MANSOOR HASAN KHAN V. UNION OF INDIA AND 2 OTHERS

WTAX/331/2022

AI Insights

The case involves Mansoor Hasan Khan, the petitioner, challenging a notice issued under Section 148 of the Income Tax Act, 1961, concerning the reassessment of income for the Assessment Year 2014-15. The notice was based on allegations of claiming exemptions under Section 10(38) of the Act on the basis of bogus long-term capital gains, as indicated by information from the investigation wing of the Income Tax Department. The petitioner argued that the matter had been previously assessed and exonerated by SEBI, and thus, the notice constituted a change of opinion. However, the court found that the new information regarding the use of certain stocks for providing bogus long-term capital gains was not considered in the earlier assessments, leading to the dismissal of the petition.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 724494 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 21-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GAURAV MAHAJAN
• Assessee Lawyers: ABHINAV MEHROTRA
• Keywords: Bogus long term capital gains; Certiorari; Certiorari; Change of opinion; Impugned notice; Reassessment
• Section: 148; 10(38); 151

Judgement Text

"Court No. - 3 Case :- WRIT TAX No. - 331 of 2022 Petitioner :- Mansoor Hasan Khan Respondent :- Union Of India And 2 Others Counsel for Petitioner :- Abhinav Mehrotra Counsel for Respondent :- A.S.G.I.,Gaurav Mahajan Hon'ble Surya Prakash Kesarwani,J. Hon'ble Jayant Banerji,J. Heard learned counsel for the petitioner, learned Additional Solicitor General of India for the respondent no.1-Union of India and learned Standing Counsel for the Income Tax Department. This writ petition has been filed praying for the following reliefs:- (a) Issue a writ, order or direction in the nature of certiorari quashing the impugned notice issued under Section 148 of Income Tax Act, Dt. 31.03.2021 and order dated 31.01.2022 disposing off the objections of the petitioner and the connected proceedings for reassessment of Income for Assessment Year 2014-15. (b) Issue a writ, order or direction in the nature of certiorari quashing the sanction issued by respondent no.3 under Section 151 dated 31.03.2021 of the Act permitting the issuance of impugned notice issued under Section 148 of the Income Act, dated 31.03.2021. Perusal of impugned notice under Section 148 read with Section 151 of the Income Tax Act, 1961 and the reasons recorded therein, prima facie, shows that assessing authority has some material in his hands to indicate that the petitioner has claimed exemption of Section 10 (38) of the Act, 1961 on the basis of bogus long term capital gains. The aforesaid belief has been formed by the assessing authority on the basis of the information received from the investigation wing of the department. Learned counsel for the petitioner has invited our attention to order of Securities and Exchange Board of India (SEBI) dated 04.03.2020 and submits that the petitioner was exonerated by the SEBI in the matter of shares of Jolly Plastic Industries Limited. Learned counsel for the petitioner submits that case of the petitioner for regular assessment under Section 148 of the Act was selected for the assessment year 2014-15 on the ground of suspicious bogus long term capital gains of share and consequently it has to be presumed that the entire matter with regard to bogus long term capital gains was considered by the assessing authority in the aforesaid assessment order dated 31.08.2016. Therefore, the impugned notice is based on change of opinion. The aforesaid submission of the learned counsel for the petitioner has no legs to stand inasmuch as, the information with regard to penny stocks was uploaded on inside Portal in the form of report dated 13.03.2020 by Deputy Director of Income Tax (Investigation-2), Rajkot. It further appears that some investigation was also carried by the Investigation wing Kolkata and in that proceeding, statement of one Sanjay Vora, Regional Director East Zone of M/s Anandrathi Shares & Stock Brokers Ltd. was recorded, who admitted that the scrip of Jolly Plastic Industries Ltd. was used for providing bogus long term capital gains to various clients. Thus, the belief formed by the assessing authority for issuing notice under Sections 148/151 of the Act, 1961 is based on some relevant materials coming to his hands, which were not subject matter of consideration in the regular assessment proceedings. Thus, the impugned notice cannot be said to be based on change of opinion. Under the circumstances, it cannot be said that the impugned notice under Section 148 of the Act, 1961 is based on change of opinion as suggested by the learned counsel for the petitioner. The scope of the interference under Section 148 of the Act is very limited, firstly whether the notice is without jurisdiction and secondly whether it is based on change of opinion. From the records, we find that impugned notice is neither without jurisdiction nor based on change of opinion. For all the reasons aforestated, we do not find any merit in this writ petition. Consequently, the writ petition is dismissed. It is made clear that assessing authority shall proceed in the matter in accordance with law without being influenced by any of the observations made in the body of this order. Order Date :- 21.3.2022 T.S. Digitally signed by TRIBHUWAN SINGH Date: 2022.03.23 09:52:49 IST Reason: Location: High Court of Judicature at Allahabad "