2017 (4) TMI 863

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....ed. 4. As mentioned elsewhere, since the facts are identical, we heard the representatives of both sides on the facts of ITA No. 501/Ahd/2016. With ground no. 1, the assessee has challenged the jurisdiction of the A.O. for reopening the assessment u/s. 147 of the Act. The other grounds are on merits of the case which relate to the treatment of gains arising out of the sale of shares as income from undisclosed sources. 5. Briefly stated, on the basis of the information received by the A.O. in respect of some search operation conducted in the case of M/s Mahasagar Securities Pvt. Ltd. The A.O. came to know that the assessee has purchased certain shares from Mahasagar Securities group which was engaged in issue of bogus purchase bills for accommodation. The A.O. accordingly re-opened the assessment u/s. 147 of the Act by issuing notice u/s. 148 of the Act after recording the reasons and opening the necessary approval u/s. 151 of the Act. 6. The reasons recorded by the A.O. read as under:- "As per the information received from investigation wing, Mumbai, the assessee has involved purchase of certain shares amounting to Rs. 2,30f059/- from M/s. Mahasagar Securities Group Co. which ....

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....C MCC Distance as per Lavenshtein Distance Analysis Net reduction in income due to CCM Harikishan Sunderlal Virmani WW/2647 Binay R. Chaturvedi WW/2108 3 Rs. 1,19,848/-   In order to verify the genuineness of the error, the Lavenshtein Distance analysis or digit edit analysis utility is also provided by the investigation Wing. This utility gives a clear indication as to whether the code is wrongly typed or is completely replaced. If the number of digits changed from original code to modified code is 1, then it can be reasonably argued that the OCC (Original Client Code) may have been typed wrongly by mistake. Similarly, if the number of digits changed is more say 4 or 5,it cannot be genuine mistake but a deliberate change. To this extent, Levenshtein Distance Analysis or digit edit analysis act as a clear indicator for genuineness in client code modification. In short, the longer the distance (i.e. number of digits changed), the lesser the chance of genuineness. Hence, the editing of client code above it is termed as deliberate change and establishes the non-genuineness and contrived nature of the code change. 4. In view of the above facts, I have r....

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....nsidering the information / material received from other source, A.O. is required to consider the material on record in case of the assessee and thereafter is required to form an independent opinion on the basis of the material on record that the income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be any reassessment for the verification. 10. Considering the similarity of the facts of the case in hand, the assumption of the jurisdiction to reopen the assessment in exercise of power u/s. 147 of the Act is bad in law and contrary to the provisions of Section 147 of the Act. The impugned re-assessment proceedings deserve to be quashed and set aside. Accordingly, the impugned notice issued u/s. 148 of the Act and reopening of the proceedings for A.Y. 2008-09 cannot sustain and the same deserve to be quashed and set aside and are hereby quashed and set aside. Ground no. 1 is accordingly allowed. 11. For the sake of completeness of the adjudication, even on merits of the case, the additions do not survive. A perusal of the orders of the authorities below shows that the claim of ca....

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....n 4(1), we find no reason to disturb the Commissioners orders." 15. The Hon'ble Apex Court held as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cros....