MAYA MILIND SIRSATH,MUMBAI vs. INCOME TAX OFFICER 33(2)(3), MUMBAI

PER OM PRAKASH KANT, AM

This appeal has been preferred by the assessee against order dated 09.08.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:

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referred to the reasons recorded by the Assessing Officer and referred to the reasons recorded by the Assessing Officer and referred to the reasons recorded by the Assessing Officer and provided to the assessee. provided to the assessee. On specific request of the assessee, a On specific request of the assessee, a copy of the said reasons provided by th he said reasons provided by the Assessing Officer Assessing Officer through online portal on 18/11/2019 [DIN: ITBA/AST/F/17/2019- portal portal on on 18/11/2019 18/11/2019 [DIN: [DIN: ITBA/AST/F/17/2019 ITBA/AST/F/17/2019 020/1020610163(1)] 020/1020610163(1)] is available on Paper Book page 13. is available on Paper Book page 13. The Assessing Officer also in the assessment order in para 2 has Assessing Officer also in the assessment order in para 2 has Assessing Officer also in the assessment order in para 2 has mentioned that reasons recorded were provided to the assessee only mentioned that reasons recorded were provided to the as mentioned that reasons recorded were provided to the as on 18.01.2019. The relevant part of the same is reproduced as The relevant part of the same is reproduced as The relevant part of the same is reproduced as under:

“Subject: Reasons for Re “Subject: Reasons for Re-opening – reg. As required by you, the reason for re As required by you, the reason for re-opening of the assessment opening of the assessment in your case for A. Y. 2012 in your case for A. Y. 2012-13 is as per information received from 13 is as per information received from DDIT(Inv.)-Unit- -4(2),Mumbai that an enquiry was conducted in the penny 4(2),Mumbai that an enquiry was conducted in the penny scrip namely M/s. Nimbus Industries Limited (Script Code scrip namely M/s. Nimbus Industries Limited (Script Code-530971) vis 530971) vis-à- vis providing Bogus Accommodation Entry in LTCG/STCL/Business Loss vis providing Bogus Accommodation Entry in LTCG/STCL/Business Loss vis providing Bogus Accommodation Entry in LTCG/STCL/Business Loss and beneficiaries involved are analysed by the and beneficiaries involved are analysed by the DIT (Inv.) DIT (Inv.)-Unit-4(2), Mumbai. On verification, it was found that you were one of the Mumbai. On verification, it was found that you were one of the Mumbai. On verification, it was found that you were one of the beneficiaries who has traded in the above mentioned scrip. beneficiaries who has traded in the above mentioned scrip. SUNITA SUNIL SUNITA SUNIL Ward 33(2)(3), Mumbai” Ward 33(2)(3), Mumbai” 3.1 In view of the above reasons recorded, the Ld. counsel for the In view of the above reasons recorded, the Ld. counsel for the In view of the above reasons recorded, the Ld. counsel for the assessee submitted that the Assessing Of submitted that the Assessing Officer has not recorded a ficer has not recorded a belief that income escaped that income escaped was more than Rs. 1,00,000/ more than Rs. 1,00,000/- , which was required u/s 149(1)(b) of the Act required u/s 149(1)(b) of the Act . In response, the Ld. . In response, the Ld. Departmental Representative (DR) submitted that reasons recorded Departmental Representative (DR) submitted that reasons recorded Departmental Representative (DR) submitted that reasons recorded available on the assessment folder the assessment folder of the department are different of the department are different from the reasons which have been produced by the assessee before which have been produced by the assessee before which have been produced by the assessee before the Tribunal. A copy of the reasons recorded supplied by the Ld. A copy of the reasons recorded supplied by the Ld. A copy of the reasons recorded supplied by the Ld.

