The Bombay High Court held that the reopening of the assessment is not valid when there is no tangible information.
Anwar Mohammed Shaikh, the petitioner challenged the notice dated 31.03.2021 issued by the Revenue under Section 148 of the Income Tax Act, 1961, (‘the Act’), for the Assessment Year 2013-14, by which reopening of the petitioner’s assessment for the relevant years are sought.
The petitioner filed its return of income for the assessment year 2013-14 on 30.03.2014 declaring an income of Rs.30,90,670/-, which was accepted under Section 143(1) of the Act subsequently, a notice under Section 148 of the Act was issued by respondent No.1 on 22.09.2016 (first notice), seeking to reopen of the assessment year of the petitioner.
The petitioner in its reply/objections, to the re-opening, made specific references to documents to support the genuineness of the concerned share transactions, some of which are, statements of long-term capital gains claimed as exempt under Section 10 (38) of the Act, bills cum contract notes issued by the Bombay Stock Exchange to substantiate that the stock was traded on market, his Demat statements where the delivery of shares was reflected, the confirmation of SEBI that the stock was traded through recognized brokers and the fact that the entire sale consideration was received through regular banking channels.
The Assessing Officer failed to examine these documents while rejecting the objections of the petitioner, which shows that the entire exercise of a re-opening of the assessment was purely based upon suspicion in the face of all the material disclosed by the petitioner to the Assessing Officer.
A two-member bench comprising Justices Dhiraj Singh Thakur and Justices Valmiki Sa Menezes observed that any information of the petitioner has not remained undisclosed about the income offered by him to tax for the relevant assessment year.
It was viewed that the impugned notice dated 31.03.2021, and the impugned order disposing of the objections dated 30.12.2021 filed by the petitioner are arbitrary and issued without the requisite jurisdiction under Section 148 of the Act. The Court quashed and set aside the impugned notice and the impugned order disposing of the petitioner’s objections.
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