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2025 (11) TMI 1402
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....f information uploaded on the Insight Portal, the case was flagged on the ground that during F.Y. 2012-13 the assessee had allegedly obtained accommodation entries of bogus Long Term Capital Gain in the scrip of M/s Frontline Business Solutions Pvt. Ltd. to the extent of Rs. 1,25,79,787/- and was also a beneficiary of another accommodation entry of Rs. 1,53,633/- routed through concerns controlled by one Shri Jignesh Shah and Shri Sanjay Shah. 2.2 The Assessing Officer recorded that search under section 132 was conducted on 11.09.2018 in the cases of Shri Jignesh Shah and Shri Sanjay Shah at Ahmedabad. According to the assessment order, the search resulted in seizure of unaccounted cash of about Rs. 19.37 crores along with incriminating documents, secret Tally data and other digital records allegedly evidencing business of providing bogus LTCG, Short Term Capital Loss and other accommodation entries through various listed penny stock scrips, as well as routing and movement of cash through angadias. The Assessing Officer also referred to an investigation report and to actions taken by SEBI in respect of the scrip of M/s Frontline Business Solutions Pvt. Ltd. (later known as Inann....
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....te bank statements, sources of income, copy of demat account, details of securities transactions and other requisitioned information. A further notice and questionnaire dated 21.02.2022 referred specifically to the alleged accommodation entries of Rs. 1,25,79,787/- in the scrip of M/s Frontline Business Solutions Pvt. Ltd. and Rs. 1,53,633/- through Jignesh Shah and Sanjay Shah and called upon the assessee to explain the nature of these transactions, how they were recorded in the books, whether they had been offered to tax, and to furnish ledger extracts of the concerned parties. The assessee vide reply dated 24.02.2022 denied having received any accommodation entries from M/s Frontline Business Solutions Pvt. Ltd. or from Jignesh Shah and Sanjay Shah and claimed to have only done intraday trading in the scrip of Frontline Business Solutions Pvt. Ltd. resulting in a loss. The Assessing Officer did not accept this explanation. Relying on the investigation findings, SEBI adjudication order, analyses of price manipulation and volume, and the list of beneficiaries, he concluded that the assessee had in fact obtained an accommodation entry of Rs. 1,25,79,787/- in the scrip of M/s Fro....
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.... that no delivery was taken, and that on such speculative activity he had suffered loss of Rs. 12,060/-. Reference was made to summaries of speculative losses and short-term capital losses, and to bank summaries showing total receipts of Rs. 6,21,901/- and total payments of Rs. 6,39,843/- in the year, in order to emphasise that no funds even remotely approaching Rs. 1,25,79,787/- had passed through the bank accounts. The assessee contended that he had not claimed any exempt LTCG or any set off of losses in the return and therefore there was no escapement of income and the question of any "accommodation entry" did not arise. 2.9 As regards the addition of Rs. 1,53,633/-, the assessee contended that no loan or any other sum had been received during the year from any concern controlled by Jignesh Shah or Sanjay Shah. The assessee further contended that this was verifiable from the bank statements, and that the Assessing Officer had not supplied basic particulars such as the name of the concern, the bank account and the date of receipt. 2.10 A remand report was called for from the Assessing Officer by the CIT(A) on the submissions filed. The Assessing Officer, vide letter dated 2....
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....ny cogent evidence from the assessee to explain the economic rationale of the transactions, and held that the assessee had failed to discharge the onus of establishing genuineness. The addition of Rs. 1,25,79,787/- as unexplained investment in penny stock transactions was accordingly confirmed. Likewise, in respect of the addition of Rs. 1,53,633/-, the CIT(A) held that the assessee had merely denied the transaction without furnishing corroborative evidence such as ledger accounts, detailed bank reconciliations or confirmations, that the information received from the Investigation Wing constituted tangible material, and that the onus under section 68 had not been discharged. 2.14 In conclusion, the CIT(A) held that all grounds of appeal were devoid of merit and dismissed the appeal, thereby sustaining the additions of Rs. 1,25,79,787/- and Rs. 1,53,633/-. 3. Still dissatisfied, the assessee has preferred the present appeal before us and has raised the following grounds: 1. Ld. CIT(A) has erred in law in upholding the validity of the Assessment Order passed by the Ao u/s 147 r.w.s.144 of the I.T. Act dated 25-03-2022 without issuing jurisdictional notice u/s 143(2) of....
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....he amount of Rs. 1,53,633/- as alleged and the said fact was verifiable from the bank account statements. The sustainment of addition made by the AO was therefore invalid. 6. Ld. CIT(A) erred in law and on facts in not appreciating that the Assessment Order passed by the AO was in violation of principle of natural justice for various reasons such as ; (i) not allowing the opportunity of being heard through the video conferencing mode despite specific request made in this regard (ii) the details and information based on which proceeding was initiated and addition was made were not provided (iii) the cross examination of persons whose statements were relied upon against appellant was not provided. 7. Your appellant craves leave to add, alter, amend, and/or delete any grounds as mentioned above during the course of appeal hearing. 4. During the course of hearing, the Authorised Representative for the assessee reiterated the factual background already placed on record and invited attention to the compilation filed in the form of a paper book. With reference to the statement of profit and loss account, contract notes issued by the registered brokers, ledger extracts....
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....in the assessment order. According to the Departmental Representative, the Assessing Officer rightly adopted the total income as the basis for computation in the best judgment assessment. 6. We have carefully considered the rival submissions on the preliminary legal ground challenging the validity of the reassessment on account of alleged non issuance of notice under section 143(2) after filing of the return of income in response to notice issued under section 148. We have also perused the assessment record as reproduced in the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals). 6.1 It is an undisputed position on record that the assessee did not file any return of income under section 139(1). The Assessing Officer initiated proceedings under section 147 and issued notice under section 148. The Assessing Officer issued statutory notices thereafter, but the assessee did not comply with the same. The assessee finally filed his return of income only on 17.03.2022, at a stage when the assessment was approaching the limitation date. The assessment order passed under section 144 does not make any reference to the said return. The Assessing Officer proceede....
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....eal with situations where the assessee furnished a return in response to section 148 in a timely manner and the Assessing Officer proceeded to frame an assessment under section 143(3) without issuing notice under section 143(2). The essential factual requirement for applying those decisions is absent here. The assessee's conduct of persistent noncompliance, coupled with a belated filing of return on 17.03.2022, disentitles him from invoking the protective ratio of such decisions. 6.6 We, therefore, hold that the absence of notice under section 143(2) in the present case does not render the assessment invalid. The assessment has been framed under section 144, which statutorily empowers the Assessing Officer to complete the assessment to the best of his judgment when the assessee fails to furnish the return of income within the stipulated time or fails to comply with statutory notices. The belated return filed by the assessee on 17.03.2022 cannot, in the facts of this case, invalidate the jurisdiction already assumed under section 147 nor can it vitiate the completion of assessment under section 144. In view of the foregoing discussion, the legal ground raised by the assessee c....