TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1095
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....t himself for condonation of delay in filing the appeal against the impugned order dated 16.01.2025 passed under Section 143(3) r.w.s 147 of the Act for Assessment Year 2012-13. It has been stated in the said application that the appeal was handled by one CA firm namely M/s S.A. Dhawan & Company who was entrusted to file the replies and also representing before the Ld. CIT(A). Once, the order passed by the Ld. CIT(A) the file was given to one particular advocate in the team of the said firm and the same ultimately could not be filed as the said junior advocate left the office on April, 2025. The file remained undetected and only in the month of July, 2025 on a routine follow up regarding listing of appeals, it was found that this particular appeal had not been filed before the Tribunal against the order passed by the Ld. CIT(A) under Section 147 of the Act. At that juncture, the appeal was drafted and ultimately filed before us after a period of 112 days. Though no evidence in support of the fact of Ld. junior advocate entrusted with the file, left the office of the concerned CA firm, however, it is found that there is some communication gap amongst the professionals in the litigat....
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....come at Rs. 195,80,710/- which was processed under Section 143(1) dated 06.02.2013 accepting the return of income. Subsequently, report by the DDIT, Investigation Unit-2(4) Kolkata was forwarded to the concerned office reporting that the assessee had earned long term capital gain on the sale of penny stock script of Konark, details whereof is as follows: Sr. No. Date Scrip Amount 1. 13.03.2012 KONARK Rs.39,19,200/- 2. 21.03.2012 KONARK Rs.14,69,700/- 3. 31.03.2012 KONARK Rs.24,49,500/- Total Rs.78,38,400/- 4. The share of Konark has been identified as penny stock by SEBI; it was further informed that these penny stocks were used to introduce undisclosed income in the books without paying taxes. The modus operandi as narrated by the Ld. AO as adopted by the operators was to make beneficiary buy some shares of a predetermined Penny stock company controlled by them. These shares are transferred to the beneficiary at a very nominal price mostly off-line through preferential allotment or off-line sale to save STT. The beneficiary holds the shares for one year, the statutory period after which LTCG is exempt und....
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....he shares is incorrect. Moreso, amount mentioned in the show cause is not that of the amount as added in the hands of the assessee. In this regard, he has drawn our attention to page 5 of the paper book filed before us being the reason recorded for issuance of notice under Section 148 of the Act in the case of the assessee. Apart from that, he has further challenged the approval granted by the Ld. PCIT dated 30.09.2019 which has been given on the incorrect recording of facts by the Ld. AO which is nothing but non application of mind by the Ld. PCIT himself. Hence, as the reason recorded is on incorrect finding of facts solely on the basis of the report of the investigation wing and no inquiry was conducted by the Ld. AO, the same has also been termed as borrowed satisfaction by the Ld. AR appearing for the assessee. Thus, the entire proceeding is liable to be vitiated as was the crux of the submissions made by the Ld. AR. 6. On the other hand, the Ld. DR relied upon the order passed by the authorities below. 7. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. In order to consider the case m....
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....147 would be valid. The Court also held- "We are aware of the legal position that at the stage of issuing the notice u/s 148, the merits of the matter are not relevant and the Assessing Officer at that stage is required to form a prima facie belief or opinion that income chargeable to tax has escaped assessment" 15.2 Also, in the case of Phoolchand Bajrang Lal v. ITO 203 ITR 456 (SC), the Hon'ble Apex Court has held that:- "An assessment completed us 143(3) bur later on information received which was indefinite, specific and reliable and the AO duly recorded the reasons for his belief that the assessee had not fully and truly disclosed particulars of his income and hence there was escapement of income. Held that the reopening of the case was valid." 15.3 Also, in the case of Raymond Woollen Mills Ltd. 236 ITR 34 (SC). the Hon'ble Apex Court has held that: - "Assessee did not include certain direct manufacturing costs and fiscal duties in the valuation of closing stock. This came to light in the subsequent years assessment proceedings. We have only to see whether there was prima facie some material on the basis of which the Depart....
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.... of LTCG on sale of shares of "Konark". Moreso, the amount mentioned in the show cause is of Rs. 14,69,700/- whereas an amount of Rs. 78,38,400/- has been added in the hands of the assessee. It is the case of the assessee that the Ld. AO without even considering actual fact of the matter recorded reasons that too solely on the basis of the report of the investigation wing. Thus, such recording of reason is flawed on two counts, firstly forming opinion on incorrect finding of fact and secondly, concluding the same without making any investigation and/or inquiry against the assessee as narrated in the reason so recorded by him. We are inclined to accept such submission made by the Ld. AR and we find that as the name of the company with whom the assessee never had any transaction has been mentioned while recording the reason; the reason recorded by the Ld. AO is the pillar of initiation of reopening of the proceeding under Section 147/148 of the Act and the path leading to invoke statutory power to reopen such assessment against assessee alleging escaping assessment by him. Further that, had there been any proper inquiry made by the Ld. AO the said recording of incorrect finding of fa....
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....at of the amount added in the hands of the assessee by the Ld. AO while finalizing reassessment on alleged escapement of assessment. The case made out by the assessee that the AO's reason to believe that income has escaped assessment must be based on tangible material having direct nexus that the belief was formed and once the assessment is concluded merely on the basis of suspicion, the same cannot be reopened is found to be acceptable. The import of the expression 'reason to believe' cannot be conflated with 'reason to suspect' that the assessee's income has escaped assessment. 11. In this regard the judgment relied upon by the Ld. AR in the case of Sanjay Kaul Vs. ITO, Ward 24(4) New Delhi passed by the Hon'ble Delhi High Court has been duly considered by us where on identical situation reason recorded based on suspicion that the assessee has escaped assessment has been quashed. In fact, we are inspired by the ratio laid down therein. The judgment passed in the matter of CNB Finwiz Ltd. Vs. DCIT, Circle 6(1), Neutral citation 2025: DHC: 4035-DB has also been considered having regard to the identical ratio laid down therein. 12. Thus, taking into consideration the entire as....