PCIT Vs Shodiman Investments Pvt. Ltd. (Bombay High Court)
The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961 challenging the order dated 12.12.2014 passed by the Income Tax Appellate Tribunal for Assessment Year 2003-04. The substantial question of law raised was whether the Tribunal was justified in holding that the reopening of the assessment was not sustainable in law.
The respondent, engaged in investment and trading in shares and debentures, filed its return declaring a loss of ₹11,736, which was processed under Section 143(1). Subsequently, on 30.03.2010, the Assessing Officer issued a notice under Section 148 seeking to reopen the assessment on the basis of information received regarding a search conducted under Section 132 in the case of Mahasagar Securities Pvt. Ltd. alleging suspicious bank transactions. The Assessing Officer rejected the assessee’s objections and completed the reassessment under Section 143(3) read with Section 147, determining the respondent’s income at ₹67.10 lakh. The Commissioner of Income Tax (Appeals) dismissed the assessee’s appeal.
On further appeal, the Tribunal called upon the Revenue to produce the complete recorded reasons for reopening, observing that only incomplete reasons had initially been furnished to the assessee. After examining the complete reasons, the Tribunal found that the Assessing Officer had recorded that no such assessee was assessed in his charge, yet proceeded to issue the reopening notice. The Tribunal also found that the recorded reasons merely referred to information received from the Deputy Director of Income Tax (Investigation) regarding Mahasagar Securities Pvt. Ltd., without explaining how the respondent was connected with the alleged suspicious transactions or how income had escaped assessment. Relying upon judicial precedents, the Tribunal held the reopening to be unsustainable.