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DR, available on page 5 of her submission, ble on page 5 of her submission, are reproduced as are reproduced as under:

“MAYA MILIND SIRSATH “MAYA MILIND SIRSATH is an Individual assessee and as per is an Individual assessee and as per ITD system verification the assessee has filed return of income for A.Y ITD system verification the assessee has filed return of income for A.Y ITD system verification the assessee has filed return of income for A.Y- 2012-13 on 02/07/2012 declaring total income of R$ 2,85,534/ 13 on 02/07/2012 declaring total income of R$ 2,85,534/ 13 on 02/07/2012 declaring total income of R$ 2,85,534/-The return was processed u/s 143(1) of the I.T Act on 09/05/2013. return was processed u/s 143(1) of the I.T Act on 09/05/2013. return was processed u/s 143(1) of the I.T Act on 09/05/2013. 2. An information in respect of penny stock companies was An information in respect of penny stock companies was An information in respect of penny stock companies was forwarded by DDIT(Inv), Unit 4(2), Mumbai vide letter No. DDIT(Inv.) forwarded by DDIT(Inv), Unit 4(2), Mumbai vide letter No. DDIT(Inv.) forwarded by DDIT(Inv), Unit 4(2), Mumbai vide letter No. DDIT(Inv.)- 4(2)/Information/Nimbus/2018 4(2)/Information/Nimbus/2018-19 dated 15.03.2019. Enquiries have 19 dated 15.03.2019. Enquiries have been conducted in the penny scrip namely M/s. Nimbus Industries been conducted in the penny scrip namely M/s. Nimbus Industries been conducted in the penny scrip namely M/s. Nimbus Industries Limited (Script Code Limited (Script Code- 530971) vis-à-vis providing Bogus Accommodation vis providing Bogus Accommodation Entry Of Long Term Capital Gains /Short Term Capital Loss /Business Entry Of Long Term Capital Gains /Short Term Capital Loss /Business Entry Of Long Term Capital Gains /Short Term Capital Loss /Business Loss and beneficiaries involved are identified by DDIT(Inv), Unit 4(2), Loss and beneficiaries involved are identified by DDIT(Inv), Unit 4(2), Loss and beneficiaries involved are identified by DDIT(Inv), Unit 4(2), Mumbai. While conducting enquiry date collect Mumbai. While conducting enquiry date collected from BSE has been ed from BSE has been analyzed to identify the beneficiaries who had traded in the scrip namely analyzed to identify the beneficiaries who had traded in the scrip namely analyzed to identify the beneficiaries who had traded in the scrip namely M/s. VAS Infrastructure Ltd. On analysis of such data the DDIT(Inv), Unit M/s. VAS Infrastructure Ltd. On analysis of such data the DDIT(Inv), Unit M/s. VAS Infrastructure Ltd. On analysis of such data the DDIT(Inv), Unit 4(2), Mumbai found that above named assessee is one of the beneficiary 4(2), Mumbai found that above named assessee is one of the beneficiary 4(2), Mumbai found that above named assessee is one of the beneficiary who had traded i who had traded in the scrip namely M/S. Nimbus Industries Limited n the scrip namely M/S. Nimbus Industries Limited during F.Y.2011 during F.Y.2011-12 relevant to A.Y. 2012-13. The DDIT(Inv), Unit 4(2), 13. The DDIT(Inv), Unit 4(2), Mumbai disseminated the data and forwarded the information of the Mumbai disseminated the data and forwarded the information of the Mumbai disseminated the data and forwarded the information of the above assessee to the office of undersigned. above assessee to the office of undersigned. 3. As per the informatio As per the information received the assessee is one of the n received the assessee is one of the beneficiaries of such transactions classified as non genuine shares beneficiaries of such transactions classified as non genuine shares beneficiaries of such transactions classified as non genuine shares sale/purchase transactions. The assessee has made Total Sale of sale/purchase transactions. The assessee has made Total Sale of sale/purchase transactions. The assessee has made Total Sale of Rs.5,69,501/- in the scrip M/s. Nimbus Industries Limited during the F.Y. in the scrip M/s. Nimbus Industries Limited during the F.Y. in the scrip M/s. Nimbus Industries Limited during the F.Y. 2011-12. 4. The investigation conducted by the Mumbai Investigation The investigation conducted by the Mumbai Investigation The investigation conducted by the Mumbai Investigation Directorate reveals that this company has been used by beneficiaries Directorate reveals that this company has been used by beneficiaries Directorate reveals that this company has been used by beneficiaries (Sellers of Shares) to launder money in the garb of Long Term Capital (Sellers of Shares) to launder money in the garb of Long Term Capital (Sellers of Shares) to launder money in the garb of Long Term Capital Gain (LTCG) while claiming tax exemption u/s 10(38) of the In (LTCG) while claiming tax exemption u/s 10(38) of the Income Tax (LTCG) while claiming tax exemption u/s 10(38) of the In Act 1961. Summons u/s 131 of the I.T Act 1961. Summons u/s 131 of the I.T Act 1961 was issued to BSE and Act 1961 was issued to BSE and the data of the scrip was called for analyzed. Financial profiling of few the data of the scrip was called for analyzed. Financial profiling of few the data of the scrip was called for analyzed. Financial profiling of few exit providers and statement of Director of M/s Nimbus Industries Ltd exit providers and statement of Director of M/s Nimbus Industries Ltd exit providers and statement of Director of M/s Nimbus Industries Ltd was recorded. 5. In view of the abo In view of the above I have reason to believe that the income to ve I have reason to believe that the income to the extent of Rs. 5,69,501/ the extent of Rs. 5,69,501/-chargeable to tax has escaped assessment chargeable to tax has escaped assessment within the meaning of section 147 of the I T Act for A.Y.2012 within the meaning of section 147 of the I T Act for A.Y.2012 within the meaning of section 147 of the I T Act for A.Y.2012-13. I therefore propose to assess the income of the assessee for A. Y.2012 therefore propose to assess the income of the assessee for A. Y.2012 therefore propose to assess the income of the assessee for A. Y.2012-13. 6. In this case a return of income was filed for the year under In this case a return of income was filed for the year under In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the I.T. Act was consideration but no scrutiny assessment u/s 143(3) of the I.T. Act was consideration but no scrutiny assessment u/s 143(3) of the I.T. Act was made. Accordingly, in this case the only requirement to initiate made. Accordingly, in this case the only requirement to initiate made. Accordingly, in this case the only requirement to initiate proceedings u/s 147 is reason to believe which has bee proceedings u/s 147 is reason to believe which has been recorded above. n recorded above. It is pertinent to mention here that in this case the assessee has filed It is pertinent to mention here that in this case the assessee has filed It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as return of income for the year under consideration but no assessment as return of income for the year under consideration but no assessment as

