AI Drafter 
TaxTMI 
TaxTMI 
2014 (5) TMI 1169
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....0/-, which was processed u/s 143(1) of the I.T. Act, 1961 (hereinafter referred as the Act). Thereafter the Assessing Officer received information from the investigation wing that a search was conducted in M/s Mahasagar Securities Pvt. Ltd. group of companies on 25/11/2009. Shri Mukesh Choksi and Shri Jayesh K. Sampat are Directors in these companies. It was found that above persons had entered into bogus transactions for giving entries of speculation profit/loss, short term/long term gain/loss, share application money, commodities profit/loss on commodity trading (through MCX). It was mentioned that these persons had given the above entries in lieu of cash received and they had charged commission for giving the accommodation entries. The Assessing Officer noted that assessee company had also claimed to have received Rs. 10.00 lacs as an amount for subscription of shares from M/s Alliance Intermediateries and Network Pvt. Ltd. and M/s Talent Infoways Ltd., both group concerns of Mukesh Choksi group, which was a bogus transaction. Accordingly, the Assessing Officer issued a notice u/s 148 of the Act after recording the reasons. In response to the notice issued by the Assessing Offic....
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....1,40,000/-. In due course, the information have received from the DDIT (lnv.-2), Udaipur alongwith report of the DDIT (Inv.), Unit-1 (4), Mumbai that search & seizure action under section 132 of the Income Tax Act, 1961 was undertaken in the case of Mahasagar Group of Companies Mumbai on 25.11.2009 on the basis of information received in an FIU alert from New Delhi regarding suspicious transactions taking place in the bank accounts of M/s Mahasagar Securities Private Limited and its related companies. The directors of these companies were one Mukesh Choksi and Jayesh K. Sampat. During the course of search it was revealed that the Mahasagar Securities Private Limited and its related group of 34 odd companies (the prominent ones being M/s. Alliance Intermediateries & Network Private Limited, M/s Mihir Agencies Private Limited, M/s. Goldstar Finvest Private Limited, etc. all run by Mukesh Choksi) were engaged in fraudulent billing activities and in the business of providing bogus speculation profit/loss, short term/long term gain/loss, share application money, commodities profit/loss on commodity trading (through MCX) and had been continuing this business from many years. The....
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....-UDR & DDIT(Inv.), Mumbai. The primarily condition of section 148 is that AO must have reason to believe that income has escaped assessment. This satisfaction should be of AO himself and not a borrowed satisfaction. The AO has not considered the fact that the assessee was incorporated on 16.03.2006, it has not carried any business activity and therefore no question of generation of income in the hands of assessee arises. Therefore the share money received cannot be income of assessee. Therefore the notice so issued is illegal and bad in law. For this reliance is placed on the decision of Hon'ble Delhi HC in the case of CIT vs. SFIL Stock Broking Ltd. [2010] 325 ITR 285. The facts and the finding of this case are as under; The Brief facts of this case are that after completion of assessee's assessment the DDIT (Inv.) informed the AO of assessee that during the course of investigation, one SG, proprietor of RK had stated on oath that the transactions through certain bank account were only paper transactions in which the party was intending to take bills paid in cash and issue cheques/drafts showing the said amounts as sale of shares. It was further informed that the assess....
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....fic provision of the Act. The ld. CIT(A), therefore, upheld the action of the Assessing Officer for issuance of notice u/s 148 of the Act and assessment proceedings initiated u/s 147 of the Act. A reference was also made to his earlier decision dated 27/2/2012 in the case of M/s Madhu Sulzcon Pvt. Ltd. Bhilwara in appeal No. 335/11-12 for the assessment year 2007-08. Now the assessee is in appeal. 6. The Ld. counsel for the assessee reiterated the submissions made before the authorities below and further submitted that from the plain reading of the reasons recorded by the Assessing Officer, it was clear that a notice u/s 148 of the Act was issued as per the information received from DDIT (Inv.), Udaipur & DDIT(Inv), Mumbai and in the second para of the reason even the name of M/s Talent Infoways Ltd., Mumbai was not referred. It was further stated that the reasons recorded by the Assessing Officer only indicated that as per the information of DDIT (Inv.), Mumbai, certain companies of Mukesh Choksi group were operating and providing accommodation entries and the assessee had also received share capital from such company. It was contended that the Assessing Officer just made gener....
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....rned, the Hon'ble ITAT has set aside this order to the file of the Assessing Officer as this case was decided ex-parte. Therefore, the order of Ld. CIT(A) in this case do not survive." It was, accordingly, submitted that the assessment made by the Assessing Officer deserves to be set aside being illegal and bad in law. 7. In his rival submissions, the Ld. D.R. strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made by the Ld. CIT(A) in the said orders. 8. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the Assessing Officer reopened the assessment by issuing the notice u/s 148 of the Act and invoked the jurisdiction u/s 147 of the Act. The provisions contained in Section 147 of the Act read 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 a....
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....egedly the beneficiary of a bogus claim of long-term capital gain shown on sale/purchase of shares a notice under section 148 of the Act was issued by the Assessing Officer to the assessee. In the reassessment proceedings, the Assessing Officer made an addition of Rs. 20,70,000/- holding that the assessee could not explain the source of the entries. The Commissioner (Appeals) confirmed the order passed by the Assessing Officer. The Tribunal quashed the entire reassessment proceeding. On appeal: Held, dismissing the appeal, that the first sentence of the reasons recorded by the Assessing Officer was mere information received from the Deputy Director of Income-tax (Investigation). The second sentence was a direction given by the same Deputy Director of Income-tax (Investigation) to issue a notice under section 148 and the third sentence again comprised a direction given by the Additional Commissioner of Income-tax to initiate proceedings under section 148 in respect of cases pertaining to the relevant ward. The Assessing Officer referred to the information and the two directions as reasons on the basis of which he was proceeding to issue notice under section 148. These could not b....