PRAMOD KUMAR GARG,AGRA vs. DCIT,CIRCLE 2(1)(1), AGRA

Brief facts state that the assessee was engaged in the business of trading in shares and securities. The assessee filed original return of income for A.Y. 2015-16 on 11.09.2015, declaring total income of Rs.24,78,460/-. An information was received from DGIT (Inv.), Mumbai through the Income-tax Business Application regarding coordinated and premeditated trading on the Mumbai Stock Exchange by engaging in reversal trades in illiquid stock options resulting in non-genuine business loss/gains to the beneficiary assessees, to which the present assessee was a party to such manipulation. It was noticed from the data available under Project Falcon on the ITBA that the assessee has purchased stock options for an aggregate premium value amounting to Rs. 25,59,000/- and sold the same for an aggregate premium value of Rs.90,21,000/-, resulting in profit of Rs. 64,62,000/-. After considering assessee’s submissions, learned Assessing Officer found that the assessee earned speculative income of Rs.85,67,234/- from M/s. A.G. Shares and Securities Ltd. and M/s. Multi Gaining Securities Services Pvt. Ltd. and added the same in the declared income of the assessee, vide order dated 09.03.2023.

Aggrieved, assessee preferred first appeal before Learned CIT(A), who concluded that the notice u/s. 148 of the Act was valid notice and partly allowed assessee’s appeal by reducing the addition to Rs.64,62,000/- as against addition of Rs.85,67,234/- made by the Assessing Officer.

Assessee has preferred this second appeal mainly on the ground that learned CIT(A) has erred in confirming the substantial amount of addition made by the Assessing Officer, ignoring the invalid notice dated 30.07.2022 issued u/s. 148 of the Act, which is contrary to the order dated 03.10.2024 passed by Hon’ble Apex Court in Union of India &Ors. vs. Rejeev Bansal, 2024 (10) TMI 264(SC)(LB).

Perused the records and heard learned representative for assessee and learned DR for revenue.

The sum and substance of assessee’s grievance is that the notice dated 30.07.2022 issued u/s. 148 relevant to the assessment year 2015- 16 is invalid and contrary to the referred decision dated 03.10.2024 passed by Hon’ble Supreme Court in Union of India & Ors. vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC).

The instant case relates to A.Y. 2015-16. Assessing Officer initially issued notice dated 28.06.2021 u/s. 148 of the Act. The Finance Act, 2021 substituted section 147 to 151 of the Act w.e.f. 01.04.2021 and sections 147 to 151 of the old law ceased to operate from 01.04.2021.

It is relevant to refer paragraph 19 (e) and 19(f) from the decision of Hon’ble Supreme Court in Rajeev Bansal (supra), which sets out the concession as made on behalf of the Revenue.

It is now crystal clear from the aforesaid decision of apex court in Rajeev Bansal (supra) that all notices relevant to the assessment year 2015-16 issued on or after 01.04.2021 will have to be dropped, as they will not fall for completion during the period prescribed under the taxation and other laws (Relaxation of Certain Provisions) Act, 2020 (TOLA). In the instant case, the notice u/s. 148 of the Act was issued on 30.07.2022 beyond the period of limitation, hence, time barred and bad in law, is quashed. All consequential assessment proceedings are accordingly quashed. Aforesaid issue is determined in favour of the assessee. The 5 | P a g e other ground is mere academic in nature, which need not be adjudicated upon.

In the result, assessee’s appeal is allowed.