TaxTMI 
TaxTMI 
2014 (6) TMI 2
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....ances of the case and as per law, the learned Commissioner of Income-tax (Appeals) ought to have held that the reopening was not validly initiated. " 2. Facts in brief as emerged from the corresponding assessment order passed u/s. 143(3) r.w.s. 147 of IT Act, dated 30th of December, 2011 were that the AO has received information that a search u/s.132 was carried out in the case of M/s. Mahasagar Securities Pvt. Ltd. In that case a statement of one Sri Mukesh Choksi was recorded u/s.132(4) of IT Act. He had admitted that the said company was engaged in providing bogus speculation profit/loss, as well as commodities profit/loss. Pursuant to the said information a notice u/s.148 was issued on 23rd of March, 2011. Reasons were recorded and duly communicated to the assessee, for the sake of completeness reproduced below: "REASONS FOR ISSUE OF NOTICE U/S. 148 OF THE I. T. ACT ASSESSMENT FOR A.Y.2005-06 : In this case, the assessee has filed return of income declaring total income at Rs.88,695/- on 13.02.2006. The assessee had during the A.Y. 2005- 06 relevant to F.Y. 2004-05 has shown the share profit of Rs. 4,05,576/-. The transaction of share has been carried out by the assess....
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.... AO followed all the procedural formalities for issue of notice u/s.148 and for proceedings conducted that. The search led to admission of the fact that the only business of those companies was to provide accommodation entries. The transaction with appellant appeared the seized materials. Therefore, the AO had a reason to believe that income has escaped assessment. Considering the same reopening is held to be valid and ground 1 is decided against the appellant. " 3. Now before us, learned AR, Mr. R.N. Vepari has pleaded that there was no independent application of mind by the AO and merely on an information from DIT (Investigation), the AO has issued the impugned notice u/s.148 of IT Act. He has argued that the AO should have satisfied himself about the reason of reopening. He has also pleaded that the reasons talk about revelation that Mahasagar Securities P. Ltd. and other group companies were engaged in fraudulent billing activities, etc. But it is not mentioned or found in search proceedings that there was any evidence found that the appellant too, had engaged himself in such activities. This would come out only if report of DIT(Inv.), which is the basis of reopening is made....
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....d Coal Co. Pvt. Ltd., 217 ITR 597 (SC), Rattan Gupta, 234 ITR 220 (Del), AGR Investment Ltd., 197 Taxman 177 (Del). 5. We have heard both the sides. We have perused the material placed before us. At the outset, it is worth to reproduce the Proviso to Section 147 of IT Act as under: "147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four y....
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....eyes of law. Once, the reason recorded were assigned by the AO then it is wrong to say that he has not applied his mind, rather we hereby hold that there was a proper application of mind by the AO. The AO has given copy of the "reasons for reopening" to the assessee which was duly signed; hence, it is wrong to argue that the AO has not recorded his own satisfaction. 5.3 It is also worth to mention that although the notice was issued after the expiry of four years but it was issued within six year. This fact has not been controverted by the appellant. Therefore, the time limit for notice as prescribed u/s.149 of IT Act was not in controversy because the amount which has escaped the assessment had exceeded Rs.1 lac. We hereby hold that there was no force on the ground of the assessee challenging the reopening of the assessment. The grounds in this regard are hereby dismissed. 6. Ground No.2 is reproduced below: "II. Addition of Rs.4,80,035/-: (1) On the facts and circumstances of the case and as per law, the addition of Rs.4,80,035/-ought to be deleted. (2) The appellant submits that the learned Commissioner of Income Tax (Appeals) having accepted that several legal is....
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.... of BSE but he had found that the scrip as per the contract filed by the assessee has not matched with the rate informed by the assessee. He has, therefore, concluded that only fictitious bills have been prepared and the purchases as per stock exchange price were far from truth. The assessee had made payment in cash for purchase of shares likewise in respect of sale of shares which took place on 28.02.205. The assessee was asked to place on record the Demat Account, the bank statement, the dividend received for the period in which shares have been retained. Although, the assessee has placed copy of bank passbook, copy of Demat Account, transaction slip, contract note of M/s. Alliance Intel, Statement of Account but it was found that the pay in or pay out was "off market" transaction. The observation of the AO after investigation was as under: "On the basis of the above information furnished by the A.R. of the assessee, in order to verify the genuineness of the transactions a notice under section 133(6) of the Act was issued on 16.12.2011 to NSDL, Mumbai to verify the transaction which have been shown as per Demat Account furnished by the assessee. Further they were asked to furn....
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....at any time sale were never executed. Thus, in all circumstances it is nothing but sham transactions. Further, the decisions on relied upon the assessee is totally irrelevant not applicable in this case.................. 3.15 It is evident from the above that Mahasagar Securities Pvt. Ltd. group is not member of ISE and therefore the business carried out is illegal. Further, most important evidence of entry business is that the companies of this group are declaring their profession as entry provider in the return of income and also disclosing of the income at the rate of 15% to total entries provided by them. This being done on the basis of following the order of ITAT Mumbai. Based upon the ITAT order all the companies including M/s. Alliance Intermediaries and Network Pvt. Ltd., M/s. Gold Star Finvest P Ltd. & M/s Alpha Chemie Trade Agencies Pvt. Ltd. have also filed their returns declaring is to be in the business of an entry provider and estimating its income @15% of total receipts from entry seekers. The same has been accepted in the assessment order dated 12.11.2008 for the A.Y.2007-08 u/s. 143(3) by ACIT (OSD)-1, Central Range-7, Mumbai. The Hon. ITAT has already declar....