TMI Blog2023 (9) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order. Non-supply of material gathered by the ld. AO from the enquiries conducted by him in the course of assessment and utilised for the purpose of assessment - Alternate plea taken, to remit the matter back to the Ld. AO in absence of the material, which also ought to have been provided by complying with the specific provision of section 142(3) - As we note that Ld. AO has conducted certain enquiries by issuing notice u/s. 133(6) of the Act to Calcutta Stock Exchange as well as summon u/s. 131 to one of the parties who bought the shares from the assessee i.e. the SVPL. From the impugned assessment order while rebutting the allegations of the assessee, Ld. AO has noted that he himself has made various enquiries in respect of the share transaction undertaken by the assessee. In the present case before us, from the perusal of the impugned assessment order, as a matter of fact, it is noted that Ld. AO has conducted enquiry from CSE by issuing notice u/s. 133(6) and has also issued summon u/s. 131 on one of the buying parties to whom assessee has sold 500 shares. Considering the above discussion in respect of provisions contained in sec. 142(3) read with sec. 142(2), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The addition is not called for and hence the same be deleted. 4. For that the facts and circumstances of the case the notice u/s 148 of the IT Act 1961 was without jurisdiction and bad in law and hence the entire assessment order is bad in law and the same should be quashed. 5. For that the reopening of assessment u/s 148 of the IT Act 1961 was bad in law and hence the reopening be declared to be bad in law and the reassessment order be quashed. 6. For that the reasons recorded before reopening of assessment u/s 148 of the IT Act 1961 did not meet the test of law laid down by various courts and hence the reopening be declared to be bad in law and the reassessment order be quashed. 7. For that the reopening of assessment u/s. 148 of the IT Act 1961 was on borrowed satisfaction and not on any independent application of mind by the assessing officer and hence the reopening be declared to be bad in law and the reassessment order be quashed. 8. For that the reopening of assessment u/ s 148 of the IT Act 1961 was without relevant material having link to escapement of income and hence the reopening be declared to be bad in law and the reassessment order be qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 19. The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal. 4. Brief facts of the case are that assessee s case was reopened u/s. 147 of the Act by recording reason to believe that income has escaped from assessment to the extent of Rs. 9,72,000/- which has arisen from share transaction in the scrip alleged as penny stock, identified in the report of the Directorate of Income-tax (Inv.), Kolkata. Assessee had made a claim of long term capital gain exemption of Rs. 9,37,866/- on sale of 3000 shares of Twenty First Century (India) Ltd.(TFCIL) sold @ Rs. 324/- per share having trade value of Rs. 9,72,000/-. Assessee had purchased 250 shares of Highland Dealcom Pvt. Ltd. (HDPL) from Agave Vintrade Pvt. Ltd. @ Rs. 400/- on 20.08.2009 for an amount of Rs. 1 lac. This company was later merged with (TFCIL) and upon its merger, assessee received 38 share of TFCIL resulting into total holding of 9500 shares of TFCIL. In the year under consideration, assessee sold 3000 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of case u/s. 147 of the Act by contending that reasons recorded are based on borrowed satisfaction. According to the assessee, crucial link between the material and the formation of belief is missing and, therefore, reopening is not in accordance with the provisions of section 147 of the Act. In this respect, it was also contended that approval for issuing notice u/s. 148 of the Act is mechanical in nature and, therefore, the proceedings so initiated are without proper application of mind and hence, liable to be quashed. Ld. CIT(A) after deliberating on the issue and various judicial precedents, dismissed the appeal of the assessee. 5. Before us, Ld. Counsel for the assessee made his submissions in respect of the reassessment proceedings initiated u/s. 147 of the Act. He submitted that the approval granted prior to issue of notice u/s. 148 of the Act is mechanical in nature without application of mind. In this respect, he submitted the certified true copy of reasons for reopening recorded by the ld. AO for the purpose of obtaining the approval along with the copy of approval which states satisfied with the reasons . Further, Ld. Counsel submitted that Ld. AO himself has not rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenging the legality of the reassessment carried out u/s. 147 read with sec. 148 of the Act, from the approval granted on his note that satisfied with the reasons we find that it is sufficient to indicate that approving authority has examined the reasons recorded and does not indicate a mechanical approach while giving the approval since the reasons to believe recorded contained details in respect of the share applicant for the reassessment proceeding sought to be initiated. Accordingly, we do not ascribe to the contentions raised by the Ld. Counsel on the legality of the impugned reassessment order. 7.1. On the alternate plea taken, to remit the matter back to the Ld. AO in absence of the material, which also ought to have been provided by complying with the specific provision of section 142(3) of the Act, we note that Ld. AO has conducted certain enquiries by issuing notice u/s. 133(6) of the Act to Calcutta Stock Exchange as well as summon u/s. 131 to one of the parties who bought the shares from the assessee i.e. the SVPL. From the impugned assessment order while rebutting the allegations of the assessee, Ld. AO has noted that he himself has made various enquiries in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Sec. 143(3) wherein the assessment is to be completed by the AO which also provides in sub-section (3) that AO shall make an assessment by an order in writing, inter alia, after taking into account all relevant material which he has gathered. Thus, by keeping the provisions of Sec. 142(3) read with section 142(2) and Sec. 143(3) in juxtaposition, we understand that it is a mandatory statutory requirement on the part of the AO to comply with the provisions of Sec. 142(3) in completing the assessment proceeding, failure of which may initiate the entire assessment itself. 8. In the present case before us, we note that assessee has raised specific ground before the Ld. CIT(A) for the noncompliance of sec. 142(3) of the Act, which has been dismissed against the assessee. We note that compliance of provisions of sec. 142(3) is a mandatory statutory procedural requirement in completing the assessment proceeding, failure of which may vitiate the entire assessment itself since this sub-section uses the word shall . The only exception to this requirement is where an assessment is made u/s 144 which is not so in the present appeal before us. 8.1. We observe that in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the perusal of the impugned assessment order, as a matter of fact, it is noted that Ld. AO has conducted enquiry from CSE by issuing notice u/s. 133(6) and has also issued summon u/s. 131 on one of the buying parties to whom assessee has sold 500 shares. Considering the above discussion in respect of provisions contained in sec. 142(3) read with sec. 142(2), we are inclined to consider the alternate plea taken by the ld. Counsel to remit the matter back to the file of Ld. AO by giving direction to the Ld. AO to make available the material gathered by him in the course of enquiry conducted in terms of sec. 142(2) and provide a reasonable opportunity of being heard to the assessee as enunciated u/s. 142(3) of the Act. Thereafter, Ld. AO may complete the assessment in accordance with the provisions of law. Accordingly, ground no. 11 and 12 taken by the assessee are allowed for statistical purposes. 9. Since the matter has been remitted back to the file of Ld. AO in terms of above observations and finding, all other grounds taken by the assessee are rendered academic in nature and are, therefore, not adjudicated upon. Accordingly, appeal of the assessee is allowed for statistical p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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