RAJVI SHAH,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

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ITA 399/AHD/2025Status: DisposedITAT Ahmedabad27 May 2026AY 2015-165 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the reopening under Section 147 was invalid as the AO relied solely on borrowed satisfaction from the Investigation Wing without independent verification. Therefore, the reassessment proceedings were quashed.

What were the facts?

The Assessing Officer (AO) reopened the assessment for AY 2015-16 based on information from the Insight Portal alleging fictitious profits from equity/derivative trading. The AO made an addition of Rs. 69,84,821/-. The CIT(A) confirmed the addition.

What were the issues?

Whether the reopening of assessment under Section 147 was validly initiated based on borrowed satisfaction? Whether the addition of alleged fictitious profits was justified?

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 144,Section 69,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR

For Appellant: Shri Deepak R. Shah, AR
For Respondent: Shri Rameshwar P. Meena, Sr DR
Hearing: 17.03.2026Pronounced: 27.05.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 24.01.2025, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2015-16.

2.

The assessee has raised following grounds of appeal :- “That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the Assessing Officer in making addition of Rs.69,84,821/- being bogus profit u/s 68 of the Act.”

3.

The assessee has also raised an additional ground of appeal which reads as under:-

“That the Ld. AO erred in law and in the facts of the case in reopening the case of the appellant u/s 147 of the Act.”

ITA No. 399/Ahd/2025 Rajvi Shah Vs. ITO Asst. Year : 2015-16 - 2– 4. Since the additional ground raised by the assessee is legal in nature and goes to the root of the assessment proceedings, the same is admitted for adjudication in view of the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT.

5.

In this case, the assessee filed return of income for the year under consideration on 30.09.2015 declaring total income of Rs.5,64,040/-. The original assessment was completed under Section 143(3) of the Act. Subsequently, information was received through Insight Portal alleging that the assessee had entered into fictitious profits/losses in equity/derivative trading amounting to Rs.69,84,821/- in the scrips namely Looks Healthcare Services Ltd. and Wagend Infra Venture Ltd. Based on the said information, the Assessing Officer reopened the assessment by issuance of notice u/s 148 dated 31.03.2021. Thereafter, assessment u/s 147 r.w.s. 144 of the Act was framed vide order dated 29.03.2022 making addition of Rs.69,84,821/- u/s 69 of the Act treating the transactions as fictitious profit/loss transactions.

6.

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A) who confirmed the action of the Assessing Officer.

7.

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before us.

8.

Before us, the Ld. AR submitted that the reopening is invalid in law since the Assessing Officer merely acted upon borrowed satisfaction on the basis of information received from the Investigation Wing/Insight Portal without conducting any independent verification or enquiry. The Ld. AR also submitted that the reasons recorded do not disclose any live nexus or independent formation of belief by the Assessing Officer regarding escapement of income. The Ld. AR further submitted that the issue is squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Jhaveri Trading and Investment Pvt. Ltd. Vs. DCIT, wherein, relying on in a group case i.e. Vicky Rajesh Jhaveri Vs. ITO in ITA No. 462/Ahd/2023 involving identical

ITA No. 399/Ahd/2025 Rajvi Shah Vs. ITO Asst. Year : 2015-16 - 3– facts and circumstances, similar additions were deleted. The Ld. AR also submitted that supporting evidences including stock summary, ledger account, item register and profit and loss account were furnished during appellate proceedings and a copy which was also placed on record before us.

9.

The Ld. DR, on the other hand, relied upon the orders of the lower authorities and submitted that the Assessing Officer had tangible material in possession suggesting escapement of income and therefore reopening was validly initiated. The Ld. DR also submitted that the assessee failed to establish genuineness of the transactions and therefore the addition was rightly made.

10.

We have heard rival submissions and perused the material available on record.

Validity of Reopening u/s 147 of the Act :- 10.1 On perusal of the reasons recorded, we find that the reopening has been initiated solely on the basis of information received from the Insight Portal/Investigation Wing alleging fictitious profits/losses in equity and derivative trading. The reasons recorded by the Assessing Officer merely reproduce the information received and thereafter conclude that income chargeable to tax has escaped assessment. For the sake of ready reference, the reasons recorded by the Assessing Officer are reproduced hereunder:-

“Issues as per reasons recorded for reopening

1.

