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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM
vkns'k@ORDER PER DR. S. SEETHALAKSHMI, J.M. The present appeal has been filed by the assessee against the order of ld. CIT (A), NFAC, Delhi dated 27.12.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2015-16. 2. The assessee has raised the following grounds of appeal :-
1. In the facts and circumstances of the case and in law, the Assessing Officer erred in passing order u/s 148A[d] r w s 148 r w s 144B a) Mechanically b) Even though it is time barred c) Even though JAO reopened the same instead of FAO GCK Stock Pvt. Ltd., Jaipur d) Without making any inquiry e) Without granting hearing f) Only on the basis of information from Investigation Wing g) Without furnishing copy of approval granted by Pr. CCIT h) Template based order i) Even though it is change of opinion j) Even though no asset exceeding Rs 50 lacs is found as income is not in form asset k) that objections raised by the appellant were exhaustive and self-sufficient but same were not disposed of properly by the FAO by passing a speaking order 2) In the facts and circumstances of the case and in law, the learned A.O. erred adding Rs 4,96,87,796/- a) On the basis of suspicion and presumption b) Based on third party statements c) Without any proof of cash trail d) By wrongly correlating general data of SEBI with the Appellant e) by making only guesswork & overlooking documents and by relying upon cases not applicable in this case. f) By not offering the opportunity to cross-examine the brokers and other persons whose statements were never furnished for rebuttal g) Without confronting result of notices u/s 133(6) or without issuing summons u/s 131 h) By ignoring the fact that transaction is by cheque 3) In the facts and circumstances of the case and in law, the Assessing Officer erred in charging interest u/s 234 and initiating penalty under section 271[1][c] 4) In the facts and the circumstances of law, the Ld. Commissioner of Income Tax (A) erred in dismissing appeal By totally overlooking judgment in the case of Rajeev Bansal by SC and not deciding the issue of time barred case of the Appellant .”
Succinctly, the fact as culled out from the records is that the assessee e-filed ITR on 30.09.2015 vide Ack. No. 836109781300915 disclosing total income of Rs. 3,77,390/- from business and other sources. The firm is a trader in securities market. There was credible information with the Department that the assessee was engaged in reversal trades in illiquid Stock Options leading to pre-meditated loss of Rs. 4,96,87,796/-. It was gathered from the information that the assessee has executed GCK Stock Pvt. Ltd., Jaipur many non-genuine trades in unique contracts Hence the case was reopened after following the due proceedings u/s 148A and the case was taken up for complete scrutiny.
3.1 The assessee filed an objection to reopening u/s 148 on 29.06.2022 and 06.07.2022. As can be seen from the Paper Book Page No. 182-190 several objections were raised by the assessee and at Paper Book Page No. 190 a request was made to grant personal hearing before passing order u/s. 148A(d). Moreover vide reply dated 06.07.2022 several objections were raised by the assessee against reopening initiated by the JAO (Paper Book Page No. 212). However the same were rejected by the AO summarily. Thereafter order u/s. 148A(d) was passed on 27.07.2022 and notice u/s. 148 was issued 27.07.2022 (Paper Book Page No. 207-216).
3.2 In response to the same the assessee e-filed ITR on 16/08/2022vide Ack. 428497880160822 with same total income.
3.3 Thereafter notices were issued by the FAO u/s. 142(1) on 18.01.2023 calling upon several information as per Annexure. The same was complied with by the assessee on 02.02.2023 in which necessary documents were submitted.
GCK Stock Pvt. Ltd., Jaipur Thereafter the FAO issued show cause notice on 29.04.2023. In response to the same the assess filed reply dated 06.05.2023 in which several objection were raised by them with regards to reopening as well as order u/s. 148A(d) and several aspects of reopening. They also challenged that this was a change of opinion and therefore reopening is bad in law because order u/s. 143(3) already passed by the then JAO on 21.12.2017 in the first round of scrutiny. The assess also raised various grounds in the said reply (Paper Book Page No. 120 – 138). However, the AO passed the assessment order u/s. 147 r.w.s. 144B and assessed total income of Rs. 5,00,65,190/-thereby making disallowance / addition of Rs. 49687796/-. 3.4 Thereafter the assessee challenged the impugned order of the Assessing Officer before the Commissioner of Income Tax (Appeal) (NFAC) in which the assessee challenged the reopening as well as disallowance of losses etc. amounting to Rs. 49687796/-. The assessee filed written submission before the Commissioner Of Income Tax (Appeal) (NFAC) as can be seen from Paper Book Page No. 217-257 in which detailed submission were made by the assessee on reopening as well as disallowance as above said. However, vide order dated 27.12.2024 dismissed the appeal fully.
3.5 Aggrieved by the order of the Ld. CIT(a) (NFAC), the assessee filed the 3.6 The hearing was fixed in this case and the contention of the Learned Authorised Representative Mr. Bhupendra Shah and The Learned Departmental Representative Mr. Arvind Kumar were heard at length from time to time. They also filed submissions which were taken on record. The Learned Departmental Representative also filed report of the Assessing Officer dated 24.02.2025 which was confronted to the assessee and their rebuttal on the same was also taken on record.
3.7 The ld. AR for the assessee filed documents in the form of Paper Book running into 1-257 pages. The assessee also filed Paper book of case laws running into 1-157 pages. Both the compilation were also filed with the Learned Departmental Representative.
3.8 The ld. DR supported of his contentions by submitting the written submissions, which are being reproduced hereunder :-
“1. Validity of Reopening under Section 148A 1.1 The reopening of assessment was conducted in accordance with the provisions of Section 148A after receiving credible information from the Investigation Wing and SEBI regarding the involvement of the assessee in reversal trade in BSE stock options. 1.2 The assessee’s contention that the reopening was mechanically done and time-barred is misplaced. The Finance Act, 2021, introduced significant changes to Section 148 and 148A, allowing reassessment up to 10 years in cases involving income escaping assessment exceeding ₹50 lakh and the procedure laid down in the Act has been duly followed by the AO in this case read with TOLA (Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act). 1.3 The assessee is wrongly relying on the Supreme Court’s dismissal of the department’s appeal in Rajeev Bansal’scase. This case was dismissed based on procedural lapses regarding non- disposal of objections, and not on the merits of reopening. In the present case, the objections of the assesee were duly considered. Vide submission dated 27.1.2025, the assesee has again submitted case lawof R.K. Build Creations Pvt. Ltd.which again is in favour of the assesee, due to non- disposal of additional reply filed by assesee in that case(as per Para 14 of honourable HC judgement) which is not relevant to facts of the present case. 1.4 In NRA Iron & Steel Pvt. Ltd. [(2019) 412 ITR 161 (SC)], the Supreme Court held that the burden of proof lies on the assessee to establish the identity, creditworthiness, and genuineness of transactions. The assessee has failed to do so in the present case.
