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2022 (1) TMI 432 - HC - Income TaxValidity of reopening of assessment u/s 147 - reasons as furnished to assess can be looked into for testing the validity of reassessment proceedings - long term capital loss disallowed as transaction was not regarded as transfer within the meaning of Section 47(iv) and (v) - as argued reasons as furnished do not bear the date, signature and approval of the authority specified u/s 151 - HELD THAT:- In this case, one set of reasons was provided to petitioner and when objected to by petitioner, respondents justify the reopening by producing an undated and unsigned reasons which was never furnished to petitioner at any point of time prior thereto. We have considered both the reasons and we do observe that the reasons as furnished to petitioner vide letter dated 28th September 2020 and the reasons as reproduced in the order dated 17th May 2021 rejecting petitioner’s objections, are different. In the first set of reasons as furnished with letter dated 28th September 2020, it is stated that the long term capital loss cannot be disallowed as the transaction is not regarded as transfer within the meaning of Section 47(iv) and 47(v) since preference shares were acquired from Greatship India Ltd. Of course, the reasons also does not record that any income has escaped the assessment because it does not state the loss has arisen because of redemption of preference capital but indicate that the loss has arisen since preference shares were acquired from the flagship company. A capital loss can never arise on the acquisition of shares but only on the transfer or sale of shares. In the second set of reasons as reproduced in the order rejecting the objections, it is stated that petitioner has sold preference shares resulting into long term capital loss. As noted in the earlier part of this order, petitioner has not sold the preference shares but the shares were redeemed by Greatship India Ltd. and since on redemption there was a transfer of shares due to “extinguishment of rights therein” the capital loss was claimed in the return of income. In our view, without appreciating or understanding the correct facts notice has been issued under Section 148 of the Act and that itself is enough for us to conclude that the jurisdictional conditions are not satisfied before the issuance of notice under Section 148 - impugned notice and the order have to be quashed and set aside. Petition is, therefore, allowed
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