ORAL ORDER

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. B.S.Soparkar for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondents.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for the respondents.

3. Having regard to the controversy in narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.

4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 30.03.2021 issued under section 148 of the Income Tax Act,1961 [for short ‘the Act’].

5. Brief facts of the case are as under:

5.1 The petitioner filed return of income for Assessment Year 2014-15 on 26.07.2014 declaring total income of Rs. 39,61,071/-.

5.2 The return of the petitioner was processed and the case of the petitioner was selected for scrutiny. A detailed scrutiny was undertaken by the Assessing Officer by issuing notice dated 21.09.2016 under section 142(1) of the Act requiring the petitioner to furnish various details relating to the capital gain earned during the year under consideration along with documentary evidence. The petitioner filed detailed reply dated 09.11.2016 furnishing requisite details. The Assessing Officer passed the assessment order under section 143(3) of the Act on 18.11.2016 and has assessed income without making any addition.

5.3 Thereafter, the respondent No.1 issued impugned notice under section 148 of the Act asking the petitioner to file return of income for A.Y. 2014-15.

5.4 The petitioner filed return of income in compliance of the notice under section 148 of the Act on 24.07.2021 and also sought for copy of reasons recorded for reopening of the assessment.

5.5 Respondent No.1 provided the copy of the reasons recorded which are reproduced hereunder:

“BASIS OF FORMING REASON TO BELIEVE AND DETAILS OF ESCAPEMENT OF INCOME: An information was received from DDIT (Inv)Unit §(1), New Delhi wherein, beneficiades of penny stock of Looks Health Services Ltd was discussed. As per the information, the Looks Health Services Ltd is a penny stock company, which has been used by beneficiaries (sellers of shares) to launder money in the grab of long term Capital Gains while claiming tax exemption under section 10(38) of the IT Act. As per the information, the assessee is one of the beneficiaries/memher of this, syndicate. The DDIT further reported that large. scale manipulation of trades and fabricated trading activity has taken place in the scrip. This has led to generation of fictitious profits and loss derived by various traders which were not genuine and were pre-determined. It can also be stated that the trades were carried out between a set of very few persons which were responsible for trade matching and placing huge orders which were matched against the corresponding counter orders immediately after the orders are placed. Even the price of the scrip was manipulated by the traders by manipulating closing price of the scrip on a particular trading day. This is important as closing price direcily influences the opening price of the next trading day. This also is necessary to artificially jack up the price of the scrip so that it can be raised up to certain level and the shares are sold to predetermined parties thereby earning bogus long- term capital gains which is exempt from tax u/s 10(38) of the Income Tax Act, 1961. Reverse modus operandi is adopted in order to provide entry of bogus ShortTerm Capital Loss. As per the information, the assessee has indulged in this sham transaction and has made total sale during the year of Rs. 2,27,30,800/-.

In the investigation report, it is reported that the assessee had received an amount of Rs. 2,27 ,30,800/as the sale consideration on account of sale in the shares of Looks Health Services Ltd. Further, looking to the investigation report, the transaction in this sh