Sanjay Gupta V. Income Tax Officer-2 (4) and 2 Others

WTAX/831/2022

AI Insights

The case involves a writ petition filed by Sanjay Gupta against the Income Tax Officer-2 (4) and others, challenging the order and notice issued under Section 148A(d) and Section 148 of the Income Tax Act, 1961, respectively, for the Assessment Year 2018-19. The petitioner contested the jurisdiction and the basis of the order, claiming that the proceedings were initiated without proper material and adjudication on the points raised in his reply. The respondents supported the impugned order, asserting that the initiation was based on credible information about the petitioner's trading activities in a penny stock, which allegedly involved bogus profits. The court dismissed the petition, affirming the validity of the proceedings initiated by the assessing officer.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 794409 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 04-07-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GAURAV MAHAJAN; NAVEEN CHANDRA GUPTA
• Assessee Lawyers: SUYASH AGARWAL
• Keywords: Bogus profits; Certiorari; Certiorari; Long Term Capital Gain; Penny stock; Prohibition; Re-assessment; Security Transaction Tax
• Section: 148; 10(38); 148A

Judgement Text

"Court No. - 3 Case :- WRIT TAX No. - 831 of 2022 Petitioner :- Sanjay Gupta Respondent :- Income Tax Officer-2 (4) And 2 Others Counsel for Petitioner :- Suyash Agarwal,Sr. Advocate Counsel for Respondent :- Gaurav Mahajan,A.S.G.I.,Naveen Chandra Gupta Hon'ble Surya Prakash Kesarwani,J. Hon'ble Jayant Banerji,J. 1. Heard Shri Rakesh Ranjan Agarwal, learned Senior Advocate assisted by Shri Suyash Agarwal, learned counsel for the petitioner, Shri Ashish Agarwal, learned counsel for the respondent nos.1 and 2 and Shri Manish Gupta holding brief of Shri N.C. Gupta, learned counsel for the respondent no.3. 2. This writ petition has been filed praying for the following reliefs:- \"(1) Issue a writ, order or direction in the nature of certiorari quashing the order passed under clause (d) of section 148A of the Act dated 30.03.2022 (for A.Y. 2018-19), passed by the ITO-2(4), Pilibhit-1/respondent No.1 (Annexure-9). (2) Issue a writ, order or direction in the nature of certiorari quashing the notice issued under section 148 of the Income Tax Act dated 30.03.2022 (for A.Y. 2018-19), passed by the ITO-2(4), Pilibhit-1/respondent No.1 (Annexure-10). (3) Issue a writ, order or direction in the nature of prohibition restraining the respondent no.1 and respondent no.2 from proceedings against the petitioner, for the re-assessment of income for A.Y. 2018-19 under section 148 of the Act.\" 3. Learned counsel for the petitioner submits that the impugned order under Section 148A(d) of the Income Tax Act, 1961 has been passed without adjudicating on the points which were raised by the petitioner in the reply to the notice. He further submits that there was no material before the assessing officer to initiate proceeding and, therefore, the impugned order under Section 148A(d) of the Act, 1961 is wholly without jurisdiction. 4. Learned counsels for the respondents supported the impugned order. 5. We have carefully considered the submissions of learned counsels for the parties and perused the record of the writ petition. 6. It is undisputed that the assessing officer was having in his possession the information received from DDIT(Inv.) 7(4), New Delhi. As per information received, the petitioner was involved in trading of shares of 'Alankit Limited' during the Financial Year 2017-18. It was alleged that the assessee has shown LTCG exempt under Section 10(38) of the Act, 1961 in his Income Tax Return for the Assessment Year 2018-19. Alongwith the notice, a chart of transactions captured by the system and reported thereon was also given to the assessee. Perusal of Schedule E1 of the Income Tax Return of the assessee shows that the assessee has shown long term capital gain from transactions for Rs.17,12,811/- on which security transaction tax is paid. In his reply, the petitioner has also admitted that he has shown some transactions in scrip of 'Alankit Limited'. From the information received, it was also revealed that 'Alankit Limited' was a penny stock and the petitioner is a beneficiary of bogus profits through scrip of 'Alankit Limited'. 7. In view of the facts briefly noted above, we find that the assessing officer has correctly formed the opinion that this is a fit case to issue notice under Section 148 of the Act, 1961. Therefore, we do not find any good reason to interfere with the impugned order. 8. For the reasons aforestated, the writ petition is dismissed. 9. It is made clear that the aforesaid observations have been made merely for the purpose of testing the validity of the order under Section 148A(d) of the Act, 1961. Order Date :- 4.7.2022 SK Digitally signed by SUSHEEL KUMAR Date: 2022.07.04 17:35:58 IST Reason: Location: High Court of Judicature at Allahabad "