Tejas Rohitkumar Shah, HUF, Ahmedabad V. The ITO, Ward-2(2)(5), Ahmedabad

ITA 62/AHD/2023

AI Insights

The case involves an appeal by Tejas Rohitkumar Shah-HUF against the order of the CIT(Appeals), National Faceless Appeal Centre, which upheld the reassessment made by the Income Tax Officer for the assessment year 2012-13. The reassessment was based on information from the Deputy Director of Income-tax (Investigation), Mumbai, which alleged non-genuine trades in shares of VMS Industries Ltd. The assessee contested the jurisdiction and the validity of the reassessment, arguing that the additions made were not based on the reasons recorded for reopening the assessment. The Tribunal agreed with the assessee, noting that the Assessing Officer had not adhered to the legal requirements for reassessment, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299937 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Speculation loss
• Section: 147; 68; 148; 271(1)(c); 143(3); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . N o . 6 2 /A hd / 2 0 23 ( A s se ss m e nt Y e a r : 20 12- 13 ) Tej a s R o h it ku ma r S hah - H U F 30, L ax m i na ga r S o cie t y, Op p. D . K . Pa te l H all , N a r a n pu r a , Ah me da bad-3 80 01 3 V s . I nc o me Ta x O f f ic er , War d - 2 ( 2) ( 5 ) , A h me da ba d [ P AN N o. A A CH T2 8 7 1 G ] (Appellant) .. (Respondent) Appellant by : Shri Kalpesh Shah, A.R. Respondent by : Shri Sanjeev Bhagat, Sr. D.R. D a t e of H ea r i ng 15.05.2023 D a t e of P r o no u n ce me nt 24.05.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi on 23.06.2022 for A.Y. 2012-13. 2. The grounds of appeal raised by the assessee are as under: “1. The learned AO passed order of assessment for the assessment year, under section 143(3) read with section 147 and 148 of the Act, without proper authority or appropriate jurisdiction under provisions of section 148 of the Act. Thus the order of assessment is void and bad in law. 2. The Learned Commissioner of Income tax Appeals has grossly erred in passing order without understanding the facts of the case and applying his mind. Further the Learned CIT Appeal has passed the order without rebutting the submissions made by the Assessee. 3. The Learned CIT Appeal has grossly erred in passing the order providing all irrelevant observations and case laws and asking the assessee to prove the genuineness of the Transaction. 4. In law, on the facts and circumstances of the case, the AO has grossly erred in initiating the penalty proceedings u/s 271(1)(c) of the act when no such penalty is exigible. Since the proceedings are wrongly initiated, AO may be directed to withdraw such proceedings. 5. The Appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” ITA No. 62/Ahd/2023 Tejas Rohitkumar Shah-HUF vs. ITO Asst.Year–2012-13 - 2 - 3. The assessee filed original return of income for A.Y. 2012-13 on 19.09.2012 declaring total income of Rs. 6,54,640/-. The Assessing Officer observed that assessee has traded in shares in the scrip of M/s. VMS Industries Ltd. which is included as “penny” and hence the trades in this scrip was considered as non-genuine as per the information received from Deputy Director of Income-tax (Investigation), Mumbai. The assessment for A.Y. 2012-13 was reopened by invoking provision of Section 147 of the Act after recording the reasons. Consequently, the notice under Section 148 of the Act was issued and served upon the assessee on 31.03.2019. The assessee filed return of income alongwith computation of Net Speculation Profit of Rs. 21,99,209/- after set off of loss of Rs. 14,52,158/-. During the year under consideration, the assessee has speculation profit of Rs. 36,51,368/- and speculation loss of Rs. 14,52,158/- and shown Net Speculation Profit of Rs. 21,99,208/-. The assessee claim set off of loss on trading of VMS Industries Ltd. of Rs. 14,52,158/- in the ITR for A.Y. 2012- 13. The Assessing Officer made addition of Rs. 14,50,430/- in respect of speculation loss which is claimed by the assessee and declared the same as credit entry as under Section 68 of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that there is a delay of almost 161 days which is due to the confusion related to re-assessment proceedings in the name of HUF in the name of Karta and Wife. And the appeal for HUF was not filed within time by the tax professional consulted by the assessee, therefore, the delay may be condoned. The Ld. D.R. oppose the ITA No. 62/Ahd/2023 Tejas Rohitkumar Shah-HUF vs. ITO Asst.Year–2012-13 - 3 - condonation of delay. Heard both the parties it appears that the delay is genuine as in individual name of Karta and the wife of the assessee the appeals were filed within the time but in the name of HUF the assessee mistakenly filed the belated appeal, therefore, the delay is condoned. 