the so-called transaction of sale of M/s. HCL Technologies Pvt. Ltd. sha....