VRDV Traders Private Limited Vs Union of India (Telangana High Court)
The Telangana High Court rejected three writ petitions filed by VRDV Traders Private Limited challenging orders passed under Section 148A(b) of the Income Tax Act, 1961, notices under Section 148 and subsequent reassessment proceedings under the Act. The petitions concerned assessment years 2014-15, 2015-16 and 2016-17 and also challenged the proceedings as violative of Article 14 and Article 19 of the Constitution and Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC).
For assessment year 2014-15, the petitioner had initially received a notice under Section 148 on 29.06.2021. Following the Supreme Court’s decision in Union of India and Others vs. Ashish Agarwal, a fresh notice under Section 148 was issued on 18.05.2022. The Income Tax authorities relied upon trading data received under the project Falcon, which indicated alleged manipulative reversal trades undertaken by the petitioner through its broker, M/s. Expro Securities.
The information reflected, among other things, identical purchase and sale quantities, substantial differences between purchase and sale prices, trades between the same parties and counterparties, very short intervals between purchase and sale transactions, insignificant changes in the underlying scrip compared with changes in buying and selling rates, trading in deep in-the-money and deep out-of-the-money options in thinly traded stocks, and substantial volumes attributable to loss-making entities.