6. As relates to Ground No. 1 the Ld. A.R. submitted that as per the reasons recorded the assessee’s case was reopened in respect of beneficiaries who has sold shares of scrip – Diamant Infrastructure Ltd. to the tune of Rs. 14,50,430/-. But the Assessing Officer has made the addition in respect of VMS Industries Ltd. Thus, the reasons for reopening was totally different than on which the addition is made by the Assessing Officer under order 143(3) r.w.s. 147 of the Act. The information of the Investigation Wing related to Diamant Infrastructure Ltd. which was sold by the assessee was incorrect as the VMS Industries Ltd. was sold at Rs. 14,50,430/- and Diamant Infrastructure Ltd. was sold at Rs. 5,84,738/-. Thus, the reasons to reopen of the assessment on the basis of this observation is entirely unlawful. The Ld. A.R. submitted that the assessee has not transaction in scrip of Diamant Infrastructure Ltd. during the previous year and there is no mention of the scrip or transaction in said scrip in the order of assessment. Thus, the order is passed by the Assessing Officer without proper and adequate jurisdiction. The assessee filed its return of income on 03.04.2019, in response to notice under Section 148 thereby again disclosing income of Rs. 6,54,640/-. During the course of assessment proceedings the Assessing officer issued notice under Section 143(2), 142(1), 148 r.w.s. 147 on different dates and assessee filed online reply in response to the said notice but no enquiries conducted for ITA No. 62/Ahd/2023 Tejas Rohitkumar Shah-HUF vs. ITO Asst.Year–2012-13 - 4 - transactions related to Diamant Infrastructure Ltd. for which the case was reopen and the reason for reopening was mentioned. Thus, the Ld. A.R. submitted that the reopening itself is bad in law. 7. The Ld. D.R. submitted that the reason for reopening though has mentioned in Para 1 the scrip of Diamant Infrastructure Ltd. to the tune of Rs. 14,50,430/- the scrip of VMS Industries Ltd. was also mentioned in the reason and therefore, the reason to believe mentioned by the Assessing Officer were justifiable for reopening the assessment. 8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the reason mentioned by the Assessing Officer in notice under Section 143(2) categorically stated that as per the information assessee is one of the beneficiaries who has sold shares of scrip Diamant Infrastructure Ltd. to the tune of Rs. 14,50,430/- during the A.Y. 2012-13 relevant to the F.Y. 2011-12 and further the Assessing Officer has mentioned that transactions to the tune of Rs. 14,50,430/- remain unexplained in the light of details investigation carried out one of the arms of Income Tax i.e. Investigation Unit. Though, the scrip of VMS Industries Ltd. has been identified yet the reason for reopening is harping on the scrip Diamant Infrastructure Ltd. and the transaction related to the same. But in the assessment order the Assessing Officer has totally shifted its enquiry to the scrip of VMS Industries Ltd. and not at all enquire related to Diamant Infrastructure Ltd. Thus, the very purpose of the reopening for the particular scrip was not taken into account while reopening and final reassessment under Section 143(3) r.w.s. 147 of the Income Tax Act. Therefore, the assessment itself is null and void have been issued. ITA No. 62/Ahd/2023 Tejas Rohitkumar Shah-HUF vs. ITO Asst.Year–2012-13 - 5 - 9. Since the very basis of the assessment order does not survive the rest of the Ground is not adjudicated hereon. 10. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 24/05/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 24/05/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 16.05.2023 2. Date on which the type draft is placed before the Dictating Member 16.05.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .05.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .05.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 25.05.2023 7. Date on which the file goes to the Bench Clerk 25.05.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................