TMI Blog2018 (11) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... prices of the shares were rigged on the stock exchange through manipulation. The shares of the company were basically used for providing bogus claim of long term or short term capital gain. It was found that the assessee had thus sold penny stocks which were valued at ₹ 1.33 crores and thereby claimed wrong exempt capital gain. The return filed by the assessee were accepted without scrutiny. Since there was no scrutiny assessment, the AO had no occasion to firm any opinion on any of the issue arising out of the return filed by assessee. The concept of change of opinion would therefore no application. It is equally well settled that at the stage of re-opening of the assessment, the court would not minutely examine the possible additions which AO wishes to make. The scrutiny at that stage would be limited to examine whether the AO had formed a valid belief on the basis of the material available with him that income chargeable to tax had escaped assessment. In the present case the Assessing Officer has heard the material on record which would prima facie suggest that the assessee had sold number of shares of a company which was found to be indulging in providing bogus cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in A.Y. 2013-14. The Kolkatta investigation wing during the course of investigation had found and concluded that the said company TURBO TECH was not engaged in any substantial activity. The financials of the company were poor, funds raised were not used for any business purposes and the process of preferential allotment of shares was a pre-arranged and managed process to allot preferential shares to beneficiaries of bogus LTCG claimants. The prices of shares were rigged on the stock exchange through manipulation of the stock market and various shares brokers and exit providers have in their statements confirmed the fact that the shares of the said company were used for providing bogus claim of LTCG/STCG. 2.2 The petitioner raised detailed objection to the notice of re-opening under a communication dated 12.7.2018. Such objections were rejected by the Assessing Officer on 20.9.2018, upon which this petition came to be filed. 3. Counsel for the petitioner raised following contentions: (1) There is no material to come to the conclusion that income in case of the assessee has escaped assessment. (2) The Assessing Officer has proceeded entirely on the basis of the informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noted: 13. One thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989 to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1)(a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998 and May 31, 1999, sending of an intimation under section 143(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India [(1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gain. The company was prima facie found to be a shell company. The assessee had claimed exempt of long term capital gain of ₹ 1.33 crores by way of sale of share of such company. The judgment in the case of Principal Commissioner of Income Tax, Rajkot-3 v. Gokul Ceramics [Taxman Vol. 241 {2016) 241], the Division Bench had examined the contention of the Assessing Officer proceeded on the basis of the information supplied by the department, and after referring to the several judgments, made following observations in para 9 which read thus: It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was along with report and showcause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing Officer had such material available with him which he perused, considered, applie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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