MANI ENTERPRISE V. THE INCOME TAX OFFICER, WARD 5(3)(1)

SCA/4896/2022

AI Insights

The case involves Mani Enterprise challenging a show cause notice issued under Section 148 of the Income Tax Act, which sought to reopen the income tax assessment for the year 2016-17. The notice was based on allegations that the petitioner was a beneficiary of bogus LTCG/STCL related to a penny stock, leading to an escape of income amounting to Rs. 79,88,004. The petitioner objected to the reassessment, and upon the non-disposal of these objections, approached the High Court. The court initially granted an interim order favoring the petitioner, which led to the assessment being framed with no additions to the income, thus resolving the matter in favor of the petitioner.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 759105 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 15-11-2022
• Assessment Year: misc
• Other Referred Cases: GKN Driveshafts judgment
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VARUN PATEL; DEV PATEL
• Assessee Lawyers: VAIBHAVI PARIKH
• Keywords: Bogus LTCG/STCL; Income escaped assessment; Penny stock; Reassessment proceeding
• Section: 148

Judgement Text

"C/SCA/4896/2022 ORDER DATED: 15/11/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 4896 of 2022 ========================================================== MANI ENTERPRISE Versus THE INCOME TAX OFFICER, WARD 5(3)(1) ========================================================== Appearance: MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MRS. JUSTICE MAUNA M. BHATT Date : 15/11/2022 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. The petitioner is before this Court seeking to question the show cause notice issued under Section 148 of the Income Tax Act (hereinafter referred to as ‘the Act’) which sought to reopen the income tax assessment of the petitioner for the assessment year 2016-17. 2. The respondent supplied the copy of reasons for reopening vide notice dated 07.01.2022 which broadly states that on account of the petitioner being beneficiary of bogus LTCG/STCL in relation to a penny stock, the respondent has a reason to believe that income of Rs. 79,88,004/- has escaped Page 1 of 4 C/SCA/4896/2022 ORDER DATED: 15/11/2022 the assessment. 2.1. The petitioner raised the objection on 27.01.2022 requesting the respondent to drop the reassessment proceeding initiated for the year under consideration. 3. The petitioner chose to approach this Court on 05.03.2022 apprehending that the respondent since has not disposed of the objection raised by the petitioner, it shall frame the assessment pursuant to the issuance of notice which is impugned. With the following prayers, the present petition has been filed:- “(a) quash and set aside the impugned notice at ANNEXURE \"A ” to this petition; (b) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at ANNEXURE “A\" to this petition and stay the further proceedings for the Assessment Year 2016-17; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition.” 3.1. This Court (Mr. J.B.Pardiwala, J. as his lordship then was and Ms. Nisha M. Thakore, J.) while issuing notice on 08.03.2022 passed the following order:- Page 2 of 4 C/SCA/4896/2022 ORDER DATED: 15/11/2022 “We have Mr. Tushar Himani, the learned senior counsel assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant. Let Notice be issued to the respondents returnable on 26.04.2022. Let there be ad interim order in terms of para 7 (b). The respondent No.2 shall be served by Email. Direct service is permitted qua respondent No.1. Registry to list Special Civil Application No. 4876 of 2022 with this matter” 4. The affidavit-in-reply is filed by the respondent no.1 denying each and every averments and urging that the procedure prescribed under the GKN Driveshafts judgment has not been completed, hence, the petition is premature. It also further has contended that all other grounds raised against the reopening of assessment are not sustainable. 5. We have heard learned Senior Advocate Mr. Tushar Hemani assisted by learned advocate Ms. Vaibhavi Parikh for the petitioner and learned Senior Standing Counsel Mr. Varun Patel with learned Standing Counsel Mr. Dev Patel for the respondent authority. 6. Our attention is drawn to the order dated 09.03.2022 Page 3 of 4 C/SCA/4896/2022 ORDER DATED: 15/11/2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives. 7. In view of the above, present petition stands disposed of. Interim relief stands vacated forthwith. (SONIA GOKANI, J) (MAUNA M. BHATT,J) Bhoomi Page 4 of 4 "