SEBI as the Assessing and Fact-Finding Authority SEBI inthis case, has also passed adjudication order against the assesee thereby levying monetary penalty for manipulation of market and misuse of BSE exchange platform which is a conclusive proof of the trades of the assesee being non-genuine (Para 11, Page 14 of the AOs order). 2.1 The Securities and Exchange Board of India (SEBI) is not only a regulatory body but also a fact-finding authority that assess and investigates stock market manipulations, including penny stock transactions. 2.2 SEBI has the power to conduct inquiries, collect data, and issue orders based on its investigations. The findings of SEBI carry substantial weight in identifying fraudulent stock transactions and circular trading schemes. 2.3 In the present case, SEBI’s investigative findings clearly indicate that the assesee was involved in price manipulation, which forms the basis for reopening the assessment. The assessee has failed to rebut SEBI’s findings with credible evidence.
GCK Stock Pvt. Ltd., Jaipur 2.4 The Supreme Court and High Courts have repeatedly upheld the reliance on SEBI reports in tax matters where stock market manipulation is evident. In various cases, the courtshave held that regulatory findings by SEBI can be valid grounds for tax additions under Section 68. 2.5 Given SEBI’s role as a fact-finding authority, its reports and actions substantiate the Assessing Officer’s findings that the assessee’s transactions were sham transactions to generate artificial losses in order to avoid tax. With regards to the investigative powers of SEBI along with its role as fact finding authority, the following note is submitted :-
1.
SEBI's Investigative Powers Under Law Section 11C of the SEBI Act, 1992 empowers SEBI to conduct investigations, summon individuals, inspect documents, and collect evidence in matters related to securities law violations. SEBI has authority to regulate, inspect, and take enforcement actions against market manipulations, insider trading, and fraudulent activities. The Delhi High Court and other High Courts have repeatedly upheld SEBI's quasi-judicial and investigative powers in stock market fraud cases. Therefore in conclusion, SEBI has strong investigative powers backed by legislation.
2. Judicial Recognition of SEBI as a Fact-Finding Authority Several cases have confirmed SEBI’s critical role in fact-finding like Sahara India Real Estate Corporation Limited & Ors. v. SEBI (2012) 10 SCC 603. Further The Supreme Court of India upheld SEBI’s power to investigate and regulate unregistered securities transactions. SEBI's probe in the Sahara OFCD (Optionally Fully Convertible Debentures) case led to the biggest refund order ever in Indian securities law history. In many cases courtshave accepted SEBI’s findings as credible evidence in a tax case. This reinforces the idea that SEBI’s reports and orders have significant weight in financial investigations. Therefore, as a Fact-Finding Authority:- SEBI has legislative backing under the SEBI Act, 1992, which gives it strong investigative and regulatory powers. SEBI’s findings have been accepted in courts as credible evidence in tax and securities law matters. The judiciary recognizes SEBI’s role, but also ensures it follows procedural fairness. SEBI’s reports and investigations can be relied upon in tax cases.
3. Addition of ₹4,96,87,796/- GCK Stock Pvt. Ltd., Jaipur 3.1 The assessee’s argument that the addition was made on presumption and without evidence is incorrect. The following key factors justify the addition: (a) The SEBI investigation reports identified the reversal trades in question as being used for price manipulation. (b) The assesee failed to provide a credible evidence to justify genuiness of these trades as can be seen form Parar 4.5 page 20 0f the AOs assessment order. (c) The trading pattern indicates pre-arranged, artificial losses, a hallmark of sham transactions, as held in Swati Bajaj & Others v. ITO [(2022) 139 taxmann.com 303 (Cal HC)].
4. Non-Applicability of Rajeev Bansal Judgment 4.1 The assessee has misrepresented the applicability of the Rajeev Bansal case. The Rajasthan High Court quashed the reassessment in R.K. Build Creations Pvt. Ltd. because of non-disposal of objections. However, in the present case, the assessee’sobjections were duly considered before passing the reassessment order.The substance of the case is different from procedural lapses in Rajeev Bansal case. Notwithstanding above argument, even if a procedural lapse existed, the substantive material evidence as placed on record by the AO, justifies the reassessment. 4.2 The High Court’s ruling in R.K. Build Creations Pvt. Ltd. does not establish a universal rule that all A.Y. 2015-16 reassessments are time-barred. The Supreme Court’s dismissal of the department’s appeal in Rajeev Bansal was a result of the specific facts of that case and does not invalidate all reassessments for the said year. 4.3 The Supreme Court in PCIT v. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 and Swati Bajaj (2022) 139 taxmann.com 303 (Cal HC) has clearly ruled that when the nature and source of transactions are unexplained, the burden is on the assesee to provide credible evidence, failing which additions are justified as held by AO and CIT(A) in this case in Paras 4.5 and 6 in their respective orders.
5. A report on the matter of reopening of case was called from the AO. The AO has reported as follows:- “In this connection, it is submitted that the as per record available with this office, the above mentioned case was selected for scrutiny by CASS for the A.Y. 2015-16 on the following reasons: - Mismatch in sales turnover reported in Audit Report and ITR Large value sale of futures (derivative) in a recognized stock exchange(STT Code 5) Large value sale of futures (derivative) in a recognized stock exchange (STT code 5)
GCK Stock Pvt. Ltd., Jaipur Large value sale of share or unit which is settled otherwise than by the actual delivery or transfer(STT Code 3) Large value sale of option in securities (derivative) in a recognized stock exchange (STT code 4)
2. Subsequently, statutory notices issued to assessee and assessee submitted its reply. After considering the submission submitted by the assessee, the assessment order was passed at the return income i.e. Rs. 3,77,394/- on 21.12.2017. Further, an information has been received from the office of the DDIT(I&CI), Unit-1, Mumbai through ‘Insight portal' that the case of the assesee was selected for verification under the Special Pilot Project on reversal trades in BSE Stock Options. A detailed investigation was carried out by SEBI in the matter of reversal trades and 14720 entities were identified to have indulged in acquiring accommodation entries through the mechanism of reversal trades. On the basis of above information and after getting the prior approval from the competent authority, notice u/s 148 vide dated 19.04.2021 and notice u/s 143(2) of the IT act 1961 vide dated 11.11.2021 were issued and served on the assesse. Further, the PAN migrated to this office i.e. ITO Ward 1(4), Jaipur on 22.02.2022. However this case, the proceedings were closed on 17.01.2023 with the comments mentioned below (Note sheet of the same is placed on record):- “The present assessment work-item u/s 147 is marked as ‘Closed' by ITBA system, in pursuance to board 's approval communicated through NaFAC dated 10.10.2022. In this work- item, Notice u/s 148 was generate by JAO (online or by Manual to system) by using the old provisions of sections 147 to 151 where the date of generation of Notice u/s 148 was in the period 01.04.2021 to 30.06.2021 and for this PAN a new notice u/s 148 under the new 148A provisions has been generated by JAO by selecting the drop down Supreme Court' after the date of Hon'ble Supreme Court decision in "UoI vs Ashish Agarwal 'dated 04.05.2022." 4. Again proceeding u/s 148A of the IT Act 1961 was initiated, keeping in the view of the judgment of the Hon'ble Supreme Court dated 04.05.2022 (2022 SCC online SC 543) in the case of Union of India Vs Ashish Agrawal on the basis of information received from INSIGHT, the assesse has claimed loss of Rs.4,34,06,150/- on account ofreversal trades in BSE Stock options in the case ofM/s GCK Stock Pvt. Ltd. and the loss of Rs. 62,81,646/- claimed on account of on reversal trades in BSE Stock options in the case of GCK Stock Pvt. Ltd., Jaipur M/s Optimum Trading Pvt Ltd. which has been amalgamated in its holding company M/s GCK Stock Pvt. Ltd. wef 01.04.2013. There after as per provision of the IT Act 1961 show cause w/s 148A(b) was issued to the assessee on22.06.2022. In response, the assessee filed written submission on 29.06.2022 and after considering the reply of the assessee order u/s148A(d) was passed after getting the prior approval from the competent authority and notice u/s 148 was issued. Keeping in the view of the above facts, it is clear that the JAO passed the order u/s 148A(d) (which is self-explanatory) within stipulated time and after giving proper opportunity of being heard. Further, statutory notices were issued to the assessee by NeFAC and in response the assesee filed written submission on 02.02.2023 and 06.05.2023. Opportunity for Personal hearing through VC was also provided to the assessee on 17.05.2023. After considering the reply of the assessee order u/s 147 rws 144B was passed on 26.05.2023 after making addition of Rs. 4,96,87,796/- by disallowing the loss.”
