TaxTMI 
TaxTMI 
2024 (5) TMI 217
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.... and the addition of Rs. 3,36,70,000/- made on account of unexplained investment u/s. 69. The relevant grounds read as under:- 1. The Learned Assessing Officer ('AO') erred in assuming jurisdiction under section 147 of the Income-tax Act, 1961 (the 'Act') to reassess the income for AY 2015-16 without having complied with the jurisdictional safeguards mandated in section 147 of the Act. The AO erred in assuming jurisdiction without having any valid reason to believe that income chargeable to tax had escaped assessment and recorded his reasons merely on surmises and conjectures. The AO has incorrectly alleged that the Appellant had earned bogus long term capital gains of Rs. Rs. 1,18,39,977/- when in fact tha....
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....he Kolkata Directorate. 3. The investigation conducted by the Kolkata Investigation Directorate reveals that the trading in sales penny stock was manipulated affair to generate entries of bogus Long Term Capital Gain facilitating tax evasion by a large number of persons. The assessee is one such person who has availed accommodation entries of bogus LTCG. The above manipulations are corroborated by the strong statements of various persons, recorded during the said investigation. 4. Information received from KOLKATA Investigation Directorate, that assessee has obtained accommodation entries of bogus Long Term capital Gain through trading in EINS Edutech Ltd., one of the Penny stock company for sales consideration of Rs. 3,35....
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.... 7,00,000 3,36,70,000 7,00,000 3,35,174448 (1,52,551) 5. The ld. AO doubted the payment made for purchase for the shares of EINS Edutech Ltd., which was not submitted by the assessee. Therefore, according to him, the source of making investment in these shares could not be established which has been added by him u/s. 69. While coming to this conclusion, he has referred to statement of Karta assessee HUF which he has recorded in the course of assessment proceedings and noted that Karta had no idea of this short term capital loss earned from the share and EINS Edutech Ltd., is one of the 84 penny stocks in which investigation was carried out and found that these shares were used for accommodation entries for bogus long term c....
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....n Directorate and information revealed that the trading in sales of penny stock were manipulated affair to generate entries of bogus Long Term Capital Gain. Now based on such information AO records his satisfaction that assessee has earned long term capital gain through EINS Edutech Ltd., which is one of the penny stock for a sale consideration of Rs. 3,35,51,000/- on which assessee had claimed long term capital gain of Rs. 1,18,39,977/- as exempt. He submitted that assessee has not earned any long term capital gain in trading of EINS Edutech Ltd. nor has claimed such in return of income, as the same has been earned on entirely different scrip, viz., Bhageria Dye Chem Ltd., which transaction has been duly accepted by the ld. AO. The assesse....
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....established fact. 8. We have heard rival submissions and perused the material on record for the reopening of the case. Now from the bare perusal of the 'reasons recorded' as incorporated supra, we find that first paragraph is about general finding of Kolkata Investigation Directorate in 84 penny stock companies and modus operandi. The second paragraph mentioned that assessee is one such person who has taken accommodation entry of bogus long term gain. However, there is no bogus long term gain in so far as on the scrip of EINS Edutech Ltd., which has been mentioned in the information. The ld. AO after receiving the information has not even applied his mind or has verified the records, whether assessee has claimed any kind of bogus long te....
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....t had settled the payment subsequently as these shares were booked through a broker and were sold within two days and purchase consideration has been settled after the sale subsequently. Be that as may be, there is no co-relation between the reasons recorded and the addition which has been made by the ld. AO. If ld. AO had such a belief during the course of assessment proceedings, he could have recorded the reasons on investment made in the purchase of shares for sums aggregating to Rs. 3,36,70,000/-. Thus, there is no link between the information and the reasons recorded and the assessment which has been made by the ld. AO. It is sine-qua-non that for reopening the assessment, AO should have reason to believe that income chargeable to tax ....