TaxTMI 
TaxTMI 
2025 (3) TMI 2171
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce company engaged in the business of shares and derivatives trading since past several years, filed return by disclosing total income at Rs. 2,17,710/-. Return of the assessee was assessed u/s 143(3) vide order dated 31.03.2015. Based on the information received from investigation Wing, Kolkata and it was reopened, notice u/s 148 was issued on 30.03.2019. The assessee has been asked to submit the details of queries raised in the reason recorded, that was duly complied by the assessee but the AO held that transaction in the scrip of M/s Scan Steels Ltd. as a sham and accordingly added a sum of Rs. 40,39,245/- in the total income assessed by the AO u/s 143(3) and declared the total assessed income of the assessee at Rs. 3,63,09,305/-. 3.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee has simply been disposed of by the AO without dealing with the same on merit. The ld. Counsel further submits that indeed statutory notices issued by the AO is vague and there has been nothing of reason to believe to reopen the assessment. The Ld. Counsel submits that the assessee is a regular trader in shares, securities and derivatives and had traded in shares and securities in all the 40 different scrips during FY 2011-12 and none of the transaction of the assessee in the securities market have been questioned by any of the regulators at any point of time. The submission of the Ld. Counsel of the assessee is that the order passed by the Ld. CIT(A) is completely based upon the facts, available on record and the judicial pronouncemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erence had traded in share in share scripts of M/s Scan Steel Limited, (BSE Scrip Code no. 511672) which on subjective investigation was establish as a penny stock company. The LTCG, claimed as exempt income, amounted to Rs. 8,11,250/-. From the accompanying report on the said penny stock company it was ascertained that the company been used to facilitate of in accounted income of members beneficiaries in the form of exempt capital gain or short Term Capital Loss in their books of accounts through entry providers by manipulation of stock prices on the stock exchange. Significantly, the assessee company traded the script during this opportune moment i.e FY 2011-12 (AY-2012-13) and amassed the bogus LTCG and claimed exempt income. It....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee had not declared any LTCG in his return of income filed or more specifically have not declared any LTCG share transaction in the shares of SSL. 9. We have gone through the order passed by the Ld. CIT(A), and find that the Ld. CIT(A) has discussed the facts submitted by the assessee with the documentary evidence and further discussed the judgement of the Hon'ble High Court and Hon'ble Supreme Court. The Ld. A.R has also drawn the attention of this tribunal on an order passed by Kolkata High Court in Calcutta Club Ltd. vs. ITO, reported in 2020 (2) TMI 737 (Cal-HC). We have gone through the cited decision by the AR and find that Hon'ble High Court has held thus: " Reopening of assessment u/s 147- Defective notice- no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 are quashed - Decided in favour of assessee." 10. Further we find that the Ld. CIT(A) has also discussed the Judgment of the Hon'ble Supreme Court passed in the case of Sheo Nath Singh vs. Appellate Assistant CIT [1971] 82 ITR 147 (SC), the Hon'ble Supreme Court while considering the similar provisions of Section 34(1A) of the Indian Income Tax Act, 1922, held as under: "There can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income tax Officer would be acting without jurisdiction if the reas....