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stipulated u/s 2(40) of the Act was made and the return of income was stipulated u/s 2(40) of the Act was made and the return of income was stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1 only processed u/s 143(1) of the Act. In view of the above, provisions of ) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this clause (b) of explanation 2 to section 147 are applicable to facts of this clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case and the assessment year under consideration is deemed to be a case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. case where income chargeable to tax has escaped assessment. case where income chargeable to tax has escaped assessment. 7. In this case more than four year have been lapsed from the end of n this case more than four year have been lapsed from the end of n this case more than four year have been lapsed from the end of assessment year under consideration, hence necessary approval to assessment year under consideration, hence necessary approval to assessment year under consideration, hence necessary approval to initiate proceedings u/s 147 of the I.T. Act and to issue notice W/s 148 of initiate proceedings u/s 147 of the I.T. Act and to issue notice W/s 148 of initiate proceedings u/s 147 of the I.T. Act and to issue notice W/s 148 of the I.T. Act may be accorded as per the provisions the I.T. Act may be accorded as per the provisions of section 151 of the of section 151 of the Income tax Act. Income tax Act.” 3.2 In view of above above two sets of the reasons recorded available two sets of the reasons recorded available before us, the Ld. DR was asked to substantiate as whether the before us, the Ld. DR was asked to substantiate as whether the before us, the Ld. DR was asked to substantiate as whether the second set of the reasons made available second set of the reasons made available on assessment folder and on assessment folder and produced before us duri before us during the hearing, was served upon the served upon the assessee or not. The Ld. DR referred to the service of letter dated assessee or not. The Ld. DR referred to the service of letter dated assessee or not. The Ld. DR referred to the service of letter dated 31.03.2019 available on page No. 2/3 of her submission, but available on page No. 2/3 of her submission, but which available on page No. 2/3 of her submission, but is found to be in respect of notice u/s 148 of the Act. in respect of notice u/s 148 of the Act. Therefore, it is in respect of notice u/s 148 of the Act. clear that said reasons were never provided to t clear that said reasons were never provided to the assessee and he assessee and authenticity of the same is doubtful, hence can’t be relied upon. the same is doubtful, hence can’t be relied upon. the same is doubtful, hence can’t be relied upon.