6. Conclusion 6.1 The reopening under Section 148A is valid as it was based on credible SEBI reports, Investigation Wing data, and broker statements. 6.2 The assessee has failed to provide any credible explanation of reversal trade in BSE stock options and the transactions have all the hallmarks of manipulations. 6.3 The Rajeev Bansal case does not apply as the assessee’s objections were duly considered and there is clear evidence of tax evasion. 6.4 The addition of ₹4,96,87,796/- under is justified, and the appeal of the assessee should be dismissed. Therefore, in light of above arguments, along with AOs report as enclosed, the honourable bench is requested to uphold the reassessment proceedings and confirm the addition of ₹4,96,87,796/- and uphold the interest charged under Section 234 and the penalty initiated under Section 271(1)(c).”
We note from the submission of the Ld AR vehemently argued that the case of the assessee is squarely covered by the catena of Judgments filed before GCK Stock Pvt. Ltd., Jaipur us and pointed out that the issue under reopening is completely time – barred. In support of the said contention the Learned Authorized Representative pointed out as follows:
4.1 In the case of Rajiv Bansal (469 ITR 46(SC) it was held that, “e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017,and 2017-2018 will be within the period of limitation as explained in the tabulation below:
AssessmentYe Within Expiry of Within Expiry of ar 3Years Limitation sixYears Limitation read read withTOLA for withTOLA for (4) (2) (1) (2) (3) (4) (5) 2013-2014 31-3- TOLA not 31-3-2020 30-6-2021 2017 applicable 2014-2015 31-3- TOLA not 31-3-2021 30-6-2021 2018 applicable 2015-2016 31-3- TOLA not 31-3-2022 TOLA not GCK Stock Pvt. Ltd., Jaipur 2019 applicable applicable 2016-2017 31-3- 30-6-2021 31-3-2023 TOLA not 2020 applicable 2017-2018 31-3- 30-6-2021 31-3-2024 TOLA not 2021 applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;” Relying upon ratio of this judgement of the Apex Court the Learned Authorised Representative adverted our attention to the Paper Book Page No. 216, para no. 11 it is clearly mentioned that “This order is passed with the prior approval of the Principal Chief Commissioner of Income Tax, Rajasthan, Jaipur. Vide letter No.Pr.CCIT/ITO(Tech)/F-115.1//2022-23/3999 dated 26-07-2022”. Accordingly The Learned Authorised Representative strongly contended that order passed u/s. 148A(d) dated 27.07.2022 and notice issued u/s. 148 on 27.07.2022 (Page no. 2 of Assessment Order), the case for reopening is time barred on 31.03.2022 and TOLA is not applicable as mentioned in para no. 19 e and f. of the Judgement of the Hon’ble Supreme Court in the case of Rajeev Bansal (SUPRA) (Paper Book Page No. 15 of Case Laws).
4.2 Further we note that the Learned Authorized Representative also relied upon Judgment in the case of R.K. Build Creations Pvt. Ltd. (WP © 14414/2022) (Paper Book Page No. 139-154 of Case Law) decided by the Jurisdictional High Court of Rajasthan. The Learned Authorized Representative drew our attention to Paper Book Page No. 150 of the Case Laws in which it was held that reopening carried out after 31.03.2022 in that case also was held to be time barred for A.Y. 2015-16. Not only that but the Learned Authorized Representative further drew our attention to Paper Book Page No. 153 of the case laws in which the Supreme Court upheld the Judgment of Jurisdictional High Court in the case of R.K. Build Creations Pvt. Ltd. held that “ Having GCK Stock Pvt. Ltd., Jaipur regard to the concession made by the petitioner-Department in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration. Hence, the Special Leave Petition is dismissed. Pending application(s), if any, shall stand disposed of.”Accordingly The Learned Authorized Representative of the assessee argued that the Judgement of Rajeev Bansal (SUPRA) has become final after the dismissal of appeal of the department in the case of R.K. Build Creations Pvt. Ltd. as above. He therefore contended that the reopening in the appeal before us for A.Y. 2015-16 is also completed time barred.
4.3 Further the Learned Authorized Representative also drew our attention to the judgment of Hon’ble Rajasthan High Court in the case of Late Shri Rafiq Ahmed Querashi (D.B. Civil Writ Petition No. 3667/2023) dated 27/01/2025, the Writ Petition for the A.Y. 2015-16 was allowed in view of judgment in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) (Paper Book Page No. 155-157 of the Case Laws.) He also referred to para no. 3 of the said Judgment of Rajasthan High Court, in which it was observed that “ 3. Learned counsel for the petitioner relies upon the decision of the Supreme Court in the case of Union of India &ors. Vs. Rajeev GCK Stock Pvt. Ltd., Jaipur Bansal reported in (2024) 469 ITR 46.It is argued that the limitation for assessment year 2015-16 expired on 31.03.2022. Contention is that concession for dropping proceeding for assessment year 2015-16 was given by respondent before the supreme court in the case of Rajeev Bansal (supra). Argument is that for assessment year 2015-16 the limitation expired on 31.03.2022 whereas the notice under Section 148 of the Act was issued on 28.07.2022. 4.Learned counsel for the respondents submits that there are other issues raised in this petition but is not in a position to distinguish the present case from the case of Rajeev Bansal (supra).
