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TMI Blog2024 (8) TMI 1539X X X X Extracts X X X X X X X X Extracts X X X X ..... ff appellant without appreciating that the AO erred in not providing a copy of the necessary sanction under section 151 of the Act to reopen the case of the Appellant. The CIT(A)/AO failed to appreciate that assuming that the necessary sanction has been obtained, the same appears to be mechanical as no prudent person duly instructed in law based on the reasons recorded could sanction such invalid reopening proceedings; 1.3 The CIT(A)/AO failed to appreciate that it is incumbent to first dispose off the objections to reopening and wait for a period of 4 weeks thereafter before proceedings to begin reassessment proceedings. The CIT(A)/AO failed to appreciate that the notice under section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") dated 28.09.2020 and the draft order dated 26.09.2021 passed prior to disposal of objections vide order dated 29.09.2021 are bad in law. Consequently, the assessment order under section 147 r.w.s 144B of the Act dated 30.09.2021 (hereinafter referred to as "the impugned assessment order') is liable to be quashed; 2. Addition of Rs. 1,32,65,571/- under section 68 of the Act: 2.1 The CIT(A) erred in upholding the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice to each other" 3. The brief facts of the case are that the assessee is engaged in the business of trading and investment in shares. For the year under consideration, the assessee filed its return of income on 30/09/2013 declaring a total loss of Rs. 54,269. The return filed by the assessee was selected for scrutiny, and vide order dated 30/03/2016 passed under section 143(3) of the Act total income of the assessee was assessed at Rs. Nil. Subsequently, on the basis of the information received from DDIT (Inv.), Unit-8(2), Mumbai that scrips of NYSSA Corporation Ltd and M/s ACI Infocom Ltd were used by a syndicate of persons for providing accommodation entries of bogus long-term capital gains/bogus short-term capital loss/bogus business loss of entries to various beneficiaries, and the assessee is one of the beneficiary, who has received sales value of Rs. 1,03,29,744 from the sale of scrip of NYSSA Corporation Ltd and Rs. 29,66,102 from the sale of scrip of M/s ACI Infocom Ltd., proceedings under section 147 of the Act were initiated and notice dated 18/03/2020 under section 148 of the Act was issued and served on the assessee. In the reasons recorded for reopening the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 744/-during the FY 2012-13. 5. Information has also been received from Dy. Director of Income-tax (Investigation), Unit 8(2), Mumbai vide email dated 07/07/2019. As per this information, the investigation wing of the income tax department conducted enquiries in the scrip of penny stock, M/s ACI Infocom-Ltd-and-found that the scrip of M/s ACI Infocom Ltd is a penny stock, listed in BSE and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or short term capital loss in the their books of account. It is also informed that share price of M/s ACI Infocom Ltd. rose from Rs. 2.63/- in 24.08.2011 and peaked to Rs 21.90 in 21.02.2013 Subsequently the share price was dropped to Rs. 2:93 in 20.08.2013. 6. The assessee is beneficiary of share transactions of M/s. ACI Infocom Ltd during year. In this regard, the Dy. Director of Income-tax (Investigation), Unit 8(2), Mumbai informed that the assessee has made sales transactions of shares of this scrip for the value of Rs. 29,66,102/- during the FY 2012-13. 7. The above fresh facts, found after assessment proceedings u/s 143(3), prove that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 9,57,269. Further, during the year, the assessee again sold shares of M/s ACI Infocom Ltd for a consideration of Rs. 13,69,150, which resulted in a profit of Rs. 7952. As per the assessee, the proceeds of the sale of shares of M/s ACI Infocom Ltd were credited to the profit and loss account and duly offered for tax as business income. Further, during the year, the assessee sold the entire opening stock of 84,000 shares of NYSSA Corporation Ltd for a consideration of Rs. 1,03,03,918, which resulted in a profit of Rs. 5,43,118. Similarly, the assessee credited the sales consideration on the sale of shares of NYSSA Corporation Ltd to the profit and loss account and offered the same to tax as business income. Therefore, it is the plea of the assessee that from the sale of shares of NYSSA Corporation Ltd and M/s ACI Infocom Ltd, during the year under consideration, it has earned profit which was offered to tax as business income. 7. From the perusal of the financial statement of audited financial statements of the assessee for the financial year 2012-13, forming part of the paper book from pages 4-19, we find that the assessee declared a total turnover of Rs. 11,74,47,670, which co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e side and then proceed further to make an addition under section 68 of the Act. As noted elsewhere, the assessee filed its return of income declaring a total loss of Rs. 54,269, and if total profit from sale of shares of NYSSA Corporation Ltd and M/s ACI Infocom Ltd amounting to Rs. 15,08,339 (Rs. 9,65,221 + Rs. 5,43,118) is reduced on account of reduction of total receipts from the income side, the same will increase the loss of the assessee, which is required to be set off with the addition made under section 68 of the Act. Therefore, resulting in the entire exercise being tax-neutral. This position is supported by the CBDT's Circular No. 11 of 2019, wherein it was clarified that up to the assessment year 2016-17, the losses can be set off from the additions made under section 68 of the Act. Even the learned CIT(A) has not disputed the same, as is evident from paragraph 6.2 of the impugned order. 10. Considering the facts of the case from the factual as well as a legal perspective, we do not find any merit in the impugned addition made under section 68 read with section 115BBE of the Act. Accordingly, we are of the considered view that the learned CIT(A) has erred in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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