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Income Tax Appellate Tribunal, “SMC-A” BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO
Per Vijay Pal Rao, Judicial Member
This appeal by the assessee is directed against the order dated 30.11.2016 of CIT(A) for the assessment year 2008-09. The assessee has raised the following grounds:
Page 4 of 8 2. Ground nos. 1 and 2 are regarding the validity of reopening u/s. 147 and 148 of the Act. The ld. AR of the assessee has submitted that the original assessment was completed u/s. 143(3) on 25.11.2010. During the course of original assessment proceedings the assessee explained the transaction of purchase and sale of shares and short term capital gain on sale of shares which was offered to tax. The Assessing Officer after considering the explanation of the assessee accepted the short term capital gain offered by the assessee while completing the assessment u/s. 143(3).
Thus the ld. AR has submitted that when the AO has taken a view and accepted the transaction of sale and purchase of shares and short term capital gain arising from sale of shares then the reopening of assessment after four years is not sustainable in law as there is nothing to show that there is a failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment. The ld. AR has referred to the notice issued u/s. 148 dated 18.11.2013 as well as reply of the assessee to the said notice. He has thus submitted that the AO issued a similar notice u/s. 148 which was dropped after the assessee filed his reply on 17.01.2014. The AO has then issued a second notice u/s. 148 on 02.03.2015 which is not sustainable in law being barred by limitation of four years provided under proviso to section 147. He has relied upon the decision of Hon’ble Rajasthan High Court in case of CIT Vs Ram Kishan Leela [2007] (295 ITR 525) as well as the decision of Hon’ble Madras
Page 5 of 8 High Court in case of ASSP & Co Vs CIT[1988] (172 ITR 274) and submitted that the reassessment proceedings and reassessment order is bad in law as the notice u/s. 148 was issued twice and the reassessment proceedings consequent to first notice u/s. 148 was pending when second notice u/s. 148 was issued. Thus the ld. AR has contented that the reassessment is not sustainable in law and liable to be quest.
On the other hand, the ld. DR has submitted that the earlier alleged notice u/s. 148 was not pending at the time when the present notice u/s. 148 dated 02.03.2015 was issued by the AO therefore the decisions relied upon by the ld. AR are not applicable in the case of the assessee. He has further contented that the assessee has not raised these issues before the CIT(A) or before the AO and therefore it is also not clear whether there was any notice u/s. 148 issued by the AO on 18.11.2013 as alleged by the assessee. If the earlier notice u/s. 148 was dropped then there is no bar in issuing the fresh notice u/s. 148 when the Assessing Officer has the reasons to believe that the income assessable to tax has escaped assessment. He has further submitted that there was a search u/s. 132 on 25.11.2009 in case of M/s. Mahasagar Securities P Ltd one of the group concern of Shri Mukesh Choksi who has admitted in his statement that his group companies including M/s. Mahasagar Securities P Ltd was engaged in fraudulent billing activity and in giving accommodation
Page 6 of 8 entries in order to enable the clients to declare speculative profit, short term capital gain, long term capital gain etc. Accordingly, the investigation wing of the income tax department has given information to the AO that during the financial year 2006-07 the assessee had purchased ‘Talent Infoway’ shares through the broker M/s. Alliance Intermediaries and network Pvt. Ltd., Mumbai. Therefore the facts came to the knowledge of the AO as a result of search u/s.
It constitutes a tangible and sufficient material to form a belief that the income assessable to tax has escaped assessment. He has relied upon the orders of the authorities below.
I have considered the rival submissions as well as relevant material on record. It is not in dispute that the original assessment was framed u/s. 143(3) on 25.11.2010. However, it is not clear whether the information given by the investigation wing during the search u/s. 132 on 25.11.2009 in case of Mahasagar group cases was passed on to the Assessing Officer prior to the completion of the original assessment dated 25.11.2010. In case the said information was available with the AO at the time of completing the original assessment u/s. 143(3) on 25.11.2010 then reopening of the assessment after four years by issuing the notice u/s. 148 on 02.03.2015 is not permitted as nothing new came to the knowledge of the AO to bring the case of the assessee in the category that there is a Page 7 of 8 failure on the part of the assessee to disclose fully and truly all material necessary for the assessment of the assessee. Further the assessee has alleged that prior to the notice issued u/s. 148 on 02.03.2015 the Assessing Officer issued a notice u/s. 148 on 18.11.2013. A copy of the said notice has been placed at page no. 96 of the paper book. The assessee has also stated to have filed a reply on 17.01.2014 placed at page no. 97 and 98 of the paper book. However, the fact of the said notice issued u/s. 148 is not known. Therefore without ascertaining the facts whether this earlier notice issued u/s. 148 was dropped by the AO or it was still pending the issue of validity of notice issued u/s. 148 cannot be decided conclusively. There is another question involved in this issue regarding the reasons recorded for issuing the notice u/s. 148 on 18.11.2013 and 02.03.2015. In case the reasons recorded by the AO while issuing these notices are identical then once the earlier notice was not acted upon then the second notice u/s. 148 cannot be issued on same reasons. Accordingly, in view of the above facts and circumstances of the case when all the relevant facts are not placed on record, and even not emerging out from the orders of the authorities below then this issue of validity of reopening is set aside to the record of the CIT(A) for fresh adjudication after considering all the relevant facts as well as aspects as discussed above. Needless to say the assessee may be given an appropriate opportunity of hearing.
Page 8 of 8 5. Since the validity of reopening has been set aside to the record of the CIT(A) which goes to the root of the matter therefore, the other issues are not taken up for adjudication and are kept open.
In the result the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 19th day of May, 2017