5. The contention that there are other issues raised in this petition need not be addressed as the petition deserves acceptance on the single issue that the re- assessment for assessment year 2015-16 has been rendered time barred and impugned notices are liable to be quashed on this ground alone.
6. In view of the above, the writ petition is allowed.” In view of the same The Learned Authorised Representative of the assessee urged thatreopening made by the Assessing Officer in this appeal for A.Y. 2015-16 is also time barred as per the said Judgement in the case of Late Shri Rafiq Ahmed Querashi (D.B. Civil Writ Petition No. 3667/2023) dated 27/01/2025 .
4.4 The Learned Authorised Representative also relied upon the Judgement in the Case of Pratishtha Garg [W.P.(C) 16878/2024] (Paper Book Page No. 88-90 of GCK Stock Pvt. Ltd., Jaipur the Case Laws ) in which the Hon’ble Delhi High Court relied upon para no. 19 e & f of the Judgement of the Hon’ble Supreme Court in the case of Rajeev Bansal (SUPRA). At page no. 89 of the Paper Book of the Case Laws the Delhi High Court Observed that “ It is relevant to note paragraph 19 (e) and (f) of the decision of the Supreme Court in Union of India and Others vs. Rajeev Bansal; 2024 SCC Online SC 2693. The same are set out as under:
“(e) The Finance Act, 2021 (2021) ((2021) 432 ITR (Stat) 52) substituted the fold regime for reassessment with a new regime.The first proviso to section 149 does not expressly bar the application of Taxation and other Laws(Relaxation and Amendment of Certain Provisions) Act, 2020, Section 3 of the Taxation and otherLaws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-taxAct, including sections 149 and 151 of the new regime. Once the first proviso to section 149(1)(b) isread with Taxation and other Laws (Relxation and Amendment of Certain Provisions) Act, 2020,then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to the assessmentyears 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Within Years Expiry of Within Six Expiry of Year Limitation Years Limitation read with (4) read with TOLA for TOLA for (2) (3) (4) (5) 2013-2014 31.03.2017 TOLA not 31.03.2020 30.06.2021 applicable. 2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021 applicable. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."4. In view of the aforesaid, the impugned order dated 19.07.2022 issued under Section 148(A)(d) of the Income Tax Act,1961 (hereafter the Act) as well as the notice dated 19.07.2022 issued under Section 148 of the Act in respect of AY 2015-16 are liable to be set aside. It is so directed.5. The petition is allowed in the aforesaid terms.” The GCK Stock Pvt. Ltd., Jaipur Learned Authorised Representative therefore further stressed that the reopening made by the JAO under this Appeal is also Time barred for Ay. 2015-16 as above said.” 4.5 The Ld AR also relied upon the Judgement in the Case of Ibibo Group Private Limited [W.P.(C) 17639/2022] (Paper Book Page No. 91-92 of the Case Laws ) in which the Hon’ble Delhi High Court observed at page no. 91 as follows:-
“We bear in mind the following concession which came to be recorded on behalf of the respondent before the Supreme Court in Union of India and Others vs. Rajeev Bansal [2024 SCC Online SC 2693] and relevant parts whereof are reproduced hereinbelow:- (e) The Finance Act, 2021 ((2021) 432 ITR (Stat)52) substituted the old regime for reassessment with a new regime. The first proviso to section 149 does not expressly bar the application of Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act,2020 applies to the entire Income-tax Act, including sections 149 and 151 of the newregime. Once the first proviso to section 149(1)(b) is read with Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to the assessment years 2013- 2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Within 3 Expiry of Within Six Expiry of Year Years Limitation Years (4) Limitation read with read with TOLA for TOLA for (2) (3) (4) (5) 2013-2014 31.03.2017 TOLA not 31.03.2020 30.06.2021 applicable 2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021 applicable 2015-2016 31.03.2019 TOLA not 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLAnot applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable (f) The Revenue concedes that for the assessment year 2015-2016, all notices issuedon or after April 1, 2021 will have to be dropped as they will not fall for completionduring the period prescribed under the Taxation and other Laws (Relaxation andAmendment of Certain Provisions) Act, 2020."3. In view of the aforesaid, it is evident that the impugned reassessment action for AY 2015-16 wouldnot sustain.” Accordingly The Learned Authorised Representative of the assessee stated that this appeal is also covered by the Judgement of Delhi High Court in the case of Ibibo Group Private Limited [W.P.(C) 17639/2022] GCK Stock Pvt. Ltd., Jaipur 4.6 Similarly The Learned Authorized Representative also point out the Judgment of Delhi High Court in the Case of Adhir Sachdeva[W.P.(C) 17647/2024] (Paper Book Page No. 134-135 of the Case Laws ). The Learned Authorized Representative pointed out that the observation of Delhi High Court at the page no. 135 of Paper Book of case laws is as follows, “ 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section149(1)(b) to protect the interests of the assesses."5. In the present case, the period of six years from the end of the relevant (AY) 2015-16 expired on 31.03.2022. The impugned notice has been issued thereafter, and the same is thus barred by limitation. The learned GCK Stock Pvt. Ltd., Jaipur counsel for the respondent concurs with the aforesaid view. In view of the above, the impugned notice is set aside.8. The petition is allowed in the aforesaid terms. Pending applications also stand disposed of.” The Learned Authorised Representative therefore requested that the present appeal for A.Y. 2015-16 needs to be quashed on the ground of the reopening made by the JAO is time barred.
4.7 Similarly in the Case of Neera Gupta [W.P.(C) 17352/2024] (Paper Book Page No. 136-138 of the Case Laws ) the Delhi High Court at page no. 137 of the Paper Book of Case Laws “ 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment. The proviso limits the retrospective operation of Section149(1)(b) to GCK Stock Pvt. Ltd., Jaipur protect the interests of the assesses."5. In the present case, the period of six years from the end of the relevant (AY) 2015-16 expired on31.03.2022. The impugned notice has been issued thereafter, and the same is thus barred bylimitation.6. The learned counsel for the respondent concurs with the aforesaid view.7. In view of the above, the impugned notice is set aside.8. The petition is allowed in the aforesaid terms. Pending application also stands disposed of.” In view of the same the Learned Authorised Representative prayed that this appeal of Assessee for AY 2015-16 needs to be quashed as the reopening is time barred.
