TaxTMI 
TaxTMI 
2025 (6) TMI 1545
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....on pertain to the same assessment and involve common facts and issues, both were heard together and are being disposed of by way of this consolidated order. Facts of the Case 2. The assessee is an individual and a partner in the partnership firm M/s. Gokul Agrotech. The assessee originally filed his return of income for Assessment Year 2017-18 on 14.11.2017 declaring total income of Rs. 3,27,580/-. The return was processed under section 143(1) of the Act. Subsequently, information was received from the Directorate of Income Tax (Systems), Directorate of Investigation and Directorate of Intelligence & Criminal Investigation pursuant to risk profiling, indicating that the assessee, during the relevant previous year, introduced capital of Rs. 14,30,00,000/- into the partnership firm M/s. Gokul Agrotech. The partnership firm had also received credits aggregating to Rs. 34.96 crores during the year. The case was reopened under section 147 on the basis of this information and notice under section 148 dated 29.06.2021 was issued. In view of the Hon'ble Supreme Court's judgment in the case of Union of India vs. Ashish Agarwal (2022), the said notice was treated as a notice under sect....
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....or the respective assessment years. The Assessing Officer further observed that out of the 5,10,250 shares allotted pursuant to the amalgamation, 1,85,250 shares were effectively allotted less than twelve months prior to their sale. Hence, the Assessing Officer concluded that the condition of long-term holding required for claiming exemption under section 10(38) was not fulfilled in respect of these additional shares. The Assessing Officer further noted that the sale transactions were executed through synchronized trading between close relatives and family members. The buyers of the shares were identified as Shri Kamleshbhai Patel, a relative, and Shri Mukeshbhai Patel, a close relative and significant shareholder of Asian Granito India Ltd. The Assessing Officer also highlighted that both sale orders and corresponding purchase orders were executed on the stock exchange within microseconds, which, in his view, clearly indicated a pre-arranged transaction lacking commercial substance. Upon further examination of the fund movement, the Assessing Officer recorded that immediately upon receipt of Rs. 14.30 crore from sale of shares, Shri Jivabhai Revabhai Patel transferred the entire a....
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....al introduced, i.e., loan received from his father through banking channel, he could not be expected to prove the source of source unless specific evidence existed to suggest his involvement in any colourable device. The assessee also argued that during the year he had not carried out any business activity and had correctly filed his return in ITR-2. The balance sheet submitted during assessment was furnished only at the instance of the Assessing Officer and reflected investments, which were erroneously shown as closing stock. It was contended that such inadvertent error could not be made a ground to treat the return of income defective or inaccurate. 5. The learned CIT(A), after considering the detailed submissions and evidences filed, held that the assessee had satisfactorily discharged the onus cast upon him. The CIT(A) observed that the Assessing Officer proceeded on mere suspicions and presumptions without bringing any corroborative material on record to establish that the transactions were non-genuine or fictitious. The CIT(A) noted that the entire capital contribution of Rs. 14.30 crore was fully reflected in the assessee's books of account and balance sheet, and hence th....
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....s 148 of the Act where notice was issued by Jurisdictional Assessing officer instead of Faceless Assessment Centre which is a clear violation of CBDT Notification No. 18/2022 dated 29.03.2022. The order passed u/s 147 of the Act deserves to be nullified. 3. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding the validity of notice issued u/s 148 of the Act where notice was issued without approval of authority specified u/s 151 of the Act. The order passed u/s 147 of the Act deserves to be quashed. 4. In law and in the facts and circumstances of the appellant's case, appellant craves leave to add, amend and/or alter the ground or grounds of appeal either before or at the time of hearing of the appeal. 7. During the course of hearing before us, the learned Authorised Representative reiterated the facts of the case and extensively referred to the factual matrix as already recorded by the lower authorities. The AR submitted that the assessee has fully explained not only the nature and source of the capital introduced into the partnership firm M/s. Gokul Agrotech but has also explained the source of source....
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....ground that the entire transaction was a colourable device involving synchronized trading among family members. The Assessing Officer noted that the buyers of the shares were close relatives of the assessee and trades were executed within microseconds, thereby indicating pre-arrangement. The AO further questioned the genuineness of the original acquisition of shares by the father and doubted the eligibility of the capital gains for exemption under section 10(38), particularly in respect of additional shares allotted on amalgamation which were sold within twelve months. 10. After a careful consideration of the facts and rival contentions, we find ourselves unable to sustain the action of the Assessing Officer for the following reasons: a. It is an admitted position that the assessee has explained not only the immediate source of capital introduced but also the source of source. The entire transaction flow from sale of shares by the father to transfer of sale proceeds to the assessee is fully documented and supported by contemporaneous evidences. The law is well settled that once the assessee discharges his primary onus of explaining the source of funds through credible d....