TMI Blog2022 (5) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... ies or fictitious entities. Perusal of the impugned notice suggests that reassessment in the present case was sought to be initiated merely for verification. This Court is of the view that even if the re-assessment was being done for verification in accordance with Explanation 1 to Section 148, nothing prevented the Assessing Officer from conducting an enquiry with respect to the said information in accordance with Section 148A(a) of the Act. In any event, it was all the more necessary in the present case for the Assessing Officer to thoroughly scrutinise the contentions and submissions advanced by the petitioner-assessee before passing an order under Section 148A(d) of the Act. Denial of effective opportunity to file a reply - This Court further finds that the information/material stated in the impugned show cause notice dated 17th March, 2022 issued under Section 148A(b) of the Act have not been shared with the Petitioner, despite specific request made by the Petitioner vide letter dated 24th March, 2022, thereby denying the Petitioner an effective opportunity to file a response/reply. The non-sharing of the information is violative of the rationale behind the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequently, this Court is of the opinion that a progressive as well as futuristic scheme of re-assessment whose intent is laudatory has in its implementation not only been rendered nugatory but has also had an unintended opposite result. Thus the impugned order dated 04th April, 2022 issued under Section 148A(d) of the Act and the notice dated 04th April, 2022 issued under Section 148 of the Act are quashed and the matter is remanded back to the Assessing Officer for a fresh determination. The Assessing Officer is directed to pass a fresh reasoned order under Section 148A(d) of the Act after considering the Petitioner s detailed reply. - W.P.(C) 7406/2022 - - - Dated:- 12-5-2022 - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MR. JUSTICE DINESH KUMAR SHARMA Petitioner Through: Mr. Ved Jain, Mr. Nischay Kantoor and Ms. Richa Mishra, Advocates. Respondents Through: Mr. Sanjay Kumar with Mr. Easha Kadian, Advocates for Revenue. J U D G M E N T MANMOHAN, J (Oral): C.M.No.22640/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.7406/2022 C.M.No.22639/2022 1. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of shares, sale of futures, sale of shares, purchase of mutual funds, sale of options, etc. The total of such table is Rs.10,07,05,88,04,543 There is no allegation/comment as to what is wrong with such transactions. The Petitioner is a member of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and these transactions are routine transactions carried out in the ordinary course of business of the petitioner considering the fact that the Petitioner is carrying business of share brokers, depository participant and investment in securities and trade in derivatives. Further, all these transactions are duly accounted for in the profit and loss account and return filed by the Petitioner. Para 3 At para 3 page 3-4 of the order, a table is provided which captures some purchases made by the Petitioner to the tune of Rs.13,08,95,220. This information is culled out from GST returns. There is no allegation/comment as to what is wrong with such transactions and how income has escaped assessment. In any case, these transactions are carried out in the ordinary course of business and duly account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Respondent No. 1 from information furnished in Form 10DB by respective stock exchange. These transactions are subject to STT and are to be reported by Stock exchanges. However, this is not the actual turnover. To explain the same by way of example, he states that in cash segment trading, if one buys 100 shares for Rs. 100 per share (i.e. Rs. 10,000) and sell such shares for Rs. 102 per share (i.e. sale price 10,200), the bank is first debited by Rs. 10,000/- and then credited by 10,200/-. However, for the same transaction in the future segment, the credit is for Rs 200/- only (i.e. the net amount of gain); and if the sale was for Rs. 97 per share, then the debit would be for 300/- only (i.e the net loss). Thus, the total value is not relevant in these segments; only the net gain/loss is credited/debited and it is such net gain/loss which is accounted for as income in the profit and loss account and return. According to him, under Form 10DB, only sale from futures is to be reported whereas the purchases are not to be reported thus leading to the gap. Thus, he states that the impugned order has been passed without any application of mind whatsoever and without appreciating the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment notice under Section 148 post an order under Section 148A(d). IMPUGNED NOTICE DATED 17th MARCH, 2022 AS WELL AS THE ORDER DATED 4th APRIL, 2022 ARE CRYPTIC. 9. In the present case, this Court finds that the impugned notice dated 17th March, 2022 as well as the order dated 4th April, 2022 are cryptic as is evident from the fact that information culled out from Petitioner s own return and records (namely Form 10DB, GST return, Form 26AS) have been used to issue notice under Section 148A(b) of the Act without mentioning as to what is wrong in these transactions, what are the apprehensions of the Assessing Officer and what are the points on which clarification is required. It is not understood as to how expenditure incurred by the Petitioner on salaries, payment of professional fees and purchases can amount to income having escaped assessment without there being any allegation that the employees/professionals to whom salaries and fees had been paid are dummies or fictitious entities. 10. In fact, perusal of para 9 of the impugned notice dated 17th March, 2022 suggests that reassessment in the present case was sought to be initiated merely for verification. This Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that the respondent-revenue should have granted extension of time to the Petitioner to file a detailed reply. 13. It is pertinent to mention that Section 148A(b) permits the Assessing Officer to suo moto provide up to thirty days period to an assessee to respond to the show cause notice issued under Section 148A(b), which period may in fact be further extended upon an application made by the Assessee in this behalf, and such period given to the assessee is excluded in computing the period of limitation for issuance of notice under Section 148 of the Act in terms of the third proviso to Section 149 of the Act. THE MANDATE OF SECTION 148A(c) HAS BEEN VIOLATED AS THE IMPUGNED ORDER UNDER SECTION 148A(d) OF THE ACT HAD BEEN PASSED WITHOUT CONSIDERING THE DETAILED REPLY FILED BY THE PETITIONER DATED 31st MARCH, 2022. 14. In any event, as the impugned Order under Section 148A(d) of the Act had been passed on 04th April, 2022 i.e. after receipt of the detailed reply by the Petitioner dated 31st March, 2022, the Assessing Officer should have considered the same as it was available on record. By not considering the reply of the Petitioner dated 31st March, 2022, the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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