MR RAVINDRA BABULAL SHAH,MUMBAI vs. ITO-30(3)(1), MUMBAI

The grounds of appeal are as under:

In the facts and circumstances of the case and in law, the Assessment order passed by the Ld. AO as affirmed by the Ld. CIT (A) is bad in law and void for want of jurisdiction since the same is contrary to the extant law and also because the necessary pre-conditions for initiation as well as completion of a re-assessment u/s 147/148 are not fulfilled in the present case.

In the facts and circumstances of the case and in law, the assessment framed u/s 143(3) r.w.s. 147 is bad in law and void since: (i) The jurisdictional notice u/s 148 is issued by the Income Tax Officer - 30(1)(4), Mumbai who admittedly did not have jurisdiction over the Assessee and therefore the said Notice u/s 148 and all consequential proceedings are bad in law and void; (ii) The re-assessment is initiated without any application of mind and is not based on any information which could establish any live link to the formation of belief that income has escaped assessment in the present case and therefore the re-assessment is bad in law; (iii) The re-assessment is initiated based on reasons which could not be treated as reasons to believe at all in the eyes of law; (iv) The re-assessment is initiated without complying with the necessary condition of sanction as mandated u/s 151 of the Act; (v) The notice u/s 148 is issued by a different officer and the objections are disposed by a different officer which is contrary to the extant law; and; (vi) In any case, the re-assessment is initiated contrary to law and therefore void.

3 In the facts and circumstances of the case and in law, the re-assessment so initiated be quashed and set aside.

ON MERITS:

In the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the action of the Ld. AO in adding an amount of Rs.59,50,000/- as alleged unexplained income of the Assessee.

While doing so the Ld. CIT (A) failed to appreciate that:

3 In the facts and circumstances of the case and in law, the addition made by the Ld. AO deserves to be deleted and it is prayed accordingly.

In the facts and circumstances of the case and in law, the Ld. AO erred in levying interest u/s 234B & 234C of the Act on the Appellant.

Briefly stated facts of the case are that the assessee filed return of income declaring income at Rs.1,11,840/-.Subsequently, information was received from the Investigation wing of the Department that one Ms. Jayashri R Shivale, had opened 15 bank accounts in name of different proprietary concerns and provided entries from them. It was admitted by her during investigation that she had no idea about the nature of transactions being undertaken in the bank accounts and for providing her identity and PAN card for opening the accounts she was paid a nominal amount byone Vijay Patel. During the course of the assessment proceedings of Jayashree Shivale, details of beneficiaries who had availed entries through the Bank account was called for. From the transaction, it was revealed that the assessee, who is the proprietor

Aggrieved, the assessee filed appeal before the ld.CIT(A). According to the appellate order, he filed his replies and submissions. The ld.CIT(A) in respect of impugned transactions observed that complete denial of the assessee stating that he had no connection with the above concerns was not found acceptable since the reopening of the P a g e | 5 A.Y. 2011-12 Mr Ravindra Babulal Shah assessment was based on specific and credible information received from the DIT (Inv), Mumbai. Upon scrutiny, it was established that the assessee, Mr. Ravindra Babulal Shah, (Proprietor of M/s Raj Diamonds), had engaged in financial transactions with two of the bogus entitiesduring FY2010-11. These transactions established a direct link between the assessee and the suspected accommodation entry operators,thereby justifying the reassessment under applicable provisions of the Act. 4.1 He further observed that the assessee did not deny that the PAN used in the transaction belonged to him. The plea that someone else fraudulently opened a bank account and conducted transactions in his name, even if assumed, required clear and verifiable evidence. Merely lodging an FIR with the police after the reopening notice and not providing any conclusive investigation result or charge sheet against the alleged fraudster renderedhis defense unsubstantiated.The reliance on the police report is misplaced. While the appellant did file a complaint, the police communication explicitly states that “in the investigation of the complaint application made by you, it does not appear that you have opened the account anywhere, so we have filed the complaint application book” which did not establish fraud nor exonerate him. Moreover, the bank confirmed that the KYC and in-person verification

Before us, the ld.AR has refuted the observations and findings of the authorities below and reiterated the same contentions as made before them while the ld.DR supported the orders of lower authorities.

We have given thoughtful consideration to the entire matrix of the case. We find that the issue in hand required further investigation and enquiry rather than rejecting the contentions of the assessee without appreciating the merits therein and his inability to prove the P a g e | 7 A.Y. 2011-12 Mr Ravindra Babulal Shah negative. The matter also requires further enquiry from the Police authorities to ascertain the outcome of the complaints lodged by the assessee before it. The alleged entry providers also require to be examined as also KYC details submitted by the assessee in the bank. 6.1 Considering the totality of the facts and the circumstances of the case, we are of the considered opinion that the matter requires revisit by the AO so as to ascertain the reality so as toarrive at a concrete finding. Both the sides agreed to the proposal. Accordingly, we set aside the appellate order and remand the matter to the file of the AO for necessary action and to frame de novo assessment after according adequate opportunity of hearing to the assessee who is also directed to cooperate with the AO in this regard.

In the result, Thus, the grounds of appeal and the appeal are allowed for statistical purposes.