4.8 The Ld AR also drew our attention to Page no. 93-100 of the Paper book of case Laws in the case of Orbit Financial Capital (ITA No.5812/M/2024) in which it is held that “ 3. In view of the aforesaid, it is evident that the impugned reassessment action for AY 2015-16 would not sustain.4.The writ petition is accordingly allowed. The impugned order under Section 148A(d) of the Act dated 23 July 2022 and consequential notice referable to Section 148 of even date are here by quashed and set aside."9. Thus, the notice u/s.148 issued on 27/07/2022 is clearly barred by limitation. The reason being the test for checking the time limit and the validity of notices issued u/s.148 under new regime applicable from A.Y. 2021-22 and prior regime is, whether & C. O. No.287/M/2024 M/s. Orbit Financial Capital period of six years had expired at the time of issue of such notice or not. In GCK Stock Pvt. Ltd., Jaipur the caseof assessee, the period of six years had expired on 31/03/2022 and consequently, the notice dated27/07/2022 is clearly barred by limitation and on this ground, the assessment proceedings u/s.147is hereby quashed. Accordingly, the cross objection filed by the assessee is allowed and all the grounds raised by the Revenue are dismissed as infructuous.” The Learned Authorised Representative therefore stated that facts of this case are exactly identical to the case of the assessee under appeal and accordingly the reopening needs to be quashed ( Paper Book Page No. 99 of the case laws).
4.9 The Ld AR also drew our attention to Page no. 101-110 of the Paper book of case Laws in the case of Pushpak Realities Pvt. Ltd. [ in which it is held that “ f. The Revenue concedes that for the assessment year 2015- 16, allnotices issued on or after 1 April 2021 will 4814 & 4812/Mum/2024 Pushpak Realities Pvt. Ltd. have to be dropped as they will not fall for completion during the period prescribed under TOLA;--- 16. Now here in this case as noted above for A.Y.2013-14 after 148A (b), notice u/s.148 was issued on29/07/2022; for A.Y. 2014-15 it was issued on 31/07/2022; and for A.Y.2015-16 it was issued28/07/2022. Thus, in all these years as noted above the original time limit for six years forA.Y.2013-14 was upto 31/03/2020; for 2014-15 it was 31/03/2021; and for A.Y. 2015- 16 it was31/03/2022. Even under the TOLA, the GCK Stock Pvt. Ltd., Jaipur time limit for issuance of notice u/s 148 had expired on30/06/2021 both for A.Y. 2013-14 & A.Y. 2014-15. For the A.Y.2015-16, the Revenue itself has contended before the Hon'ble ITA No.4816, 4814 & 4812/Mum/2024 Pushpak Realities Pvt. Ltd. Supreme Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice u/s. 148for the A.Y. 2015-16 has been issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on thereasons given by the ld. CIT (A) for quashing the notice.” Accordingly The Learned Authorised Representative mentioned that the issue involved in this appeal is also covered by the ratio of this order.
4.10 The Ld AR also drew our attention to Page no. 111-120 of the Paper book of case Laws in the case of Munish Financial [I.T.A. No.5055/Mum/2024] in which it is held that “6. We heard the parties and perused the material on record. In assessee's case, the AO issued the original notice under section 148 dated 29.06.2021 for AY 2015- 16 and consequent to the directions given by the Hon'ble Supreme Court in the case of Ashish Agrawal (supra), the said notice was deemed as notice issued under section 148A(b). The AO after passing the order under GCK Stock Pvt. Ltd., Jaipur section148A(d) issued the notice under section 148 dated 29.07.2022. The contention of the assessee is that the said notice is barred by limitation as per the first proviso to the un-amended provisions of section 149(1) as has been confirmed by the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal (Supra). The relevant observations of the Hon'ble Supreme Court reads as under - 19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:-
(a) to (e)**** (f). The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;” In view of the same The Learned Authorised Representative requested that reopening by the JAO in the case under appeal is also time barred and needs to be quashed. 4.11 The Learned Authorised Representative also drew our attention to Page no. 121-129 of the Paper book of case Laws in the case of Ashok Amratlal Shah [ITA No.4286/Mum/2024] in which at page no. 126-127 it is held that “8. Upon review, we find merit in the Ld. AR's argument. The ruling in Rajeev Bansal(supra) explicitly addresses the issue of limitation for notices issued under the newregime. The relevant observations from paragraphs 112 and 113 of the judgmentclarify that any reassessment notice issued beyond the surviving time limit is invalid.For AY 2015-16, the surviving time limit was exceeded, and the notice issued GCK Stock Pvt. Ltd., Jaipur on30/06/2022 is therefore barred by limitation. The Ld. CIT(A) observed that the notices under Section 148 were issued in compliance with the directions of the Hon'ble Supreme Court in Ashish Agarwal (supra) and the escaped income for AY2015-16 exceeded Rs. 50 lakhs, and therefore, the extended limitation period under Section 149(1)(b) of the Act applied.ITA No.4286 to 4288 /Mum/2024 Ashok Amratlal Shah The Ld. DR could not present any contrary facts or rulings to refute the submissions of the Ld. AR. Respectfully following the decisions inAshish Agarwal (supra) and Rajeev Bansal (supra), we hold that the notice issued under Section 148for AY 2015-16 is invalid, rendering the subsequent assessment proceedings null and void. Accordingly, the legal ground no-1 raised by the assessee for AY 2015-16 is allowed. Since we have adjudicated the issue of limitation in favor of the assessee, the remaining grounds of appeal are rendered academic and do not require further deliberation.” Hence once again The Learned Authorised Representative prayed that the reopening in the case under appeal is also time barred and needs to be quashed.
4.12 The Ld AR also drew our attention to Page no. 130-133 of the Paper book of case Laws in the case of Chiara Nath [ITA No. 1924/Del/2024] in which at page no. 132 it is held that “For the A.Y.2015-16, the Revenue itself has-5- Chiara Nath vs. DCIT contended before the Hon'ble Supreme GCK Stock Pvt. Ltd., Jaipur Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice u/s. 148 for the A.Y. 2015-16 has been issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the ld. CIT (A) for quashing the notice." Thus the Learned Authorised Representative once again prayed that the reopening is time barred for the A.Y. 2015-16.