Name of the assessee : Shah Rajvi Jayendra 2. PAN of the Assessee : AOVPS4221A 3. Assessment Year : 2015-16 4. Details of the Assessing Officer having : ITO, Ward-5(3)(1) Jurisdiction over the assessee Ahmedabad 5. Quantum of escapement : Rs. 69,84,821/- 1. Brief details of the assessee In this case, the assessee has filed return of income for the A.Y. 2015-16 on 30.09.2015 declaring total income of Rs. 5,64,040/-.

2 Brief details of Information collected/ received by the AO: In this case, information was reflected on Insight Portal. As per information uploaded, the following transaction was taken place by Shah Rajvi Jayendra during the F.Y. 2014-15.

ITA No. 399/Ahd/2025 Rajvi Shah Vs. ITO Asst. Year : 2015-16 - 4–

S. Source PAN Source FY Information Type Information Information No. PAN Value (Rs.) Remark Name 1 AACCA0359D Wagend 2014-15 Fictitious Profits in 11,95,629 Sale value Infra Equity/Derivative during the Trading year Venture Limited 2 AAHCM4915C Looks 2014-15 Fictitious Profits in 57,89,192 - Health Equity/Derivative Services Trading Ltd Total 69,84,821

3.

Basis of forming reasons to believe and details of escapement of income: On perusal of the details furnished and the information uploaded it is very clear that transaction of Fictitious Profits in Equity/Derivative Trading of Rs. 69,84,821/- was carried out By Shah Rajvi Jayendra during the F. Y. 2014-15 relevant to A. Y. 2015-16.

4.

Applicability of the provisions of section 147/151 to the facts of the case: After analyzing the above information provided by Investigation Wing the data made available in the ITS details of the assessee and since, the assessee has filed the return of income for A. Y. 2015-16 prima facie, I have reason to conclude that the assessee had failed to disclose fully and truly all the particulars of his income and income chargeable to tax has escaped assessment by an amount of Rs. 69,84,821/-. While forwarding the above information, Investigation Wing had also provided the relevant portion of Investigation. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the I.T. Act for A.Y. 2015- 16 by an amount of more than Rs. 1 lakh and I am satisfied that this is a fit case for re-opening the assessment for A.Y. 2015-16.”

From a plain reading of the reasons recorded, it is evident that the reopening has been initiated solely on the basis of information received from the Insight Portal/Investigation Wing. No independent enquiry or verification has been conducted by the Assessing Officer before recording satisfaction for reopening the assessment. It is well settled law that reopening under Section 147 cannot be based merely on borrowed satisfaction. The Assessing Officer must independently apply his mind to the material available before assuming jurisdiction under Section 147 of the Act. In the

ITA No. 399/Ahd/2025 Rajvi Shah Vs. ITO Asst. Year : 2015-16 - 5–

present case, except reproducing the information received from the Investigation Wing, no independent analysis or nexus has been brought on record by the Assessing Officer to demonstrate formation of belief based on his own satisfaction. Hence, we hold that the jurisdiction assumed by the Assessing Officer u/s 147 of the Act is not legally sustainable in the eyes of law, resulting in the quashing of reassessment proceedings.

11.

In the result, the appeal of the assessee is allowed.

The order pronounced in the open Court on 27.05.2026

Sd/- Sd/-

(T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 27/05/2026 **btk आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , अहमदाबाद / ITAT, Ahmedabad , , 1. Date of dictation ………words processed by the Hon’ble VP on his PC on …25.05.2026….. 2. Date on which the typed draft is placed before the Dictating Member ……25.05.2026….. 3. Other Member……….26,05.2026………… 4. Date on which the approved draft comes to the Sr.P.S./P.S …….26.05.2026….………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement ………27.05.2026…. 6. Date on which the fair order comes back to the Sr.P.S./P.S ……27.5.2026………………. 7. Date on which the file goes to the Bench Clerk ……27.05.2026…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order……………………………………

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