South Asian Stocks Limited v. Assistant Commissioner Of Income Tax Circle22(2)Delhi & Anr

$~23 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 11340/2022 & CM APPL. 33401/2022 & CM APPL.33402/202233402/2022 SOUTH ASIAN STOCKS LIMITED ..... Petitioner Through:Dr.RakeshGupta,Dr.RakeshKumar, Mr. Somil Agarwal and Mr.Anshul Mittal, Advocates.Kumar, Mr. Somil Agarwal and Mr.Anshul Mittal, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE22(2)DELHI & ANR...... RespondentsDELHI & ANR...... Respondents ..... RespondentsThrough:Mr.RuchirBhatia,Sr.StandingCounselforRevenuewithMs.Mansie Jain, Advocate.Mr. Rajnish Kumar Gaind, SPC forR-3/UOI.CounselforRevenuewithMs.Mansie Jain, Advocate.Mr. Rajnish Kumar Gaind, SPC forR-3/UOI. Date of Decision: 2[nd]August, 2022 % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): CM APPL. 33402/2022 Exemption allowed, subject to all just exceptions. Accordingly, present application stands disposed of. W.P.(C) 11340/2022 & CM APPL. 33401/2022 1.Present writ petition has been filed challenging the show cause noticedated 22[nd]March, 2022 issued under Section 148A(b) of the Income Tax W.P.(C) 11340/2022 Act, 1961 [‘the Act’] as well as the order passed under Section 148A(d) ofthe Act and notice issued under Section 148 of the Act both dated 06[th]April,2022 for the Assessment Year 2018-19. 2.Learned counsel for the Petitioner states that a notice was issued tothe Petitioner under Section 148A(b) dated 22[nd]March, 2022 stating that inthe the assessment proceedings of Vishesht Financial Services PrivateLimited (VFSPL), it was found that VFSPL had made transaction ofRs.7,32,76,643/- in shares through the petitioner-broker during FinancialYear 2017-18 for which VFSPL could not provide the PAN/GSTIN of theentities in whose scrips it traded. It was further alleged in the said notice thatas the information regarding the scrips was not provided during theassessment of VFSPL, prima facie all the transactions belonged to thePetitioner. It was also stated that since no details regarding thesetransactions were found to be declared in the Petitioner’s ITR, the abovetransactions prima facie had resulted in the escapement of income. 3.Learned counsel for the Petitioner states that the Petitioner-Assesseeis a SEBI registered broker providing trading platform online to the clientsas per SEBI/NSE/BSE Exchanges Rules & Regulation and chargingbrokerage only. He further states that the Petitioner has no involvement,whatsoever, with the transactions done by its clients online and therefore, onthe basis of alleged assessment in the case of VFSPL, the issuing of noticeunder Section 148 of the Act to the Petitioner is totally illegal. 4.Learned counsel for the Petitioner further states that the case ofVFSPL was picked up for scrutiny and after examination of all thesubmissions, an assessment order dated 8[th]April, 2021 under Section 143(3)read with Section 144B of the Act was passed without making any addition W.P.(C) 11340/2022 and accepting the returned income of the VFSPL. 5.Learned counsel for the Petitioner states that the impugned orderunder Section 148A(d) of the Act has been passed by the authorities withoutconsidering the detailed reply of the Petitioner filed in response to theimpugned show cause notice dated 22[nd]March, 2022. He states that throughits reply to the show case notice dated 22[nd]March, 2022, the Petitioner hadrequested the authorities to provide the Petitioner with the information onthe basis of which the assessment was sought to be reopened, however thesame was not provided to the Petitioner. Learned counsel for the Petitioneralso states that it is not understood as to how the non-mentioning of thePAN/GSTIN of the entities in whose scrips VFSPL traded could lead toescapement of income. 6.Issue notice. Mr. Ruchir Bhatia, learned Senior Standing Counsel forRevenue accepts notice. 6.Issue notice. Mr. Ruchir Bhatia, learned Senior Standing Counsel forRevenue accepts notice. 7.He admits that the impugned order under Section 148A(d) and noticeunder Section 148 of the Act were issued on the basis that the assessment ofVFSPL was not complete.He states that the fact that scrutiny assessmentproceedings had been completed in the case of VFSPL was not brought tothe notice of the Assessing Officer and the said fact throws an entirelydifferent light on the proceedings. 8.Having heard the learned counsel for the parties, this Court finds thatif the averments in the writ petition are true and correct, then the scrutinyassessment of VSFPL had concluded even prior to the issuance of the noticeunder Section 148A(d) of the Act to the Petitioner. It is strange that the saidinformation was not reported by the VFSPL’s Assessing Officer to thePetitioner’s Assessing Officer. 9.In any event, to cut the controversy short, the impugned order passedunder Section 148A(d) and the notice issued under Section 148 of the Act,both dated 6[th]April 2022 are set aside and the Assessing Officer is directedto pass a fresh order within four weeks under Section 148A(d) afterconsidering the averments & documents placed on record in the present writpetition and the scrutiny assessment order passed in the case of VFSPL aswell as the fact that VFSPL had furnished the PAN/GSTIN details inresponse to the notice issued under Section 142(1) of the Act.10.With the aforesaid direction, the present writ petition along withpending application stands disposed of. The rights and contentions of theparties are left open. MANMOHAN, J AUGUST 02, 2022Msh/KA MANMEET PRITAM SINGH ARORA, J W.P.(C) 11340/2022