Vipul Gupta Huf, Represented Through Its Karta Vipul Gupta V. Income Tax Officer, Ward 6 (1), Jaipur and Additional Director Of Income Tax (ADIT), Investigation (Inv.), Ajmer and Central Board Of Direct Taxes (CBDT), Represented Through Its Chairman

CW/9335/2023

AI Insights

The case involves a writ petition filed by Vipul Gupta HUF against the Income Tax Officer, ADIT (Investigation) Ajmer, and the CBDT, challenging the reopening of an assessment for the Assessment Year 2016-17 under Sections 148A(d) and 148 of the Income Tax Act, 1961. The petitioner contested the use of third-party information and the lack of opportunity to cross-examine the informant as grounds for the reopening. The court examined the procedural validity of the notice and order, the substantive allegations of bogus capital gains through share transactions, and the petitioner's responses to the notices.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 805456 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 14-07-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SANDEEP PATHAK; ARNAV SINGH
• Assessee Lawyers: PRATEEK KEDAWAT; PRATEEK BARLA
• Keywords: Bogus capital gain; Cross Examination; Cross-examination; Financial transactions; Financial transactions; Income Tax; Reassessment; Third-party information; Unverified material
• Section: 148; 148A(b); 148A(d)

Judgement Text

"[2023:RJ-JP:20387-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 9335/2023 Vipul Gupta Huf, Represented Through Its Karta Vipul Gupta S/o Mani Ram Gupta Aged About 44 Years Resident Of 13/12A, Malviya Nagar, Jaipur - 302017, Rajasthan, India ----Petitioner Versus 1. Income Tax Officer, Ward 6 (1), Jaipur, Having Office At New Central Revenue Building, Bhagwan Das Road, Jaipur - 302005, Rajasthan, India 2. Additional Director Of Income Tax (ADIT), Investigation (Inv.), Ajmer, Having Office At Aayakar Bhawan, Near Bus Stand, Jaipur Road, Ajmer - 305001, Rajasthan India 3. Central Board Of Direct Taxes (CBDT), Represented Through Its Chairman Having Office At Ministry Of Finance, North Block, New Delhi - 110011, Delhi, India ----Respondents For Petitioner(s) : Mr. Prateek Kedawat, Advocate with Mr. Prateek Barla, Advocate For Respondent(s) : Mr. Sandeep Pathak, Advocate through VC with Mr. Arnav Singh, Advocate HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE PRAVEER BHATNAGAR Judgment / Order 14/07/2023 Heard on admission. This petition under Article 226 of the Constitution of India is directed against the order dated 05.04.2023 issued under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act of 1961’) as also notice dated 05.04.2023 issued under Section 148 of the Act of 1961 for the Assessment Year 2016-17. [2023:RJ-JP:20387-DB] (2 of 4) [CW-9335/2023] Learned counsel for the petitioner argued that the assessment in case of the petitioner has been reopened on the basis of a third party information without having clinching material on record and even without allowing the petitioner to cross-examine the person concerned from whom such information was received and whose statement was recorded during investigation forming the basis for opening assessment. He would also submit that based on unverified and suspicious material without proper investigations and inquiry, the power under Section 148A(d) of the Act of 1961 has been exercised and re-assessment proceedings have been initiated. The correctness of the factual statements made in the impugned order have also been challenged. We find that a notice under Section 148A(b) of the Act of 1961 was issued to the petitioner on 21.03.2023 by the Assessing Officer along with annexures disclosing information suggesting that income chargeable to tax for the Assessment Year 2016-17 has escaped assessment. The petitioner was required to show cause as to why, in view of details contained in the enclosures, notice under Section 148 of the Act of 1961 should not be issued. The annexure enclosed stated that as per information available on insight portal, assessee made financial transactions (sale of shares) of Rs.88,82,400/- during financial year 2015-16 relating to Assessment Year 2016-17. The description disclosed that sale of equity share (settled by the actual delivery or transfer) in a recognized stock exchange amounting to Rs. 88,82,400/- were disclosed. Referring to background, management, financial performance and balance sheet particulars of Sanasa Techfeb Limited. The notice stated that the company has neither the meaningful tangible assets nor any substantial investments and profit and loss account for the stated financial year shows miniscule profits. According to the [2023:RJ-JP:20387-DB] (3 of 4) [CW-9335/2023] Assessing Officer, the said details show that the manipulation were made by the clients and the brokerage firms for personal gains. The company has neither paid any dividend to the share holders nor any bonus has been announced. The trade data of the said company was also called from the Bombay Stock Exchange and details were collected. The information was also disclosed by the ADIT (Investigation) Ajmer, wherein, it was stated that M/s. Sanasa Techfeb Limited is a penny stock company, hence, the trading done and the profit earned on the sale of the shares of this company were bogus and designed to camouflage undisclosed income of various persons including assessee as capital gain from sale of shares. The petitioner gave a reply, wherein, all the allegations were denied. According to the petitioner, it has not indulged in any bogus capital gain and raised issue that shares of Sanasa Techfeb Limited were listed on SME Portal of BSE which is separate from BSE main Portal. The assessee disputed the factual contents of the report prepared by ADIT (Investigation) Ajmer which was made basis to initiate proceedings under Section 148A(d) of the Act. The Assessing Officer vide order dated 05.04.2023 passed a detailed order, after taking into consideration the reply filed by the petitioner to arrive at conclusion based on consideration of material on record that the assessee is one of those who purchased shares from Sanasa Techfeb Limited and upon verification of the ITR filed by the assessee and perusal of computation it is revealed that assessee claimed exempt income of Rs.84,36,941/- under Long Term Capital Gain on which STT paid, hence, the entire transaction remained unexplained/unverified. On that basis, order was passed highlighting [2023:RJ-JP:20387-DB] (4 of 4) [CW-9335/2023] need to verify those transactions. This follows issuance of notice under Section 148 of the Act of 1961. The assessee did not challenge the said order but chose to file its return in response to notice under Section 148 of the Act of 1961. During the pendency of the assessment proceedings, the assessee has filed this writ petition. Though, number of grounds have been urged by the assessee to assail the correctness of order dated 05.04.2023 under Section 148A(d) of the Act of 1961, we find that the order has been passed after giving due opportunity of hearing to the petitioner. The order is detailed one. It contains examination of various facts, correctness of which have been disputed by the petitioner. The correctness of those factual aspects cannot be gone into in the writ petition. The petitioner has filed petition after submitting return pursuant to notice under Section 148 of the Act of 1961. In the absence of there being any improprietory in the decision making process and further taking into consideration that the petition was filed after submitting return of income and during the pendency of the assessment proceedings and further that no addition has been made but it is a case of reopening of assessment and the assessee would have full opportunity to satisfy the Assessing Officer against any addition, we are not inclined to admit the petition. The petition is, therefore, dismissed. (PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),J Mohita/4 "