AEGIS FINSTATE LLP vs. ACIT, CIR 43(1), DELHI & ANR.

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W.P.(C)/9316/2024HC DelhiDLHC01039458202410 July 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE RAVINDER DUDEJA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court allowed the writ petition, setting aside the order under Section 148A(d) dated April 10, 2024, and the notice under Section 148 dated April 10, 2024. The Court found that the Assessing Officer (AO) had clearly failed to either evaluate the explanation tendered by the petitioner or to deal with the objections voiced to the proposed reassessment. The AO's order merely noted the documents filed and stated that certain transactions needed verification during assessment, without addressing the petitioner's submissions. The Court was inclined to set aside the order and enable the AO to commence proceedings afresh from the stage of Section 148A(b), considering the petitioner's reply. The matter was remitted to the AO to proceed afresh from the stage of Section 148A(b) after taking into consideration the replies submitted by the petitioner. All rights and contentions of the parties on merits were kept open.

What were the facts?

The petitioner, Aegis Finstate LLP, is challenging an order passed under Section 148A(d) of the Income Tax Act, 1961, dated April 10, 2024, and a consequential notice under Section 148 of the Act of the same date. The Assessing Officer (AO) had issued a Section 148A(b) notice on February 22, 2024, seeking explanations regarding transactions in equity shares, mutual fund units, and future derivatives. The petitioner submitted a detailed reply. An additional Section 148A(b) notice was issued on March 30, 2024, to which the petitioner responded on April 6, 2024. The AO's order under Section 148A(d) merely noted the documents filed and stated that certain transactions, including sale of bonds and equity shares, needed verification during assessment proceedings, without addressing the petitioner's objections.

What were the issues?

1. Whether the Assessing Officer (AO) has properly dealt with the objections raised by the petitioner against the proposed reassessment proceedings under Section 148A(d) of the Income Tax Act, 1961. Assessee's Contention: The petitioner argued that the AO failed to evaluate their explanations and objections submitted in response to the Section 148A(b) notices. The AO's remarks in the Section 148A(d) order were superficial and did not address the substance of the petitioner's submissions, indicating a failure to comply with the procedural requirements for issuing a reassessment notice. Revenue's Contention: The learned counsel for the respondents (revenue) submitted that the course suggested by the Court would subserve the ends of justice, implying an acceptance of the petitioner's grievance regarding the AO's handling of the objections.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

$~195 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 9316/2024

AEGIS FINSTATE LLP .....Petitioner Through: Ms. Rano Jain, Mr. Venketesh Chaurasia, Mr. Mayank Patawari, Ms. Shakshi Rustagi, Advocates.

versus

ACIT, CIR 43(1), DELHI & ANR. .....Respondents Through: Mr. Puneet Rai, SSC with Mr. Ashvini Kumar, Mr. Nikhil Jain and Mr. Rishabh Nangia, Advocates.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE RAVINDER DUDEJA

O R D E R %

10.07.2024 CM APPL. 38146/2024 (Ex) Allowed, subject to all just exceptions.

This application stands disposed of. W.P.(C) 9316/2024 & CM APPL. 38145/2024 (for interim relief) 1. The writ petitioner is aggrieved by the issuance of the order under Section 148A(d) of the Income Tax Act, 1961 [“Act”] dated 10 April 2024 as also the notice under Section 148 of the Act of the same date. 2. We note that the Section 148A(b) notice had been issued on 22 February 2024 and in terms of which the petitioner was called upon to explain certain transactions undertaken in respect of sale of equity shares, purchase of mutual fund units and future derivatives. In response to the aforesaid notice, the petitioner submitted a copious This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/07/2024 at 12:23:49

reply which has been dutifully reproduced in the order under Section 148A(d) of the Act. Further an additional notice under Section 148A(b) was issued on 30 March 2024, to which the petitioner filed its reply on 06 April 2024. 3. However, while dealing with the objections which were so raised to the proposed reassessment, all that the Assessing Officer [“AO”] has chosen to observe is as follows:- “6. Remarks of the AO: The assessee in his reply has submitted ITR, Computation of Income, Balance Sheet, Profit and Loss account, trading and manufacturing account, bank statement of current accounts, trading account with Almondz Global Securities Limited, capital account of Mr. Anubhav Poddar; Bonds Account with Almondz Global Securities Limited, AlmondzFinanz Limited, ledger account of HSBC Income Fund, calculation sheet for capital gain on sale of bonds, HSBC Income Fund units, equity shares, profit on intra day transaction, payment of STT on shares sold and other details. Further, on perusal of the details/documents filed by the assesse, all the transactions are duly reflected in the Insight Portal, TDS Statement and annual Tax Statement under section 203AA of the Income Tax Act 1961/26AS and Taxpayer Annual summary, it is established beyond doubt as under: a. The assesse has shown both long term and short term capital gains. Short term capital gains was declared at Nil by the assessee as per the ITR and replies submitted but the sale is with respect to sale of bonds for which no details have been submitted this was sold at 23,06,00,555. This needs to be verified during assessment proceedings. Long Term Capital Gain on sale of shares through stock exchange on which STT has been paid of Rs. 23,66,94,598/- (i.e.Sale Consideration of Rs. 23,84,1 0,509/. Again this sale amount needs to be verified and requires assessment proceedings as exact units of shares sold and whether it is a long term capital gain or not needs to be verified and third party verifications need to be done.”

4.

It is thus ex facie evident that the AO has clearly failed to either evaluate the explanation which was tendered by the petitioner or to deal with the objections which were voiced to the proposed reassessment. We were thus inclined to set aside the order enabling the AO to commence proceedings afresh from the stage of Section This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/07/2024 at 12:23:49

148A(b) of the Act bearing in consideration the reply of the petitioner which had been submitted. 5. In view of the aforesaid, Mr. Rai, learned counsel appearing for the respondents submitted that the course as suggested would subserve the ends of justice. 6. Accordingly and for the reasons aforenoted, we allow the instant writ petition and set aside the order under Section 148A(d) of the Act dated 10 April 2024 as well as the notice referrable to Section 148 dated 10 April 2024. The matter shall stand remitted to the AO who shall commence proceedings afresh from the stage of Section 148A(b) and proceed in the matter after taking into consideration the replies which had been submitted by the writ petitioner. 7. All rights and contentions of respective parties on merits are kept open.

YASHWANT VARMA, J.

RAVINDER DUDEJA, J. JULY 10, 2024/vp This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 18/07/2024 at 12:23:49

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