JAY MAULESH UKANI,RAJKOT vs. THE INCOME TAX OFFICER, WARD - 2(1)(2), RAJKOT, RAJKOT

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ITA 95/RJT/2025Status: DisposedITAT Rajkot10 August 2026AY 2013-1415 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reasons recorded by the Assessing Officer for reopening the assessment were not sufficient. Consequently, the reassessment proceedings were quashed.

What were the facts?

The assessee's case was reopened based on information suggesting bogus share transactions in M/s. Atlanta Infra & Finance Ltd. The Assessing Officer treated investments in shares and a gift received as unexplained. The CIT(A) confirmed these additions.

What were the issues?

Whether the reopening of assessment was based on sufficient reasons. Whether the additions made on account of unexplained investment in shares and unexplained cash credit were justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69,Section 68,Section 115BBE,Section 271(1)(c),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri D. M. Rindani, Ld. AR
For Respondent: Shri Anadi Dixit, Ld. Sr. DR
Hearing: 10/06/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member आयकरअपीलसं./ITA No. 95/Rjt/2025 [ �नधा�रणवष�/Assessment Year: 2013-14 ] Jay Maulesh Ukani, The Income Tax Officer, Pushkar, 15-B, Panchwati Ward -2(1)(2), Rajkot Vs. Society, Kalawad Road, Aayakar Bhavan Race Course Rajkot 360005, Gujarat Ring Road, Rajkot Gujarat-360001 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ADFPU9062J (अपीलाथ�/Assessee) (��यथ�/Respondent) Assessee by : Shri D. M. Rindani, Ld. AR Respondent by : Shri Anadi Dixit, Ld. Sr. DR Date of Hearing : 10/06/2026 10/08/2026 Date of Pronouncement : ORDER Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2013-14, is directed against the order under section 250 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 25.01.2025, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 of the Act, dated 28.03.2022. 2. The grounds of appeal raised by the assessee are as follows:

1.

The learned Commissioner of Income Tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of reopening of assessment u/s.148 of the I. T. Act and passed the order u/s 147 r.w.s 144 of the I T Act whereby assessed the total income of Rs.93,05,764/- as against the returned income of Rs.2,62,512/-, it is totally wrong, unwarranted, unjustified and bad in law. 2. The learned Commissioner of Income Tax (Appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of investment made in shares i.e. M/s. Atlanta infra and finance Ltd, amounting to Rs.77,93,252/-, is treated as unexplained investment u/s 69 of the I. T. Act and added to the total income of Rs.77,93,252/-, it is totally wrong, unwarranted, unjustified and bad in law. 3. The learned Commissioner of Income Tax (Appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of gift received from grandfather (blood relation) amounting to Rs. 12,50,000/- through proper banking channel is treated as unexplained cash credit u/s.68 of the I. T. Act and added to the total income of Rs.12,50,000/- and also wrongly applied the section 115BBE of the I. T. Act and taxed at higher rate, it is totally wrong, unwarranted, unjustified and bad in law. 4. The learned Commissioner of Income Tax (Appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of mentioned the facts in body of order which is very far away from the truth and made the addition totally on surmises and conjecture basis and initiated the demand of Rs.58,32,496/-it is totally wrong, unwarranted, unjustified and bad in law. 5. The learned Commissioner of Income Tax (Appeals), national faceless appeal centre has erred in not considering the appeal submission along with entire evidence which is already uploaded through e-filling portal and passed the order and dismiss the appeal and mentioned in the appellate order that the assessee has not filed any substantial written submission along with documentary evidence and dismissed appeal without verifying the records it is totally wrong, unwarranted, unjustified and bad in law. 6. The learned Commissioner of Income Tax (Appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of initiated the penalty proceedings u/s.271(1)(c) of the I T Act it is totally wrong, unwarranted, unjustified and bad in law. 7. The learned Commissioner of Income Tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of charging the interest u/s.234A, 234B, 234C it is totally wrong, unwarranted, unjustified and bad in law.

8.

Your applicant reserves the right in addition or alteration in the grounds of appeal at the of time of hearing.

3.

Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee has filed his return of income for assessment year (A.Y.) 2013-14, declaring total income of Rs.2,62,512/-, on 25.07.2013. Subsequently, the information was received in insight portal of Income Tax Department from DDIT (Investigation), Kolkata mentioning that M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) is a bogus entity and provided various beneficiaries companies a credit/debit entries to their book which were nothing but layering of funds among various accounts including this company. On examination of the above information with the assessee's case records, the case was reopened after recording reason for re- opening and taking the approval of Pr. CIT-Rajkot-1 and notice u/s 148 of the Act, was issued on 31/03/2021 and duly served on the assessee. The reasons for reopening u/s. 147 are reproduced as under: -

" Brief Details of the Assessee: Assessee is an individual. The address of the assessee is 158-Pushkar Kalawad Road, Panchwati Society, B/H Virani High School, Rajkot. Assessee has filed his return of income for A.Y. 2013-14 declaring total income of Rs. 2,62,512/-on 25.07.2013. Brief details of information collected/received by the AO: This information is available on Insight portal. As per the credible information received and available in the case of the above-mentioned assessee who is one of the beneficiaries who has carried out bogus transactions in shares of M/s Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd). The assessee has carried out transactions of Rs. 77,80,000/- during the year under consideration. Further, it is seen that assessee has filed return of income for the A.Y. 2013-14 declaring total income at Rs.2,62,512/-. As per the said information, the script M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) is a penny stock company and has been used by the Operators, Entry/Exit Providers and Beneficiaries claim business loss/LTCG/STCG for the purpose of introducing unaccounted cash in the books of accounts or to create fictitious losses in the return of income to avoid paying taxes due. The above-mentioned assessee has, during the year relevant to Assessment Year 2013-14, carried out share transactions of Penny Stock companies which were used to providing accommodation entries in the guise of LTCG/STCG. M/s Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) is entry provider/penny stock company engaged in providing accommodation entries. Since, the assessee has carried out share transactions in the said script and has earned capital gain out of the transactions in the said Script during the year. Since the script is a penny script, the genuineness of income earned out of the scrip as well as amount utilised for investment in shares along with its sources has remained unexplained for the period under consideration. The information contained a note of the trade pattern of the company and the report of the Inspector on physical discrete inquiry. Briefly narrating, 1) the Company does not exist at its address. Therefore, it lacks identity as well as genuineness, 2) Preferential allotment with spurt in price during lock in period & spurt in volume post lock in period, 3) Companies having weak financials and the price rise in such companies is not supported by the financials & 4) SEBI has suspended trading in the script &passed adverse orders. Analysis of information collected/received: All the above observations made regarding the unorthodox trade pattern of the scrip and the analysis of financial activities as well as price fluctuations concluding that the sharp and exponential rise in the Market price of the Scrip is not justified or supported by the Financials of the Company, it is penny scrip and that its price was artificially managed by a group of entry providers in the guise of exempt LTCG or STCL. The assessee has carried out transactions of Rs. 77,80,000/- during the year under consideration. Further, it is seen that assessee has filed return of income for the A.Y. 2013-14 declaring total income at Rs. 2,62,512/-. Considering the above discussed observation of the script M/s. Atlanta Infra & Finance Ltd., it is concluded that the above-mentioned assessee is one of the beneficiaries who has carried out bogus transactions in the said script aggregating to Rs. 77,80,000/- in the above-named script during F.Y.-2012-13. Since the transactions are bogus an amount to the tune of Rs. 77,80,000/-, income earned out of transaction in shares along with the cost of investment in such script held in the script of M/s Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) have remained unexplained within the meaning of sec. 68 of the Act and has escaped the assessment within the meaning of sec. 147 of the Act”. Findings of the AO: On verification of the record and above discussed facts in Para 2 to 4, it is seen that assessee is one of the beneficiaries who has carried out bogus transactions in shares in the above script. Since the transactions are bogus and script was managed by few players, the genuineness of income earned out of such shares transactions and sources of investment made has remained unexplained to the extent of Rs. 77,80,000/-. Since the transactions are bogus as discussed earlier above, total amount of transactions carried out in the script amounting to Rs. 77,80,000/-, has remained unexplained within the meaning of sec. 68 of the Act and has escaped the assessment within the meaning of sec. 147 of the Act”. Basis of forming reason to believe and details of escapement of income: In view of the above discussion in para 2 to5, the assessee has earned capital gain out of sale of shares and has invested in shares of M/s. Allanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) during the period. Therefore, the income earned out of sales of shares as well as amount utilised for investment in shares has remained unexplained. In view of the above discussion in para 4 & 5, total transactions to the tune of Rs. 77,80,000/-, 1, have, therefore, reason to believe that an amount of income earned and investment made in the script named M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) to the tune Rs. 77,80,000/- has escaped assessment in this case within the meaning of section 147 of the Act for which the assessment for A.Y. 2013-14 is required to be re-opened u/s 147 of the I.T. Act”.