The assessee has also challenged that order passed u/s. 148A(d) on 27.07.2022 is merely a change of opinion. 5.1 The Learned Authorised Representative of the assessee drew our attention to Paper Book Page No. 1-2 showing Assessment order passed u/s. 143(3) in the first round of assessment by the JAO on 21.12.2017 5.2 The Learned Authorised Representative also pointed out that during that assessment proceeding a Show cause notice (Paper Book Page No. 3-4) was issued on 24.11.2017 calling upon assessee to furnish 5.3 After that the JAO issued ano After that the JAO issued another supplementary show cause notice (Paper ther supplementary show cause notice (Paper Book Page No. 5). 5.4 In response to the same the assessee submitted detailed reply dated In response to the same the assessee submitted detailed reply dated In response to the same the assessee submitted detailed reply dated 04.12.2017 on 07.12.2017 (Paper Book Page No. 6 04.12.2017 on 07.12.2017 (Paper Book Page No. 6-7) along with necessary 7) along with necessary enclosures. Further the assessee also submitted anothe enclosures. Further the assessee also submitted another reply to supplementary r reply to supplementary show cause notice on 07.12.2017 along with necessary enclosures (Paper Book show cause notice on 07.12.2017 along with necessary enclosures (Paper Book show cause notice on 07.12.2017 along with necessary enclosures (Paper Book Page No. 8). 5.5 In view of the above the Learned Authorised Representative of the assessee In view of the above the Learned Authorised Representative of the assessee In view of the above the Learned Authorised Representative of the assessee GCK Stock Pvt. Ltd., Jaipur strongly contended that the issue of losses in illiquid stock and reversal of trades was already examined by the JAO in the first scrutiny u/s. 143(3). As can be seen from Paper Book Page No. 1 the then JAO has specifically mentioned that all the details were filed from time to time during the assessment proceedings. Therefor initiations of reopening u/s. 148A(b) (Paper Book Page No. 139-181) is nothing but a change of opinion. The Learned Authorised Representative also argued that the same trades have been examine in the first round of scrutiny which cannot become the basis of reopening for reassessment. In this regard the Learned Authorised Representative of the assessee also referred to reply at Paper Book Page No. 182 -190 in which the assessee has raised several objections to reopening on merit as well as on law point. The Learned Authorised Representative also adverted our attention to Paper Book Page No. 120-138 in which the issue was challenged on merit as well as on law point. The Learned Authorised Representative also pointed out that the judgement of Rakhi Trading Pvt. Ltd. relied upon by the Jao for the reopening was only to penalised the broker and nothing to do with this fact of the case of the assessee. In the reply to show cause notice dated 06.05.2023 the assessee also raised various objection that order passed u/s. 148A(d) was not a speaking order and objections of the assessee was also not disposed off. The assessee further stated that this was clearly a template based order without any sound reasoning. The Learned Authorised Representative GCK Stock Pvt. Ltd., Jaipur further relied upon the case of Sabh Infrastructure Ltd. Paper Book Page No. 125 and stated that the same is reaffirmed by the Hon’ble Supreme Court that order of reopening has to be speaking order and information has to be inquire by the Assessing Officer before passing the order of reopening. The Learned Authorised Representative therefore averred that order u/s. 148A(d) is passed in a cryptic manner and mechanically. It was further argued by the Learned Authorised Representative that the transaction of Rs. 4,96,87,796/- mentioned by the JAO in notice u/s. 148A(b) are already recorded in the books of account therefore the question of treating the same as ground for reopening is not tenable in law. He therefore argued that reopening u/s. 148A on the same ground which were already examined and considered in the first order dated 21.12.2017 by the Jao cannot become the basis of reopening u/s. 148 r.w.s. 148A. He therefore pointed out that this is a clear case of change of opinion which Is clearly invalid even under new provision of section 148A(d) as was held in the case of Seem Gupta 40 taxmann.com 463 (Delhi) Paper Book Page No.
The Learned Authorised Representative also relied upon several case laws out of which the most important is that in the case of Kelvinator of India Ltd. (2010) 320ITR 56 [SC] Paper Book Page No.
128. The Learned Authorised Representative also quoted numerous case laws on the change of opinion appearing at Paper Book Page No. 130-131. The Learned Authorised Representative also mentioned that there was no failure on the GCK Stock Pvt. Ltd., Jaipur part of assessee to disclose the primary facts before the JAO in the first round of assessment. To support that contention the Learned Authorised Representative relied upon several cases quoted at Paper Book Page No. 131-132. The Learned Authorised Representative therefore submitted that mechanically approval granted u/s. 148A is not tenable under law as per various case laws mentioned in Paper Book Page No. 132-133. Accordingly the Learned Authorised Representative prayed that the reopening carried out by the JAO vide notice dated 27.07.2022 is untenable in law being clearly a change of opinion without an iota of doubt. Accordingly reopening needs to be quashed.
The Ld AR of the assessee as sailed the reopening on the basis of the fact that no opportunity of being heard was granted to the assessee before drawing adverse while passing order u/s. 148A(d). 6.1 In this regard the Learned Authorised Representative of the assessee adverted our attention to Paper Book Page No. 190 in which it is stated that “ In any case, an opportunity of personal hearing may be granted before taking any adverse action against the assessee.” 6.2 In this regard The Learned Authorised Representative of the assessee relied upon judgement in the case of Nikhil Chandrakant Dharia v. ITO [2024] 469 ITR 262 /151 taxmann.com 117 (Bom) (HC). in which it was held that “S. 148A: Reassessment-Conducting inquiry, providing opportunity before issue of notice- GCK Stock Pvt. Ltd., Jaipur Before passing order under S. 148A(d) the Officer ought to give a personal hearing if requested for by the assessee-Grant of approval by PCIT without application of mind to the form of approval-Order and notice liable to be set aside. [S. 148, 148A(b), 148A(d),149(1)(b), 151 Art. 226]. The Petitioner challenged the show cause notice under section 148A(b) of the Act, order under section 148A(d) of the Act and the notice under section 148 of the Act on the ground that there was total non-application of mind by the superior authorities in granting the approval before issuance of the impugned re-opening notice. The Hon’ble Bombay High Court accepted the submission of the Petitioner and observed that the application for approval, recommendation and the grant of approval have all been made by the officers mechanically and without application of mind. Further, on the issue of personal hearing not being granted, the Hon’ble Court observed that in every case, before passing an order under section 148A(d) of the Act, the Respondents shall give a personal hearing if requested for by the Petitioner. Accordingly, the impugned notices/orders were quashed and set aside. (AY. 2019-20).” 6.3 Therefore the Learned Authorized Representative strongly contended that the order u/s. 148A(d) is passed without giving personal hearing.
The Ld AR of the assessee also objected to the notice u/s. 148 r.w.s. 148A on the ground that objections raised by the appellant were exhaustive and self- GCK Stock Pvt. Ltd., Jaipur sufficient but same were not disposed of properly by the FAO by passing a speaking order. 7.1 In this regard The Learned Authorized Representative of the assessee pointed out that several objection were raised on merit as well as legal grounds. As can be seen at Paper Book Page No. 182-190 and 120-138. 7.2 The Learned Authorized Representative further pointed out that the JAO is duty bound to dispose the same objection seriatim as was held in the case law of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) in which it was held that “New reassessment scheme was introduced with the intent of reducing litigation and promoting ease of doing business. In fact, the legislature brought in safeguards in accordance with the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) before any exercise of jurisdiction to initiate reassessment proceedings under section 148 of the Act.” 7.3 Accordingly the assessee strongly contended that the objection raised at Paper Book Page No. 182-190 and 120-138 Ought to have been disposed off by the JAO /FAO. In the absence of that the reopening initiated u/s. 148A(d) was untenable in law.
