TMI Blog2021 (2) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... AM: This appeal filed by the assessee is directed against order of the learned CIT(A)-12, Chennai dated 19.11.2018 and pertains to assessment year 2015-16. 2. The assessee has raised following grounds of appeal:- 1. This appeal is against the orders of ClT (Appeals)-12, Chennai (order in ITA 1802/CIT (A) -12 /2017-18, passed on 19-11-18. 2. The order of the learned CIT (Appeals) is contrary to law, facts and circumstances of the case and opposed to principles of natural justice, fair procedure and legitimate expectation. 3. Denial of fair opportunities and natural justice: The first appellate authority failed to consider the written submissions filed during the course of hearing. He did not afford reasonable opportunities to the appellant before coming to conclusions. He did not provide any opportunity before applying the case law quoted by him in the order. He did not discuss any of the decisions relied on by the appellant and referred to in the written submissions. 4. Assessment order: The assessment order uls 143 read with section 147 is based on conjectures, pre-concluded mindset enquires and materials not directly related to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper approved channels i.e stock exchange registered brokers. b) The CIT (Appeals) has referred to a decision of Chennai ITAT in the case of Vidya Reddy vs ITO (TA 2016 of 2017) The facts in the said case are different from the present appeal. In the present appeal the assesse had produced all available evidences in his possession on genuineness of investment in shares of the company and produced details of bank entries for buying and receiving sale proceeds, contract notes, the names and addresses of brokers for purchase and sale. 9. No evidence against the appellant: The CIT (Appeals) has failed to note that there is no direct or indirect evidence that the appellant entered into any collision direct, deliberate, conscious and systematic actions towards converting unaccounted money into long term profit on sale of shares. Neither the AO nor the CIT (Appeals) could show any direct evidence from any source about such an activity on the part of the appellant. 10. Appellant had no control over the share price: The AO and the CIT (Appeals) have failed to note that in the case of the assessee the genuineness of the company MIs. PS IT Infra Services Ltd wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence, a petition has been filed explaining facts and reasons for filing additional grounds. The AR further submitted that additional grounds of appeal taken by the assessee is purely legal ground and further no new facts are required to be examined and hence, in view of decision of Hon ble Supreme Court in National Thermal Power Corporation Ltd. Vs. CIT 229 ITR 383 (SC) additional grounds filed by assessee may be admitted. 4. The learned DR, on the other hand, strongly opposing additional grounds filed by assessee submitted that assessee has failed to make out a case for admission of additional grounds and also facts with regard to said additional grounds was already on record and hence, additional grounds of appeal filed by assessee should not be admitted. 5. We have heard both parties and considered petition filed by assessee for admission of additional grounds and we find that additional grounds taken by assessee challenging reassessment proceedings in light of notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) is purely a legal ground for which there is no requirement of examining any facts and hence in view of specific ratio laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g term capital gain from sale of shares. The Assessing Officer further, on the basis of information filed by the assessee noted that assessee had originally purchased 10,00,000 equity shares of M/s. PS IT Infra Services Ltd., on 16.08.2013 from M/s. Prem Sagar Vinimay Pvt .Ltd. through open offer @ ₹ 35 per equity share. These shares were subsequently demated and sold between 30.10.2014 and 03.12.2014 at rates ranging from ₹ 70 to 90 per equity share. The Assessing Officer after analyzing share price in stock market and on analysis of financials of company has come to the conclusion that scrip sold by assessee is penny stock and share price was rigged in collusion with certain parties and accordingly, made additions towards entire sale consideration received from sale of M/s. PS IT Infra Services Ltd., as unexplained cash credits and brought to tax u/s. 68 of the Act. 8. The assessee carried the matter in appeal before learned CIT(A) but could not succeed. The learned CIT(A) for the reasons recorded in appellate order dated 19.11.2018 has confirmed additions made by Assessing Officer towards sale consideration received from transfer of equity shares on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The learned DR, on the other hand, strongly supporting order of learned CIT(A) submitted that there is no merit in the arguments taken by assessee in light of decision of Hon ble Jurisdictional High Court in the case of CIT Vs. K.M Pachayappan (supra), because ITAT., Ahmedabad D Bench in the case of ITO vs Ripul C.Dalal in ITA No.1022/Ahd/2003 has considered an identical issue and by following the decision of ITAT., Lucknow Bench in the case of M/s. Kailash Auto Finance Ltd. Vs DCIT (2009) 32 SOT 80 has held that in view of amendments brought in to Explanation 2(b) to section 147 of the Act, the law laid down by Hon'ble Jurisdictional High Court of Madras in the case of CIT vs. K.M Pachayappan (supra) is no more applicable, because when there is no assessment framed, the Assessing Officer is well within his powers to reopen the assessment, but such reopening can be made even before expiry of time limit for issue of notice u/s.143(2) of the Act. 11. We have heard both parties, perused materials available on record and gone through orders of the authorities below. The solitary question that came up for our consideration in the given facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 148 on 15.03.2000 when a valid Return under Section 139(4) was pending. In this case the Return was filed and the same is pending, which means that the proceeding is still pending. In such a situation, the Revenue could not have issued notice for the purpose of reopening under Section 147 of the Act. In the case of Trustees Of H.E.H. The Nizam's Supplemental Family Trust Vs. Commissioner of Income-tax [2000] 242 ITR 381 (SC), the Supreme Court considered the scope of reopening the assessment and held as follows: It is settled law that unless the return of income already filed is disposed of, notice for reassessment under section 148 cannot be issued, i.e., no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated. According to the Revenue it is immaterial whether the order is communicated or not and the only bar to the reassessment proceedings is that proceedings on the return already filed should have been terminated. .... A mere glance at this note would show that it could not be said that the Income-tax Officer gave finality to the refund since no refund is granted eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not been opened under section 143(2), the return had been accepted as correct. It may be argued that thereafter recourse could be taken to section 147, provided fresh material had been received by the Assessing Officer after the expiry of limitation fixed for framing the original assessment. So far as the present case is concerned, we are of the view that it is evident that, faced with severe paucity of time, the Assessing Officer had attempted to travel the path of section 147 in the vain attempt to enlarge the time available for framing the assessment. This is not permissible in law. Applying the principles enunciated in the judgments of the Supreme Court as well as the Delhi High Court, cited supra, the Tribunal is right in coming to a conclusion that no action could be initiated under Section 147 of the Act, when there is a pendency of the Return before the Assessing Officer. The reasons given by the Tribunal are based on valid materials and evidence and we do not find any error or illegality in the order of the Tribunal so as to warrant interference. 12. We further noted that the Hon ble Supreme Court in the case of Trustees of H.E.H. The Nizam's Supplementa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought in as Explanation 2(b) to section 147 of the Act, is on different context and has no relevance to the issue of whether reassessment notice can be issued before expiry of time limit of issue of notice u/s. 143(2) or not. Further, as per Explanation 2(b) what we understood is deemed cases at escaped assessment also includes a case where return of income has been furnished by assessee, but no assessment has been made and it is noticed by the Assessing Officer that assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. From plain reading of Explanation 2(b) of section 147, it is very clear that even if no assessment was made u/s.143(1) or 143(3), still assessment can be reopened u/s.147 of the Act, if the Assessing Officer noticed escapement or understatement of income. In this case, issue is entirely different because question before us is whether Assessing Officer was right in issuing reassessment notice u/s. 148 of the Act, when valid return filed by assessee is not attained finality. Therefore, we are of the considered view that Explanation 2(b) has no relevance to decide the issue whether Assessing Officer was right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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