4.

During the assessment proceedings, the assessing officer issued show cause notices under section 142(1) of the Act, dated 24.12.2021 and 10.02.2022. Against these show cause notices, the assessee submitted its reply before the assessing officer dated 27.12.2021. The reply submitted by the assessee, before assessing officer, is reproduced below:

“With reference to the above your honour has issued a notice u/s. 142(1) of the IT Act and called for the details as per notice dated 24.12.2021 in this regards we are submit herewith the following details for your honour's kind a perusal: 1. Our above named client has earned the income from Interest Income, Rent Income and Share Profit income. Copy of your P&L Account, Balance sheet, computation of income and other relevant documents for F.Y. 2012-13 relevant to A.Y. 2013-14 along with copy of valid return of income, filed in response to notice u/s 148 is attached herewith. 2. Copy of the all bank pass book/statement of all the bank accounts/FDRs held by you during F.Y. 2012-13 relevant to A.Y. 2013-14 is attached herewith. 3. Detail of all bank accounts is as under: Sr. No. Bank Name Account Number 1 IDBI Bank Ltd 119104000068226 4. Details of sale & purchase of share transactions along with demat account statements, broker's ledger and copy of relevant bank account statement, reflection receipts & payments of share transactions is attached herewith. 5. During the year under consideration our above named client has purchased the shares of M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) through banking channel. Entry is reflected in the Bank Account Statement attached herewith as per point no.2 above. Ledger Account from the books of broker Atlanta share shopee ltd (BSE) is attached herewith. No any sale of shares in the script Atlanta Infra & Finance Ltd done by our above named client during the year under consideration.

6.

If the scrip of M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) was purchased in no-physical form, Statement of demat account, reflecting the credit of shares of the this scrip is attached herewith. We are submit herewith the details as per information called for by your honour by virtue of provision of section 142(1) of the IT Act. We hope that your honour will satisfy with above contention. So we request your honour kindly accept the same and take on records and oblige”. 5. However, assessing officer rejected the above contention of the assessee and held that the assessee has failed to discharge his onus to substantiate his claim of investment. In view of the above facts and considering the findings of the search/ survey, inquiries conducted in the case of assessee, brokers, operators and the entry providers and the nature of transaction entered into by the assessee the entire investment on the scrip M/s Atlanta Infra & Finance Ltd. of Rs. 77,93,252/- was treated as unexplained investment u/s. 69 of the Act and added to the income of the assessee under head income from other sources and taxed u/s 115BBE of the Act. 6. The assessing officer further noticed that there is unexplained gifts u/s 68 of the Act. As per capital account of the assessee, it is seen that the assessee has received gift of Rs. 12.50 lakhs from Daya Bhai Patel. In this regard, the assessee was requested to prove the relation with him and submit copy of gift deed, return of income of Daya Bhai Patel and his bank account statement of reflecting the payment of gift with sources of the same. Therefore, assessing officer issued show cause notice to the assessee to explain the gift transaction. In response to the show cause notice, assessee submitted, copy of balance sheet, profit and loss, ground, capital account of the assessee for the year ended on 31.03.2013. The assessee also submitted copy of gift deed before ld.CIT(A). However, the assessing officer noted that the assessee has failed to prove the genuineness of gift transaction and creditworthiness and identity of the donor. Hence, Rs. 12,50,000/- was treated as unexplained cash credit u/s 68 of the Act and added to the income of the assessee under head income from other sources and taxed u/s 115BBE of the Act.

7.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer. The ld.CIT(A) noted that in absence of any substantial documentary evidences in support of its grounds of appeal, there is no infirmity in the order of Assessing Officer. Therefore, Addition of Rs. 77,93,252/- and Rs. 12,50,000/- were sustained.

8.

Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before this Tribunal.

9.