As regards Ground no. 2 filed by the assessee in this appeal before us, the assessee manily challenged addition / disallowance of Rs. 49687796/- in respect of GCK Stock Pvt. Ltd., Jaipur reversal of trades and illiquid stocks. 8.1 In this regard the Learned Authorized Representative of the assessee argued that this addition is based on the mere suspicion and presumptions. He also stated that the same is based on third party statements, outsider. It was also argued that there is no proof of cash trail, inward or outward. The assessee also pointed out that the general data of SEBI in this regard is wrongly co-related with assessment / reassement of the assessee. The Learned Authorized Representative further argued that the addition is based on pure guess work and null of the documents produced before the JAO / FAO are any way disproved by the JAO/FAO. The FAO has relied upon several cases which are not applicable to the fact of the case. The FAO did not issue any notice u/s. 133(6) / 131, viz brokers and other persons whose statements were never furnished for rebuttal. It was also pointed out that all the transactions are on the BOLT of the BSE and have been carried out through banking channels by cheque. Therefore the onus lying upon the assessee to prove the genuineness of the transactions has been discharged. Thereafter the burden shifted on JAO/FAO to prove the same wrong. 8.2 Therefore the Ld AR contended that additions / disallowance are bad in law.
As regards other objections to reopening u/s. 148r.w.s. 148A was conducted by JAO instead of FAO and without granting hearing, on the basis of information GCK Stock Pvt. Ltd., Jaipur received from the investigating wing by way of template based order. 9.1 The Learned Authorized Representative of the assessee relied upon Hexaware Technologies Ltd. [464 ITR 430 (Bombay)] and stated that the reopening is bad in law. 9.2 The Learned Authorized Representative further stated that 148A(b) notice was required to be issued by FAO as per the Faceless Assessment scheme without which order u/s. 148A(d) was not tenable at all.
We have carefully considered the rival submissions and find that there is substantial force in the argument of The Learned Authorised Representative of the assessee as follows: 10.1 At the outset, we find that the Learned Authorised Representative of the assessee successfully demonstrated interplay between the judgement of Union of India vs Ashish Agarwal (2022 SCC Online SC 543) and Rajeev Bansal (SC) 301 Taxman 238. We have noted the fact that in the case of Ashish Agarwal (SUPRA) the Hon’ble Apex Court validated all the notices wrongly issued u/s. 148 instead of 148A after 01.04.2021 as per the TOLA. However, the issue of applicability of TOLA year wise was adjudicated in the case of Rajeev Bansal (SUPRA). Accordingly we find that due date of issuing for notice u/s. 148 for each assessment year starting from 2013-14 till 2017-18 was adjudicated as tabular form as can be seen in Paper Book Page No. 15 of the case law.
10.2 We note from the arguments that the main contention of the assessee is that the reopening made by the JAO vide notice dated 27.07.2022 u/s. 148 is barred by law of limitation because the last date for reopening was 31.03.2022. this contention of The Learned Authorised Representative is strengthened by the several judgments of the Hon’ble Supreme Court &Jurisdictional High Court, Hon’ble Delhi High Court and Orders of Delhi and Mumbai Tribunal quoted above (SUPRA). We have carefully considered the submission of the Learned Departmental Representative dated 24.02.2025 in which it is contended that the Judgement of Rajeev Bansal (SUPRA) as well as R.K. Build Creations Pvt. Ltd. Does not apply to the facts of the case under appeal. We are unable to accept this contention of the Learned Departmental Representative for the simple reason that Hon’ble Supreme Court in the case of Rajeev Bansal (SUPRA) has categorically observed that, “f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April2021 will have to be dropped as they will not fall for completion during the period prescribed underTOLA;” moreover we have also observed that the Hon’ble Supreme Court in the case of Rajeev Bansal ( SUPRA) that TOLA is not applicable to AY. 2015-16. This observations are rightly pointed out by Learned Authorised Representative at page no. 15 of the Paper Book of Case law which support the case of the assessee. We also find strength in the GCK Stock Pvt. Ltd., Jaipur argument of the assessee that the reopening made for AY 2015-16 after 31.03.2022 is clearly time bared and the Department itself has conceded the notices issued after 31.03.2022 will have to be dropped because the same did not fall during the period prescribed under TOLA.
We are also fortified by the averment of the Ld AR that department should have withdrawn the reopening wrongly made by the JAO. Apart from this the Learned Authorised Representative also pointed out that vide online submission dated 21.11.2024uploaded on the website of the Income Tax Department. The assessee relied upon Judgement of the Rajeev Bansal and Pushpak Realities Pvt. Ltd. (SUPRA) it was contended before the Commissioner Of Income Tax (Appeal) (NFAC) that the reopening made by the JAO is time Barred. However in this connection we find that the Commissioner Of Income Tax (Appeal) (NFAC) has observed at para no. 6.1.9 to 6.1.11 of page no. 51-52 of Appellate order it is observed that “6.1.9 In this regard, appellant assessee relied upon Hon’ble ITAT Mumbai Bench judgement in the case of ITO v Pushpak Realities Pvt Ltd, as the sameis not from jurisdictional ITAT order, with due respect, it is held that the same is not applicable to the appellant assessee case.
GCK Stock Pvt. Ltd., Jaipur Further, the pertinent point to note in this case, even at the cost of repetition is that the relevant Assessment Year involved in this case is AY2015-16, also as per new provision of sec 148, as the number of years is not more than 10 years which has elapsed from the end of the relevant AY i.e2015-16 and the AO is in possession of evidence in the form of SEBI order in the name of the appellant assessee itself and also the detailed report of Directorate of I & CI in the name of the appellant assessee itself which revealed that the income chargeable to tax which is in the form of entry or entries in the books of account had escaped assessment amounts to Rs.Rs.4,96,87,796/- which is more than Rs.50,00,000/-, AO after following the due procedure has rightly issued the notice u/s 148 on 27.7.2022.6.1.11 Therefore, this ground of appeal raised by the appellant assessee is dismissed.” We therefore find force in the argument of the Learned Authorised Representative that the Commissioner Of Income Tax (Appeal) (NFAC) has ignore the Judgement of Rajeev Bansal by dismissing the ground while deciding the faceless appeal and did not adjudicate the reopening as time barred. In this regard we find that the case of the assessee is squarely covered by the Judgement of Supreme Court in the case of Rajeev Bansal (SUPRA and other Judgements of jurisdictional Rajasthan High Cout and Delhi Hogh Court as well as other benches of the Tribunal. We therefore hold that the reopening made by the JAO vide notice u/s. 148 dated 27.07.2022 is time barred and the revenue ought to have withdrawn GCK Stock Pvt. Ltd., Jaipur the same as per the concession made by them before the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra). Be that as it may, the reopening carried out by the JAO on 27.07.2022 is accordingly held to be time barred and this ground of the appeal succeeds.
