TaxTMI 
TaxTMI 
2026 (10) TMI 49
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....nformation received from the Investigation Wing of the Department that the assessee had taken accommodation entry made by way of unexplained transaction amount to Rs. 3,20,97,440/- with Mr. Ashish Panchal, proprietor of M/s Nine Impex, and Rs. 8,33,00,000/- with M/s. Zara Trading Private Limited through Shri Renukamata Multi State Cooperative Urban Credit Society Limited, which comes total amount to Rs. 11,53,97,440/- during the impugned assessment year. As the total transaction of Rs. 11,53,97,440/- was not reflected in the ITR, the Ld. AO had initiated proceedings u/s. 147 of the Act. In response to the notice u/s 148, the assessee filed the return on 28.07.2021. The assessee engaged in business of importing electronic goods like batteries, torch, etc. and selling on local market on wholesale trading basis. In response to the notice, the assessee filed the written submission and informed that the assessee had no transaction with the Renukamata Multi State Cooperative Urban Credit Society Limited. But finally, the Ld. AO treated the entire transaction as a bogus transactions and the addition was confirmed total amount to Rs. 11,53,97,440/- with the total income of the assessee. Th....
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....) 09.12.2021 and 22.12.2021 49-50 6. Objection filed by the assessee 28.12.2021 51-54 7. Notice u/s 142(1) 24.01.2022 55-56 8. Showcause Notice 21.03.2022 90-98 5. The Ld. AR invited our attention in recorded reasons duly noted by the Ld. AO. The said recorded reason was supplied to the assessee, which is enclosed in APB page 45 to 46. The relevant part of the observations of the ld. AO is reproduced as below: "A search operation was carried out at the offices (head and branch) of M/s. Renukamata including head office at Ahmednagar and branch offices at Mumbai, Ahmedabad, Chennai, Hyderabad, Ulhasnagar by the Investigation Wing, Mumbai on 26.05.2017. During the field enquiries at the premises of account holders in Mumbai, it was found that most of such account holders are persons of low means and their financial profiling do not correspond to the high volume of cash deposits in their accounts with the society. It is further noticed that the assessee has involved in the transactions made with credit society during the F.Y.2014-15 as unexplained credit of Rs. 3,20,97,440/- and other transactions totaling to Rs. 8,33,00,00....
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....eproduced as below: "AO's Comments on Additional Grounds Ground No. 1: Reopening under Section 148 is bad in law The contention of the assessee is not acceptable. The notice under section 148 dated 31.03.2021 was issued after recording reasons to believe based on credible information received through the Insight/verification mechanism regarding financial transactions linked to the assessee. The Assessing Officer applied independent mind to the information before recording reasons and obtaining the requisite statutory approval under section 151. The validity of reopening has already been upheld during the assessment proceedings. The reassessment proceedings were initiated in accordance with the provisions of the Income-tax Act, and therefore the reopening is valid in law. Ground No. 2: Details of alleged transactions were not provided The assessee's contention is denied. During the reassessment proceedings, notices under sections 148 and 142(1) were duly issued, providing sufficient opportunity to the assessee to explain the transactions. The assessee was informed of the basis of reopening and was given adequate opportunity to fur....
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....ent proceedings does not cure the above defect. The procedure laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO & Ors. reported in [2003] 259 ITR 19 (SC) requires the Assessing Officer, upon receipt of objections to the notice for reopening, to dispose of the same by passing a speaking order before proceeding with the reassessment. Consideration of the objections in the course of reassessment cannot substitute the requirement of their disposal in the manner prescribed. 10. We further find that the Hon'ble Bombay High Court in KSS Petron Pvt. Ltd. v. ACIT, ITA No. 224 of 2014, order dated 03.10.2016, as relied upon in the present proceedings, has held that failure to follow the procedure prescribed in GKN Driveshafts (India) Ltd. (supra) goes to the jurisdiction of the reassessment proceedings and such defect cannot be cured by restoring the matter to the Assessing Officer. The same principle has also been referred to in Jayanthi Natarajan v. ACIT reported in [2018] 100 taxmann.com 511 (Madras). 11. In the present case, the assessee's objections dated 28.12.2021 were admittedly on record, whereas no separate speaking order disposing of t....