Learned Counsel for the assessee submitted written submission, on the technical ground, challenging the reopening of assessment under section 147 of the Act, which are reproduced below: “Reasons recorded are based on incorrect facts and hence notice u/s 148 becomes bad in law: 1. Reasons recorded for re-opening are reproduced on Page 2-3 of the assessment order and particular attention is invited to following: (i). In Para 2 of the reasons recorded, it is stated that "assessee is one of the beneficiaries who carried out bogus transactions in shares of Atlanta Infra & Finance Ltd." (ii). In Para 2 of the reasons recorded, it is stated that "the assessee has carried out share transactions in the said script and has earned capital gain out of the transactions in the said script during the year". (iii). In Para 3 of the reasons recorded, it is stated that "the income earned out of transaction in shares along with with the cost of investment in such script have remained unexplained within the meaning of Sec. 68 of the Act and has escaped assessment within the meaning of Sec. 147 of the Act.

(iv). In Para 5 of the reasons recorded, it is stated that "since the transactions are bogus total amount of transactions carried out in the script amounting to Rs. 77,80,000/- has remained unexplained within the meaning of Sec. 68 of the Act and .................". (v). In Para 6 of the reasons recorded, it is stated that "the assessee has earned capital gain out of sale of shares and has invested in shares of Atlanta Infra & Finance Ltd during the period and thus income earned out of sales of shares as well as amount utilised for investment in shares has remained unexplained. 2. It is noteworthy that during the year, the Assessee had purchased shares of the said company during the year and there was no sale of shares of said company during the year. 3. Thus, the reasons recorded are wholly and solely incorrect and the very basis of re- opening is based on incorrect facts and hence, notice u/s 148 and the entire reassessment proceedings are bad in law and deserves to be quashed. 4. There is no belief or any material showing that the purchases of the said shares were unrecorded or unaccounted and hence the question of same being unexplained cannot arise even at the stage of formation of belief. 5. Reliance in this regard, is placed upon following decisions: (i). Decision of Jurisdictional High Court in the case of Narendrakumar Mansukh Bhai Patel (2018) 92 taxmann.com 259 (Gujarat) wherein it was held that if the reasons recorded by the AO for re-opening assessment was palpably incorrect, impugned reassessment proceedings were to be quashed. (ii). Decision of Jurisdictional High Court in the case of Pranav Ramesh Parikh vs. Income- tax Officer [2025] 174 taxmann.com 384 (Gujarat) wherein it was held that if the reopening was based on incorrect assumptions and accordingly, reassessment notices be required to quashed. (iii). Decision of Delhi Tribunal in the case of Subhash Chand Gupta (2024) 168 taxmann.com 76 wherein it was held that when the very basis of formation of belief of Assessing Officer that income had escaped assessment in reasons recorded was fallacious and, accordingly, reasons recorded did not have live link to formation of belief of Assessing Officer vis-à-vis facts of instant case reopening made under section 147 being based on incorrect assumption of facts was to be quashed. Borrowed Satisfaction without application of mind by the A.Ο.: (1). Reasons recorded as reproduced in the assessment order Page 1-3, show that the A.O. has straightaway relied upon the information received by and that no independent inquiries are made by him. (2). There is no material referred to by the A.O. except the enquiry report on the share of Atlanta Infra & Finance Ltd. No other material has been referred to by the A.O. or made available. Particular attention is invited to following Paras of reasons recorded for re-opening:

(i). In Para 2 of the reasons recorded, the A.O. has stated that "as per credible information received and available in the case of above-mentioned assessee who is one of the beneficiaries who has carried out bogus transactions in shares of M/s Atlanta Infra and Finance Ltd.. (ii). Further, in the same Para 2 of the reasons recorded, it is stated that "as per said information, the script............. is a penny stock company and has been used by the Operators, Entry/Exit Providers and Beneficiaries................". (iii)In Para 4 of the reasons recorded, it is stated that "as per credible information available with this office as detailed in Para 2 & 3 above, the above-mentioned assessee is one of the beneficiaries who has carried out bogus transactions in shares of M/s Atlanta 4. Hence, this shows that no independent inquiries were carried out by the A.O. on the information received by him. Also, the belief of the A.O. is a borrowed one as no other material was available with the A.O. except the enquiry report and hence, on this count also, re-opening is bad in law. Reliance in this regard is placed on following decisions: (i). Decision of Gujarat High Court in case of Rikin Industries vs. Income-tax Officer [2025] 171 taxmann.com 58 (Gujarat) wherein it was held that if the reopening proceedings were on borrowed satisfaction by solely relying on information received from insight portal without forming any independent opinion is required to be quashed. (ii). Decision of Gujarat High Court in the case of Ashvin Dye-Chem Industries (2025) 171 taxmann.com 687 wherein it was held that where Assessing Officer issued reopening notice against assessee based on information received from insight portal that assessee had entered into non-genuine transactions in F&O trading and no verification of material on record was made by Assessing Officer reopening notice was unjustified. (iii). Decision of Gujarat High Court in case of Amitkumar Chandulal Rajani in SCA No. 2930 of 2022 dated 20-01-2025 wherein it was held that in absence of any link established between the material found and the reasons recorded, assessment u/s 147 deserves to be quashed. (iv). Decision of Delhi High Court in the case of Meenakshi Overseas P. Ltd. (2017) 82 taxmann.com 300 wherein it was held that where reassessment was resorted to on basis of information from DIT(Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. (V). Decision of Kolkata Tribunal in the case of Sangeeta Devi Anchalia Kolkata in ITA No. 236/R/2024 dated 02-01-2025 wherein it was held that re-opening on the basis of information received and arriving at conclusion without any independent application of mind and in fact a case of borrowed satisfaction”.

10.

On merits of the case, the learned Counsel for the assessee submitted the following written submissions.

“Contentions against the order of CIT(A) on merits:

1.

The Assessee has duly filed submissions along with evidence before the CIT(A) (Page 46-59). However, the same was not taken into consideration by the CIT(A) while passing the order u/s 250 of the Act. Reg. addition of Rs. 77,93,252/- u/s 69 of the Act: 2. During the year, there was no sale of shares of Atlanta Infra & Finance Ltd made by the Assessee and till date the said shares are not sold. Hence, in any case, question of escapement of capital gains/income does not arise. 3. Complete details regarding purchase of shares were filed both before the A.O. and the CIT(A). The Assessee filed a reply dated 27-12-2021 (Page 12) in response to notice u/s 142(1), stating therein details of purchase of shares of Atlanta Infra & Finance Ltd and it was clearly mentioned therein that no sale of said shares was made during the year under consideration. 4. Evidence in respect of purchase of shares of Atlanta Infra & Finance Ltd (Erstwhile known as Kadvani Securities Ltd) is on Page 23, 24-26, 66-69. All these details were filed before the A.O. and the CIT(A). 5. Further, addition cannot be made u/s 69 of the Act as the investment in shares was duly recorded in the books of accounts of the Assessee and explanation in this regard was also given to the A.O. and the CIT(A). Thus, when neither the investment was unrecorded nor the same was unexplained, addition u/s 69 cannot be made. 6. It may be pertinent to note that the A.O. has made addition of Rs. 77,93,252/- u/s 69 of the Act whereas the belief was formed for escapement of income of Rs. 77,80,000/- u/s 68 of the Act in the reasons recorded. Thus, addition is bad in law and deserves to be deleted. 7. Even presuming that the stock of the said company was held to be a penny stock, it would impact if at all, the receipt of the funds by assessee at the stage of sale only but at the stage of purchase, how can a registered purchase transaction of a listed company be termed as bogus or unexplained? 8. When the consideration for purchase has actually flown out from the books of accounts, there no provision of law under which the same can be treated as bogus, especially in absence of any tangible material showing that the money paid came back to the assessee. Reg. addition of Rs. 12,50,000/- u/s 68 of the Act: 9. Further, reg. addition of Rs. 12,50,000/- u/s 68 of the Act, the Assessee stated before the CIT(A) that it was a gift received from the grandfather of the Assessee for which gift deed along with ITR of the donor was filed (Page 60-65). Thus, since the identity, creditworthiness and genuineness of the amount received as gift gets established, addition u/s 68 deserves to be deleted. In view of above facts and case law relied upon, since the very basis of reassessment proceedings are bad in law, entire proceedings deserve to be quashed and additions of Rs.90,43,252/- made to returned income deserve to be deleted. Also, Since, all documents were available with both the A.O. and the CIT(A), the matter may kindly not be set aside and the finding may kindly be given by the Hon'ble Bench”. 11. On the other hand, Ld. DR for the revenue, argued that reopening of the assessment in the assessee’s case under consideration is in accordance with the provisions of section 147/148 of the Act. 12. On merit, learner DR for the revenue submitted that assessee has failed to explain the genuineness of the transactions, therefore, both additions made by the assessing officer should be upheld. 13. We have heard, both the parties and perused the material available on record. It is noteworthy that during the year, the assessee had purchased shares of the said company and there was no sale of shares of said company during the year, however, reasons recorded by the assessing officer states that there was sale of shares of said company, hence reasons were recorded on wrong premises. Thus, the reasons recorded are wholly and solely incorrect and the very basis of re-opening is based on incorrect facts and hence, notice u/s 148 of the Act, and the entire reassessment proceedings are bad in law and deserves to be quashed, as there is no belief or any material showing that the purchases of the said shares were unrecorded or unaccounted and hence the question of same being unexplained cannot arise even at the stage of formation of belief. Reasons recorded, as reproduced in the assessment order Page 1-3, show that the A.O. has straightaway relied upon the information received by and that no independent inquiries are made by him. There is no material referred to by the A.O. except the enquiry report on the share of Atlanta Infra & Finance Ltd. No other material has been referred to by the A.O. or made available. Hence, this shows that no independent inquiries were carried out by the A.O. on the information received by him. Also, the belief of the A.O. is a borrowed one as no other material was available with the A.O. except the enquiry report and hence, on this count also, re-opening is bad in law. For this reliance is placed on decision of Hon’ble Gujarat High Court in case of Rikin Industries Vs. Income-tax Officer [2025] 171 taxmann.com 58 (Gujarat) wherein it was held that if the reopening proceedings were on borrowed satisfaction by solely relying on information received from insight portal without forming any independent opinion is required to be quashed.

14.

We note that on similar identical facts, the issue is covered in favour of the assessee by the judgement of jurisdictional Gujarat High Court in the case of Narendrakumar Mansukh Bhai Patel, 92 taxmann.com 259 (Gujarat), wherein it was held as follows: “5.Having heard learned counsel for the parties and having perused the documents on record what emerges is that as per the reasons recorded for issuing the notice, the department had information suggesting that one R.P. Jambu Wala, a commodity trader was indulging in booking the contrive losses by utilizing NMCE platform. These losses would be set off against other income. In case of the assessee, he had booked such contrived losses to the extent of Rs. 16.51 lacs (rounded off) through NMCE platform operating through the proper M/s. R. P. Jambu Wala. Such contrived losses were set off against the assessee's other return of income. 6. According to the assessee, however, he had never claimed loss of Rs. 16.51 lacs and, in fact, the said figure appearing in his balance-sheet was on the credit side. The assessee had thus received the said sum of Rs. 16.51 lacs and not suffered such a loss, as alleged. The assessee pointed out this aspect to the Assessing Officer in the objection raised along with which, he had also produced his balance-sheet.

7.

There is nothing on the record that the said sum of Rs. 16.51 lacs was a loss claimed by the assessee. In fact, the balance sheet would show that the said figure was the assessee's receipt through sales. If the case of the Revenue was that after showing the sale of the commodities at Rs. 16.51 lacs, the assessee had claimed artificial losses. No such ground has come on record in the reasons recorded. The Revenue is bound by the reasons recorded by the Assessing Officer for reopening assessment which reasons are shown to be palpably incorrect. On the basis of the reasons recorded, it would not be possible to allow the Revenue to carry out fresh assessment. Facts are similar in all cases. 8. All petitions are therefore allowed. Respective impugned notices are set aside”.

15.

On the identical facts, our view is further fortified by the judgement of the jurisdictional Hon’ble High Court of Gujarat in the case of Pranav Ramesh Parikh 174 taxmann.com 384 (Gujarat), wherein it was held as follows: “7. Learned advocate Mr. B. S. Soparkar for the petitioner submitted that no income has escaped assessment in case of the petitioner as the reasons are factually incorrect. It was submitted that the information received in relation to JM Balanced Fund does not pertain to the petitioner as the short-term capital loss suffered by the petitioner is not from the said JM Balanced Fund. Reference was made to page-29 of the paper-book being part of the computation of total income showing the statement of short-term capital gains which was suffered by the petitioner during the year under consideration as well as the statement at page-31 and page-32 of the paper book to point out that none of the statements in name of JM Balanced Fund is found. It was therefore submitted that there is no question of dis-allowance of short- term capital loss arising from the JM Balanced Fund in the hands of the petitioner in the Assessment Year 2018-2019. 8. It was further submitted that allegations made against the petitioner in the notice issued under Section 148A(b) of the Act alleging Sham Transactions by the petitioner with JM Balanced Funds-Annual Dividend Option Regular Plan is based on survey action conducted under Section 133A of the Act in case of M/s. JM Financial Asset Management Limited ("JM Financial") on 15/02/2021 making allegations in the notice probable income of Rs.3,78,59,354/- chargeable to tax has escaped income, however, the allegations against the JM Financial do not implicate the petitioner in any manner as there is nothing to indicate that the petitioner had participated knowingly in a Sham Transactions to reduce the tax liability or earn dividend or book short term capital loss. It was also submitted that the respondent has not provided the documents sought for by the petitioner pertaining to such survey action. It was further pointed out that during the course of regular assessment, the petitioner has provided all the details in response to the notice issued under Section 142(1) of the Act and thereafter the assessment order dated 23/03/2021 was passed.

8.1. In support of his submissions reliance was placed upon the decision of Bombay High Court in case of Karan Maheshwari v. Asst. CIT [Writ Petition (L) No. 37211 of 2022, dated 8-3-2024] wherein in similar facts, the Hon'ble Bombay High Court quashed and set aside the orders passed in case of the said petitioner along with the notice of reopening under Section 148 of the Act. It was further submitted that the notice under Section 148A(b) refers incorrect facts and the impugned order under Section 148A(d) could not have been passed referring to the escapement of the income to the tune of Rs.13,48,09,249/- in absence of such amount referred to in the notice. It was further submitted that in the impugned order, it was stated by the respondent that the petitioner has not filed further submissions is also factually incorrect as the petitioner after the first reply of 16/03/2022 had filed reply on 22/03/2022 and was preparing reply pursuant to the documents supplied on 26/03/2022. It was therefore submitted that the impugned notice and order are liable to be quashed and set aside. 9. Per contra, learned Senior Standing Counsel Ms. Maithili Mehta for the respondent submitted that impugned order passed under Section 148A(d) of the Act and the notice for reopening are passed after taking into consideration the reply and the submissions made by the petitioner, inasmuch as, the petitioner was provided sufficient opportunity by the respondent and thereafter the impugned orders was passed along with the notice for re-opening. 10. It was submitted that the petitioner shall have an ample opportunity to make submissions during the course of the assessment proceedings and therefore, no interference be made at this stage while exercising extra ordinary jurisdiction by the Court under Articles 226 and 227 of the Constitution of India. 11. Considering the submissions made by learned advocates appearing for the respective parties as well as the record, it appears that the petitioner has disclosed the short-term capital loss suffered during the year under consideration in the computation of the income as well as return of income. On perusal of the statement placed on record pertaining to the short-term capital loss from the mutual fund at page-31 and 32 of the paper-book, there is no reference to JM Balanced Fund- Dividend as stated in the reasons forming part of the notice under Section 148A(b) of the Act being the information which led to reopening of the assessment. Perusal of the impugned order under Section 148A(d) of the Act also refers to the transaction made by the assessee during the Financial Year 2017-2018 pertaining to Assessment Year 2018-2019 refers to JM Equity Hybrid Fund only and not the JM Balanced Fund whereas the allegations in the notice is against the JM Balanced Fund-Annual Dividend Option Regular Plan of JM Financial which is alleged to have manipulated accounting methodology so as to artificially inflate the distributable surplus”.

16.

In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

17.

In the result, appeal filed by the assessee, is allowed.

Order is pronounced in the open Court on 10/08/2026.

Sd/- Sd/- [Shri Sonjoy Sarma] [Dr. Arjun Lal Saini] �याियक सद�य/Judicial Member S लेखा सद�य/Accountant Member //True Copy// राजकोट/Rajkot िदनांक/ Date: 10/08/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order

Sr. Private Secretary ITAT, Rajkot

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