TaxTMI 
TaxTMI 
2026 (2) TMI 567
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.... of the act and not proceeding u/s 153C of the Act. 3. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs. 1,84,87,500/- u/s 68 of the Act. 4. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs. 3,69,750/- u/s 69C of the Act. 5. The Learned CIT(A) erred in law and on the facts of the case in not allowing an opportunity of cross examination of persons whose statements were relied upon and personal hearing before confirming addition U/S 68 of the Act 6. Your appellant craves for leave to add, amend or alter all or any of the grounds before or during hearing of this appeal." 3. A perusal of the above grounds of appeal, reveals that the assessee apart from contesting additions made/confirmed by the lower authorities on merits, has also raised the legal ground relating to the validity of the reopening of the assessment u/s. 147 of the Act. Since the legal ground raised by the assessee goes to the root of the case, hence, the same is taken first for adjudication. 4. The brief facts of the case are that the as....
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....total income of Rs. 3,37,840/-. 2. Brief details of Information collected/ received by the AO: This office has received information from DCIT, Central Circle-1(1), Ahmedabad in connection with search and survey action was carried out at the resident and office of Shri Shirish Chandra Shah and at the residence of his key employees and associates on 09.04.2013 and subsequent days. During the course of search, it was found that Shri Shirish Chandra Shah is engaged in providing accommodation entries of share capital, share premium, share application money, unsecured loans, long term capital gains, short term capital gain/loss, trading loss etc. wherein cash is received by him from various clients and against this cash he provides accommodation entries. On analysis of the trade data and information, it is seen that the assessee has purchased/ sold 83500 shares of Sawaca and received pay-in/pay out of Rs. 1.84,67.500/- in the AY 2013-14. 3. Analysis of information collected / received: On verification of the information received the records of providing accommodation entries are maintained by Shri Shirish Chandra Shah in various excel sheets maintained in the name of in....
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....pay in received, he has also facilitated payment of cash aggregating to Rs. 35,50,000/-. Further there is also transfer of Rs. 30,75,000/- to the main account of Rajesh Jhaveri. On perusal of the trade data obtained from BSE and its correlation with the entries recorded in the "n Navkar sawaska" sheet, it has been found that the entries recorded in this sheet correlate with the actual trades executed on BSE. Entries with regard to the purchase and sale of shares of Sawaca by SCS through his infrastructure correlate with the actual trades executed on BSE. Entries with regard to the purchase and sale of shares of Sawaca by Shri Shirish Chandra Shah through his infrastructure correlate with the exchange data and with the sauda sheets impounded from the office of Shri Shirish Chandra Shah. Further, on analysis of the evidence impounded from the office of Shri Shirish Chandra Shah situated at "Bokadia Mansion" during the course of survey held on 09.04.2013, it has been found that sauda sheets for the trades executed by Shri Shirish Chandra Shah through synchronized trading have been impounded as Annexure A-6 & A-7. The loose papers impunded in these Annexures contain the trades....
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....investment. Hence, it is found that income of Rs. 1,84,87,500/- as per information received from DCIT, Central Cir. 1(1), Ahmedabad for the year under consideration has escaped assessment within the meaning sec. 147 of the IT. Act. 6. Basis of forming reasons to believe and details of escapement of income: From the detailed discussion made above, it is very clear that the assessee has purchased/sold 83500 shares of Sawaca and received pay-in/pay-out worth of Rs. 1,84,87,500/-. Further, the assessee has claimed exempt income of Rs. 1,83.67,048/-, In view of the above facts, I have reason to believe that income of Rs. 1,84,87,500/-has escaped assessment within the meaning of section 147. of the Act. Therefore, it is a fit case for reopening of the assessment by invoking the provision of section 147 of the I.T. Act 1961. Accordingly, it is fit case for issuing notice u/s. 148 of the I.T. Act. 7. Applicability of the provisions of section 147/151 to the facts of the case: In this case, the return of income was filed for the AY 2013-14 by the assessee and assessment u/s 143(3) was made on 31.07.2015 determining total income of Rs. 3,37.8410/-. Since, 4 years f....
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....ARMA Ward 5 (3)(1), AHMEDABAD" 5. Being aggrieved by the said order of the AO, the assessee preferred appeal before the Ld.CIT(A). 6. Before the Ld. CIT(A) the assessee raised the legal ground that the reopening of the assessment was bad in law being hit by the first proviso to section 147 of the Act as the assessment in this case was reopened after the lapse of 4 years from the end of the relevant assessment year and that the original assessment order was passed u/s 143(3) of the Act. The assessee also contested the additions on merits. The Ld.CIT(A), however, dismissed the appeal of the assessee deciding both the legal as well on merits issues against the assessee. 7. Being aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before the Tribunal. 8. We have heard the rival contentions of the Ld. Representatives of the parties and gone through the available material on record. The assessee has challenged these additions both on merits and on the jurisdictional ground that the reopening of assessment under section 147 was bad in law. Since the legal issue regarding the validity of reopening goes to the root of the matter, therefore the same is....
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....at the assessee was supposed to disclose which he has not disclosed along with the return of income or during the enquiries made by the AO in the original assessment carried out u/s 143(3) of the Act. The relevant part of the order in the case of "Mitesh Ashokkumar Patel vs. ITO" (supra), is reproduced as under: "9. It is pertinent to mention here that the AO, himself, has noted in the impugned assessment order that the assessee had filed the copy of Annual Financial Report and Audited P&L account and balance-sheet along with return of income, wherein various information/material were disclosed. At this stage, we had specifically put a query to the Ld.DR as to whether as per the legal requirement, the assessee was supposed to file along with return of income any other information/documents apart from that have been filed by the assessee along with return of income. He however, could not point out any such specific requirement, but, insisted that the aforesaid information as narrated in above points (a) to (d), was necessary for the just and correct assessment of income of the assessee. However, the Ld.Counsel for the assessee has submitted that the assessee had duly disclo....
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....see. 10. We find force in the contention of the Ld.Counsel. Now coming to the four points (a) to (d) as reproduced above by the AO to suggest that the assessee was supposed to disclose these particulars during the original assessment proceedings, we note that the assessee had already furnished all the particulars of his purchases and sales before the AO which were duly included in the audited accounts of the assessee. As noted above, the assessee had made numerous transactions and purchases during the year. If the AO doubted any of the particular transaction, he should have called for further details relating to such transaction from the assessee. However, there was no requirement as per law for the assessee to furnish any further information as to the nature of transaction regarding each of the purchase transactions as alleged. The assessee had duly disclosed that the nature of transaction was purchases of the gold ornaments/bullion from the said parties. The copies of delivery challan/receipt/proof of transportation, the names of parties, to whom the further sales were made from all the parties were furnished. The confirmations of purchasers, etc. were not required to fu....
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....rial facts necessary, only then he would have been justified in issuing the notice u/s. 148 of the Act. The Hon'ble Bombay High Court, therefore, held that the reopening of the assessment was hit by First Proviso to section 147 of the Act. The Hon'ble Bombay High Court also held that since the Assessing Officer has not applied his mind to the information received in the context of the facts on record, therefore, the notice issued u/s. 148 of the Act was also bad in law and therefore, the Hon'ble Bombay High Court quashed the notice and assessment framed u/s. 148 of the Act. 8.6. Even as noted from the reasons recorded, in case of search action in case of third party, no direct incriminating evidence has been found against the assessee otherwise the AO could have proceeded u/s 153C of the Act. Even the AO has wrongly observed that no assessment was carried out u/s 143(3) of the Act and hence the AO proceeded to reopen the assessment on the wrong premises, whereas, the original assessment was carried out u/s 143(3) of the Act. Hence, the AO erred in reopening the assessment despite the said action being hit by the first proviso to section 147 of the Act under the misbelief that th....