DEEPAK TRAMBAKLAL MEHTA,MUMBAI vs. INCOME TAX OFFICER 18(2) (4), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

ON NATURAL JUSTICE: 1.1 In the facts and circumstances of the case and in law the order passed by the Learned Commissioner of Income Tax (Appeals) -

48. Mumbai [the CIT(A)] which in turn affirmed the order passed by Learned Income Tax Officer - 18 (2)(4). Mumbai (the AO) is had in law and deserves to be quashed since the Assessment order passed by the AO is in itself void as the same is passed in gross violation of principles of Natural Justice.

ON JURISDICTION 10 FRAME THE RE-ASSESSMENT:

2.1 In the facts and circumstances of the case and in law, the CIT(A) erred in affirming the re-assessment order passed by the AO u/s 143(3) r.w.s. 347 of the Income Tax Act, 1961 (the Act).

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

(i) The necessary preconditions for initiation and completion of a reassessment u/s 147 / 148 were not fulfilled in the present case; (ii) There is no escapement of income in the present ease since the transactions as alleged by the AO are not undertaken by the Appellant and the assessee cannot be asked to prove the negative; (iii) The reassessment is void since no sanction as contemplated u/s 151 was obtained in the present case; (iv) The reasons as recorded by the AO are not in accordance with law and therefore the entire assessment is vitiated and deserves to be quashed.

2.3 In the facts and circumstances of the case and in law the reassessment framed by the AO is void and deserves to be quashed.

ON MERITS:

.1.1 In the facts and circumstances of the case and in law, the addition of Rs.3,90,894/- made by the AO and as affirmed by the CIT(A) is bad in law and deserves to be deleted.

3.2 While affirming the said addition the Ld. CIT (A) failed to appreciate that:

(i) The addition has been made merely on the basis of surmises and conjectures without any concrete evidence at all:

(ii) The addition is made on the basis of some confronted statements of some third parties before some other Authority and in fact the said parties are not even known to the Appellant:

(iii) The Appellant has not undertaken any such alleged transaction so as to enable the AO to make an addition in the hands of the Appellant:

(iv) The Appellant could not be asked to prove the negative and in fact admittedly there is no concrete evidence with the AO or even the CIT(A) on the basis of which the said addition has been made: and; (v) Even otherwise the addition made on the basis only of some third party statements is not sustainable since the Appellant was not granted an opportunity to cross examine them in spite of specific requests in this regard.

3.3 In the facts and circumstances of the case and in law the addition made by the AO and as affirmed by the CIT(A) deserves to be deleted.

In the facts and circumstances of the case and in law, the Appellant be granted the Set-off of deficit under the head Income from House property as claimed in the Return of Income amounting to Rs. 19896 which was neither rejected nor allowed by the Ld. AO in his order and such order affirmed by the Ld. CIT(A).

ISSUE No. 2 5. Under this issue the assessee has challenged the reopening of the assessment in view of the provisions u/s 147/148 of the Act. It is argued that there is no escapement of income in the present case since the transaction as alleged by AO are not undertaken to by the assessee could not be asked to prove the negative, therefore, the AO has no right to invoke the provisions u/s 147/148 of the Act. It is specifically argued that the reasons recorded by AO nowhere requires any cause of action, therefore, the reopening is bad in law. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. Before going further, we deem it necessary to advert the reasons for reopening u/s 147 of the Act on record: - ANNESURE Reasons for Re-opening of Assessment Deepak T. Mehta A.Y.2006-07

On verification of the information available from the record it was noticed that the assessee is one of the beneficiaries of accommodation entry from M/s. Mahasagar Group facilities by Mukesh Choksi and his group: The verification of the this transaction is required therefore, I have reason to believe that the assessee has not disclosed his true and full income in the return of income and the income chargeable to tax has escaped assessment as per section 147 of the I. T. Act 1961. Issue notice u/s 148 of the I. T. Act. (Seema Dhankhar) Asstt. Commissioner of Income- Tax-18(2) Mumbai 6. On appraisal of the above mentioned reasons, it is specifically mentioned that the assessee was one of the beneficiaries of accommodation entry from M/s. Mahasagar Group facilitated by Mukesh Choksi and his group and required verification. No transaction has been mentioned in the reasons. Nothing on record how the assessee is beneficiaries of accommodation entry from M/s. Mahasagar Group facilitated by Mukesh Choksi. Transaction is required to be reopened for verification only. There is no reason on record to which it can be assumed that there is escapement of income of the assessee. Apparently reopening is not proper. The AO nowhere applied his mind upon the information received by DGIT(Inv.), Mumbai. In this regard, we also find support of legal proposition settled by Hon‟ble Bombay High Court in the case of PCIT Vs. Shodiman Investments (P.) Ltd., reported in (2018) 93 taxmann.com 153 (Bom) and Nu Power Renewables P. Ltd. Vs. DCIT reported in (2018) 94 taxmann.com 29 (Bom) and Varshaben Sanatbhai Patel V. ITO

(2015) 64 taxmann.com 179. Taking into account of all the facts and circumstances, we are of the view that the AO has no jurisdiction to reopen the case of the assessee u/s 147/148 of the Act, therefore, we set aside the reopening and the decide this issue in favour of the assessee against the revenue.