3.3 Therefore, the issue the issue-in-dispute left before us before us in additional ground raised is whether the Assessing Off is whether the Assessing Officer has complied the icer has complied the conditions specified in section 149(1)(b) during relevant time. The conditions specified in section 149(1)(b) during relevant ti conditions specified in section 149(1)(b) during relevant ti relevant part of the provision is reproduced as under: relevant part of the provision is reproduced as under: relevant part of the provision is reproduced as under:

“149. (1) No notice under section 148 shall be issued for the “149. (1) No notice under section 148 shall be issued for the “149. (1) No notice under section 148 shall be issued for the relevant assessment year, relevant assessment year,— (a) if four years have (a) if four years have elapsed from the end of the relevant elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause assessment year, unless the case falls under clause (b) or clause assessment year, unless the case falls under clause (b) or clause (c) ; (b) if four years, but not more than six years, have elapsed from (b) if four years, but not more than six years, have elapsed from (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income the end of the relevant assessment year unless the income the end of the relevant assessment year unless the income

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chargeable to tax whic chargeable to tax which has escaped assessment amounts to or is h has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. likely to amount to one lakh rupees or more for that year. likely to amount to one lakh rupees or more for that year. (c) if four years, but not more than sixteen years, have elapsed (c) if four years, but not more than sixteen years, have elapsed (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in from the end of the relevant assessment year unless the income in from the end of the relevant assessment year unless the income in relation to any asset (i relation to any asset (including financial interest in any entity) ncluding financial interest in any entity) located located located outside outside outside India, India, India, chargeable chargeable chargeable to to to tax, tax, tax, has has has escaped escaped escaped assessment.? assessment.? Explanation.-In determining income chargeable to tax which has In determining income chargeable to tax which has In determining income chargeable to tax which has escaped assessment for the purposes of this sub escaped assessment for the purposes of this sub- -section, the provisions of Explanat provisions of Explanation 2 of section 147 shall apply as they ion 2 of section 147 shall apply as they apply for the purposes of that section.” apply for the purposes of that section.” 3.4 In the instant case, notice u/s 148 has been issued beyond In the instant case, notice u/s 148 has been issued beyond In the instant case, notice u/s 148 has been issued beyond the period of four years from the end of the relevant assessment the period of four years from the end of the relevant assessment the period of four years from the end of the relevant assessment year, therefore, according to above provision, year, therefore, according to above provision, the Assessing officer the Assessing officer was required to record that in was required to record that income escaped was more than Rs. come escaped was more than Rs. one lakh but in copy of the reasons recorded provided to the assessee, the reasons recorded provided to the assessee, the reasons recorded provided to the assessee, the Assessing Officer has not complied with the mandatory the Assessing Officer has not complied with the mandatory the Assessing Officer has not complied with the mandatory condition of tax effect involved being more condition of tax effect involved being more than Rs.1,00,000/ than Rs.1,00,000/-. The Hon’ble jurisdictional High court in the case of Hindustan Unilever Hindustan Unilever Hon’ble jurisdictional ltd in 439 ITR 333 (Bom) in 439 ITR 333 (Bom) held the assessing officer has to the assessing officer has to specifically point out the failure on the part of the assessee in specifically point out the failure on the part of the assessee in specifically point out the failure on the part of the assessee in disclosing all the material facts and in absence therefore , disclosing all the material facts and in absence therefore , disclosing all the material facts and in absence therefore , reassessment proceedings is invalid in law. reassessment proceedings is invalid in law. In instant case also in instant case also in absence of any such satisfaction absence of any such satisfaction in the reasons recorded in the reasons recorded, the assessment proceedings are void ssment proceedings are void ab-initio, therefore , therefore, same are quashed. Since, the additional ground No. 2 of the appeal of the quashed. Since, the additional ground No. 2 of the appeal of the quashed. Since, the additional ground No. 2 of the appeal of the assessee is allowed and the reassessment proceedings has been assessee is allowed and the reassessment proceedings has been assessee is allowed and the reassessment proceedings has been quashed, therefore, the other ground quashed, therefore, the other grounds are merely rendered s are merely rendered

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academic and therefore, we are not adjudicating upon. The appeal academic and therefore, we are not adjudicating upon. The appeal academic and therefore, we are not adjudicating upon. The appeal of the assessee is accordingly allowed. of the assessee is accordingly allowed.

Order pronounced in the open Court on nounced in the open Court on 30/04/2024. /04/2024. Sd/- Sd/ Sd/- (SANDEEP SINGH SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/04/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai