TMI Blog2019 (10) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that the rise was beyond the cap laid down by the SEBI, because the price of the scrip cannot rise beyond the cap prescribed by the SEBI. If the shares have been purchased and sold from the stock exchange on a quoted price with proper contract number, trade time and after paying STT, then it is very difficult to assume that the sale proceeds received from sale of such shares is bogus, especially when purchase of shares are not in dispute. This inter alia means assessee was in possession of shares which were also dematerialised. To prove that such a transaction was in the nature of bogus or colourable transaction, there has to be some inquiry or material to nail the assessee that she was some kind of a beneficiary in some accommodation entry operation. No defect has been pointed out in the documents submitted by the assessee nor has the broker of the assessee been inquired upon. Simply relying upon the general modus operandi and statement of some brokers recorded by the Kolkata Investigation Wing does not mean that all the transactions undertaken of the scrip M/s. CCL International Ltd. through the country by millions of subscribers are bogus. Thus, in absence of any ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2013-14. The case was reopened u/s.147 on the ground that income of ₹ 1,82,76,483/- has escaped assessment for failure on the part of the assessee to explain the source of deposit. In response to the notice u/s 148 issued on 11.08.2016 and notice u/s 142(1) dated 29.11.2016 by the AO, the assessee has filed detail the objections before the Assessing Officer vide letter dated 23.05.2017. However, the said objections have neither been disposed off by the Assessing Officer nor it has been discussed or dealt with in the assessment order. The CIT (A), before whom this issue was raised, has been dismissed by him on the ground that no such objection was raised. 4. Before us, ld. counsel for the assessee, Mr. Manoj Patwari, had filed a copy of RTI application filed before the Assessing Officer/ Income Tax Department seeking certified copies of objections filed by the assessee before the Assessing Officer against the reopening of assessment. In response, the Assessing Officer has provided the copy of objections as available on record and it has been confirmed by the department that such objection was filed. He pointed out that Ld. CIT (A) has wrongly dismissed the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly borne out that assessee did filed a detailed objections before the Assessing Officer vide letter dated 23.05.2017 challenging the validity of reopening u/s 147/148 on various counts. Such an objection filed by the assessee, admittedly has not been disposed off by the Assessing Officer either by way of any separate order or even in the impugned assessment order. In fact entire assessment order is silent on this issue. Thus, there is a gross violation of the principle of the law laid down by the Hon ble Apex Court in case of GKN Driveshafts (supra), whereby the Assessing Officer is bound to disclose the reasons for re-assessment within reasonable time and assessee is entitled to raise objections if any; and if such objections has been filed, then AO is bound to pass a speaking order dealing with the objections before proceeding the reassessment in terms of the notice given earlier. As pointed out by the ld. counsel for the assessee, Hon ble Gujarat High Court and Hon ble Bombay High Court have come down very heavily on such nondisposal of the objections by the Assessing Officer and have gone ahead to quash such reassessment proceedings and the assessment order itself. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance made by the AO of the management service fee consequent upon reopening of the assessment, there appears to be no need to examine the issue projected by the Revenue in this appeal viz., the justification for reopening the assessment under Section 147/148 of the Act. 7. It has come to our notice that in a recent judgment of Hon ble Delhi High Court in the case of Surender Kumar Jain vs. PCIT in W.P. (C) No.593/2019 at CM No. 20670/2019, vide judgment and order dated 29.07.2019 has observed and held as under: 1. On 18th March, 2019, the following order was passed by this Court: The matter has been listed before this Court as the DB-11 has not assembled today. Learned counsel for the petitioner submits that the Assessment for the Year 2011-2012 pertaining to the petitioner has been reopened. While the reasons to believe have been served upon the petitioner, but before the objections could be decided, a final order has been passed. Reliance has been placed on various judgments of this Court, including the judgment passed in the case of Smt. Kamlesh Sharma v. B.L. Meena, Income-Tax Officer and Others, reported at [2006] 287 1TR 337(Del). Notice to show cause as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not chosen to dispose of the objections, filed by the Petitioner against the reopening of the assessment but has proceeded to the stage of passing the reassessment order itself. 6. In almost an identical fact situation in Smt. Kamlesh Shanna w B.L. Meena, Income-Tax Officer (supra), where the AO did not pass any speaking order but straightaway passed an assessment order, and simultaneously rejected the contention of the Petitioner, this Court observed: 3. We are of the opinion that in view of the language of the Supreme Court in GKN Drives hafts [2003] 259 ITR 19 the Assessing Officer should have rejected the objections, if he thought it appropriate to do so, before passing the final order and not simultaneously. 4. This position was reiterated by this Court in Sita World Travels (India) Ltd. v. CIT (2004) 140 Taxman 381 (Del). 5. We cannot appreciate how, in spite of the clear language used by the Supreme Court as well as this Court, the Assessing Officer did not comply with the requirement of law. 7. This Court has, therefore, no hesitation in setting aside reassessment order dated 29th December, 2018 for the Assessment Year AY 2011-12. Consequently, a directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n we are of the opinion that on this ground alone the impugned reassessment order is liable to be quashed and at this stage we are not inclined to set aside this issue to Assessing Officer for deciding this matter when substantial time has lapsed and two stages have been crossed. Be that as may be, we are proceeding to decide the issue on merits as argued by the parties. 8. On merits of the addition, we find that Ld. Assessing Officer, first of all noted that M/s. CCL International Ltd. is traded in Bombay Stock Exchange under the security ID M/s. CCL International with the security code no. 531900. He has incorporated the financials of the company as per the balance sheet available in the public domain which has been incorporated in paragraph 2 of the order from pages 2 to 5 of the assessment order. Assessing Officer observed that shares of M/s. AAR Infrastructure Ltd. were later on merged in M/s. CCL International Ltd. and then on 09.02.2012 these shares were allotted to various beneficiaries. However, for making such an observation, no such information or material has been stated in the assessment order. Thereafter, he has noted that trading in shares of M/s. CCL Internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention to the scrip-wise chronology of events which is as under: Share Script Description Description A.Y. 2013-14 M/s. CCL International Limited (AAR Infrastructure Ltd.) No. of shares 50000 Acknowledgment Receipt Available Share Allotment Letter 17.02.2011 Share Certificate N.A. Bank Statement 13.01.2011-500000 (Paid) Subdivision of shares 18.06.2012 Dematerialization Request filed On 26.04.2011 Broker statement Available Contract Notes Sale of 125000 shares from 31.08.2012-31.10.2012 Sale consideration 1,82,26,175 Long Term Capital Gain claimed 1,77,25,158 Total LTCG claimed 1,77,25,158 Period of holding 20 mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kers reproduced in the assessment order there is any whisper the assessee s broker, M/s. Indianivesh Securities Pvt. Ltd. was indulged in any such activities. There is no direct or indirect material or statement that assessee was either beneficiary or was indulged in bogus transaction. The assessee has duly discharged the onus by proving the genuineness of the transaction by filing all the details relating to purchase, dematerialization which was done immediately after the purchase and sale which almost after one and a half years and all the documentary have been produced to prove the genuineness of the Long Term Capital Gain. In respect of same scrip, he has filed the decision of Co-ordinate Bench in the case of Deep Nagar vs. ACIT, ITA No.3212/Del/2019 order dated 12.06.2019 to show that trading in these shares and LTCG has been accepted to be genuine and also following decision of Co-ordinate Benches dealing in the same scrip:- (a) Smt. Sumita Hinger vs. ITO, Ward - 22 (1) 2019 (7) TMI 529 (Kolkata LTAT) (b) Ramesh Chandra K. Shah Versus ACIT Central Circle- 30), 2019 (2) ITA No. 113/Kol/2018(Kolkata ITAT). (c) Mukta Gupta, Mohan Lai Agarwal (Huf) Versus Ito, Ward-1 (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Ltd. and according to amalgamation scheme, the assessee received 1,25,000 shares of M/s. CCL International Ltd. in the proportion of 250 equity shares ₹ 2 per share and ₹ 100 equity share of ₹ 10 per share. The shares which were allotted on 17.02.2011 have been sold after period of more than 18 to 20 months, i.e., on 29.08.2012 to 10.10.2012. The said shares have been sold through stock broker M/s. Indianivesh Securities Pvt. Ltd. 17. Before us the ld. counsel has in his brief note has stated that following documents and statements were filed before the authorities below: (a) All the transactions were supported by proper Contracts Notes and delivery of shares was made through De-mat Account with stock broker, M/s Indianivesh Securities Pvt. Ltd. (who is the member of BSE and registered with SEBI). The shares were sold in the open market. The appellant has fulfilled all the condition u/s 10(38) of the Income Tax Act, 1961. The appellant has already filed National Security Depository Limited generated Demat Account and the broker statement relating to the sale of share in our paper book, also relevant demat statement highlighting the shares purchased h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation entries in the scrip of M/s. CCL International. But nowhere in the entire assessment order, there is any reference to any material or evidence that assessee or assessee s broker have been found to be indulged in any kind of accommodation entry in this scrip. No inquiry whatsoever has been made from the broker of the assessee. Further, during the period in which assessee had purchased the shares and had sold them whether the SEBI had suspended the trading has not been mentioned, in fact, Assessing Officer himself mentions that there was brief suspension in the year 2010, whereas the assessee has purchased shares in the year 2011 and sold them in the year 2012. Coming to the financials, as culled out from the records, the revenue from the operation of M/s. CCL International Ltd. from March, 2010 to March, 2012 was between ₹ 55.25 crore to ₹ 79 crore. Thus, it cannot be held that it was mere a paper entity. From a bare perusal of the history of listing and trading of shares and the quote of Bombay Stock Exchange as quoted in the assessment order, it clearly reflects that as on 06.02.2010, the closing price was ₹ 50 and there was a steady increase and with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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