TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1387
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....ing reason is believe that income chargeable to tax has escaped assessment; 2.0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred in confirming the validity of notice u/s 148 dated 12/09/2016, though issued before due date for filing the return of income u/s 139(4) viz. 31/03/2017, thereby the notice u/s. 148 and consequential reassessment order passed u/s.147 is bad in law; 3.0 On facts and circumstances of the case and in Law, Ld. CIT (A) erred in confirming the validity of notice u/s 148, though valid sanction u/s 151 not been obtained from correct approving authority; 4.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s 68 of sale consideration of STT paid listed shares of M/s Surabhi Chemicals & Investments Ltd of Rs. 5,17,04,286/-; 5.0 The Ld. CIT(A), before confirming the addition of sale consideration of listed shares of Rs. 5,17,04,286/-, ought to have considered the understated vital facts, being; a) The correctness of exhaustive documentary evidences such as Contract-cum-bills, D-mat statements, bank statements, bhav copy, confirmation of stock broker, share a....
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....d discussion on the issue made an addition of INR. 5,17,04,286/-under Section 68 of the Act to the returned income of INR. 12,20,270/-. 4. Being aggrieved, the Assessee preferred appeal before the CIT(A). In Appellate proceedings, the Assessee challenged reopening of the assessment under Section 148 of the Act, inter alia, on the ground that the notice under Section 148 of the Act was issued to the Assessee before the expiry of due date to file the return of income under Section 139(4) of the Act. The notice under Section 148 of the Act could not have been issued since the time limit for issuing the notice under Section 142(1) of the Act as well as the time limit for filing of the belated return was available with the Assessee. Reliance was placed by the Assessee on several judicial precedents. It was also contended that notice under Section 148 of the Act has been issued in absence of tangible material and on the basis of borrowed satisfaction. It was also claimed that when no return of income was available with the Assessing Officer at the time of recording of reasons, the averment made by the Assessing Officer in reasons recorded for reopening to the effect that the Assessee ....
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....presentative supported the reasons recorded for reopening the assessment and placed reliance on the order passed by the CIT(A). It was submitted that there was tangible material for reopening the assessment in the form of report from investigation wing. The Assessee has obtained the accommodation entry with the sole object of obtaining the exemption under Section 10(38) of the Act. The reasons recorded by the Assessing Officer for re-opening the assessment were proper and did not suffer from any infirmity. Even in the return of income filed in response to notice issued Section 148 of the Act, the Assessee had claimed exemption under Section 10(38) of the Act. There was no infirmity in the order passed by the CIT(A) in upholding the action of the Assessing Officer. 8. We have considered the rival submission; perused the material on record and have examined the position in law in view of the submissions advanced. 8.1. In the case of Prashant S. Joshi vs. Income-tax Officer, Ward 19(2)(4): [2010] 324 ITR 154 (Bombay) [22/02/2010], cited on behalf of the Assessee, the Hon'ble Bombay High Court has held as under: "9. Section 147 provides that if the Assessing Officer has ....
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....g or setting aside a notice issued under section 148. In the case of Equitable Investment Co. (P.) Ltd. v. ITO [1988] 174 ITR 714, a Division Bench of the Calcutta High Court has held that where a notice issued under section 148 of the Income-tax Act, 1961, after obtaining the sanction of the Commissioner of Income-tax is challenged, the only document to be looked into for determining the validity of the notice is the report on the basis of which the sanction of the Commissioner of Income-tax has been obtained. The Income-tax Department cannot rely on any other material apart from the report." 11. The same principle was reiterated in a judgment of the Division Bench of this Court in Hindustan Lever Ltd. v. R.B. Wadkar [2004] 268 ITR 332 (Bom.) "...the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons....The reasons recorded should be clear and unambig....
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....s beneficiaries. 4. As per the information received you are one of the beneficiaries of such transactions classified as non-genuine shares sale/purchase transactions. The total purchases to the tune of Rs. 46,80,450/- were made by you in the scrip Mahavir Advanced Remedies Limited (Scrip Code 531689) on various dates during the F.Y.2014-15 and claimed exempt income from LTCG of Rs. 35,06,23,268/-. 5. The investigation conducted by the Kolkata Investigation Directorate reveals that the trading in the above mentioned penny stock was a manipulated affair to generate entries of bogus LTCG/STCG facilitating tax evasion. During the course of search action sworn statements of key persons were recorded, modus operandi was revealed and it was admitted that they were in the business of providing accommodation entries only. 6. As stated earlier, you are one of such person who has availed accommodation entries of bogus capital gain by sale of above mentioned penny stock. Therefore, the transactions claimed by you which resulted into claim of exempt income from Long Term Capital Gains, are not genuine and are merely accommodation entries executed solely to accommodate....
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....AO. xi. Further on such reason, approval/ sanction u/s 151 of the act is accorded. Thus, such approval/ sanction are also without application of mind. 014. Thus no reason to believe can be formed by LD AO with respect to escapement of income prior to the dates for filing of Return of Income. Explanation 2 (a) to Section 147 of the Act also does not make any distinction between ROI filed u/s 139(1) or u/s 139(4) of the Act. 015. Thus, in absence of any ROI for the impugned assessment year, LD AO could not have formed such a belief and LD Approving authority also could not have approved such reason for reopening of assessment. 016. Accordingly, Ground no 2 of the appeal is allowed. As appeal of Assessee is allowed on the Ground no 2 mentioned above, all other grounds are not required to be adjudicated. 018. In the result, appeal of Assessee is allowed." 11. We note that in the present case also the reasons recorded suffer from the same infirmity as highlighted by the Tribunal in the case of Reena Rakesh Kothari (supra). In Paragraph 4 of the Reasons Recorded for reopening assessment for the Assessment Year 2015-2016, was mentioned that ....