10.3 The Learned Authorised Representative has vehemently argued that notice dated 27.07.2022 u/s. 148 is nothing but a change of opinion. In this we have carefully considered rival submission and find that there is a substantial force in the argument of the assessee because in the first round of the scrutiny order was passed by the JAO u/s. 143(3) on 21.12.2017 after issuing show cause notice dated 24.11.2017 and supplementary show cause notice dated 28.11.2017 which were fully and truly replied by the assessee vide two letter dated 04.12.2017 submitted on 07.12.2017 each. On perusal of the same, we find that the issue under first round of scrutiny was also covering the issue of illiquid stocks and reversal of trades. These were duly examine by the JAO after perusing the detailed replies of the assessee along with the enclosures with each letters. Accordingly we are inclined agree with the contention of the AR that firstly this tantamount change of opinion of the same facts as above said and secondly that was no failure on the part of the assess to furnish all the details of the illiquid stock and reversal of trades. Accordingly we find that the case of the assessee is very much covered by the GCK Stock Pvt. Ltd., Jaipur judgement of Seema Gupta (SUPRA) which reconfirms the ratio of Kelvinator of India Ltd. (SUPRA) that no reopening can be conducted merely on the base of change of opinion. We have also perused the judgements relied upon by the Learned Authorised Representative of the assessee in connection with mechanical approval, disclosure of primary facts, lack of inquiry etc. are clearly applicable of fact of the case. Accordingly we find that the contention of the assessee the notice u/s. 148 r.w.s 148A is bad in law and accordingly hereby quashed.
10.4 In this regard we have heard the rival contentions and find that the assessee had made specific request for personal hearing as can be seen at Paper Book Page No. 190 vide letter dated 29.06.2022. During the course of proceeding us/. 148A(b). In this regard we further find that order u/s. 148A(d) was passed on without providing personal hearing. Accordingly we find that this objection raised by the assessee needs to be allowed as per the judgement of Bombay high court in the case of Nikhil Chandrakant Dharia (SUPRA) in which the issue of personal hearing during the course of proceeding us/. 148A(b) was discussed and allowed. We are therefor of the considered view that in the absence of personal hearing order passed u/s. 148A(d) dated 27.07.2022 is not tenable in law and accordingly quashed.
GCK Stock Pvt. Ltd., Jaipur 10.5 We have carefully considered the rival submission of both the sides, we find that objections were raised by the assessee on merits as well as on law point as seen on the Paper Book Page No. 182-190 and 120-138. These were not disposed off by the Assessing Officer during the course of reopening or reassessment by the JAO or FAO and clearly violative of supreme court judgment in the case of GKN Driveshafts (India) Ltd. (SUPRA). We are therefore inclined to agree with the submission of the Learned Authorized Representative that reopening initiated by the Assessing Officer in this regard is not tenable in law. We also find support from the Judgment in the case of Vivek Saran Agarwal 157 taxmann.com 80 (Allahabad) in which it was held that objection can be raised even during the reassement proceedings. Accordingly we find that the reopening is not tenable in law.
10.6 As regards other grounds of reopening we find that the main objection of the assessee is against the reopening initiated by JAO instead of FAO relying upon Judgment in the case of Hexaware Technologies Ltd [464 ITR 430 (Bombay)]. However in this regard we find that the said issue is pending before the Hon’ble Supreme court and has not attained finality. Moreover we have already quashed reopening on other four grounds as mentioned in forgoing paragraphs, this issue of JAO and FAO is merelyacademic in nature in the appeal and does not require
As regards ground no. 2 of the appeal we found that the assessee agitated addition / disallowance of Rs. 49687796/- in respect of illiquid stock and reversal. We have carefully considered the submission of the Learned Authorised Representative viz a viz Assessment Order u/s. 147 r.w.s 144B and Appellate Order u/s. 250 in this case. However, in this regard we have given a careful thought to rival submission of both the sides and find that these are consequential and academic in nature because we have already allowed the ground no. 1 of the assessee and quashed reassessment based on erroneous grounds of reopening u/s. 148 r.w.s 148A, the adjudication of this ground of merit does not survive with a liberty to either side to not the same. Accordingly this ground is infectious in nature and therefore treated as not required to be decided.
As regards ground no. 3 raised by the assessee regarding charging of Interest u/s. 234A, 234B & 234C, we find that this is merely consequential and mandatory in nature as per the Judgment of Supreme Court in the case of Anjum M.H. Ghaswala and Others, [2001] 252 ITR 1 (SC). Accordingly we direct the Assessing Officer to recalculate the Interest u/s. 234A, 234B & 234C after giving the Appeal Effect. As regards ground no. 3, the assessee has raised sub GCK Stock Pvt. Ltd., Jaipur ground regarding imitation of penalty u/s. 271 (1) (c). In the regard we find that, this ground is premature because mere imitation of penalty does not raise any demand till it is levied. Therefore no adjudication is required on the same being premature.
As regard ground no. 4 the assessee aggrieved by the fact that the Ld. Commissioner of Income Tax (A) erred in dismissing appeal By totally overlooking judgment in the case of Rajeev Bansal by SC and not deciding the issue of time barred case of the Appellant. We have carefully considered the rival submission and find that there is substantial force in the argument of the assessee. We find that the assessee has quoted this Judgment before the Commissioner Of Income Tax (Appeal) (NFAC) vide online response dated 21.11.2024 however the same was not adjudicated by Commissioner Of Income Tax (Appeal) (NFAC) while deciding the appeal. However, we have already considered this aspect while deciding appeal before us. As discussed in length at para no. 10.1 of this order. Not only that but the same issue is intricately connected to challenge to reopening mentioned in para no. 10.1 therefore this ground is also decided jointly with challenge to reopening in forgoing paragraphs.
For the statistical purpose the appeal is partly allowed, being ground no. 1 GCK Stock Pvt. Ltd., Jaipur allowed by way of quashing of reopening and ground no. 2 being infructous. Ground no. 3 being consequential and ground no. 4 is already merged with ground no. 1.
In the result, the appeal of the assessee is partly allowed
Order pronounced in the open court on 06/05/2025. Sd/- Sd/- ¼ xxu xks;y ½ ¼MkWa-,l-lhrky{eh½ (Gagan Goyal) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06/05/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- GCK Stock Pvt. Ltd., Jaipur. 1. 2. izR;FkhZ@ The Respondent- ITO, Ward-1(4), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File vkns'kkuqlkj@ By order,
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