Allowing the petition the Court held\u00a0\u00a0 that the assessee was himself a victim of the alleged fraud of the mutual fund and was again being victimised by the Assessing Officer. Even in the order under section\u00a0148A(d)\u00a0wherein it was mentioned that statement of the key management personnel of the mutual fund was recorded, there was nothing to indicate that the assessee was part of the alleged sham mutual fund. The assessee was not a distributor and was only a client. The allegation in the initial notice issued under section\u00a0148A(b)\u00a0that the assessee was one of the persons who had claimed fictitious short-term capital loss was without any basis. The assessee had, based on public announcement, invested in the mutual fund. The receipt of tax free dividend fund and the fact that the assessee had suffered a loss could not be held against the assessee. Even assuming that the transaction was preplanned, there was nothing to impeach the genuineness of the transaction. The assessee was free to carry on his business which he did within the four corners of the law. Mere tax planning without any motive to evade taxes through colourable devices was not frowned upon even in\u00a0Mcdowell and Co. Ltd. v. Commercial Tax Officer (1985) 154 ITR 148(SC), \u00a0 CIT v. Walfort Share and Stock Brokers (P) Ltd(2010) 326 ITR 1 (SC). Court also observed that \u00a0the Assessing Officer\u2019s allegations in the notice issued under section\u00a0148A(b), that the mutual fund had manipulated accounting methodology so as to artificially inflate the distributable surplus and the investors, in order to reduce their tax liability, had entered into sham transactions and received dividend and short-term capital loss, did not implicate the assessee in any manner. There was nothing to indicate that the assessee had participated knowingly in a sham transaction to reduce his tax liability or to earn dividend or book short-term capital loss. The Assessing Officer was also not clear whether the assessee had booked loss or claimed dividend in the mutual fund which indicated non-application of mind by the Assessing Officer. The initial notice under section\u00a0148A(b), the order passed under section\u00a0148A(d)\u00a0and the notices under section\u00a0148\u00a0were therefore, quashed and set aside. (AY.2016-17)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 148A : Reassessment-Conducting inquiry, providing opportunity before issue of notice-Information from insight portal that assessee had transacted with Mutual Fund found to be involved in scam-No nexus between belief and material-Reassessment notice and order disposing the objection is quashed-Court can examine relevancy of recorded reasons in writ jurisdiction. [S. 147, 148, 148A(b), 148A(d), Art. 226] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-47452","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-clm","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47452","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=47452"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47452\/revisions"}],"predecessor-version":[{"id":47453,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47452\/revisions\/47453"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=47452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=47452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=47452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}