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Facts
The assessee's original assessment for AY 2012-13 was completed under Section 143(3). Subsequently, the assessment was reopened under Section 147 based on information received from a third party regarding accommodation entries, specifically the purchase of shares from alleged penny stock companies. The Assessing Officer made additions under Section 69 for unexplained income related to share purchases and disallowed losses from other share transactions, along with a notional commission. The assessee contested the validity of the reopening, arguing it was a 'change of opinion' and based on information already available during the original assessment or proceedings under Section 153C.
Held
The Tribunal found that the issues forming the basis for reopening the assessment were already considered and dealt with in the original assessment proceedings under Section 143(3). The reopening of assessment under Section 147 was thus deemed a 'change of opinion' and invalid. Consequently, the reassessment order passed under Section 143(3) read with Section 147 of the Act was quashed.
Key Issues
Validity of reassessment initiated under Section 147 of the Income Tax Act based on a 'change of opinion' concerning share transactions, and whether the information relied upon for reopening was new or already part of original assessment/other proceedings.
Sections Cited
147, 148, 143(3), 153C, 69, 131, 143(2), 142(1), 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 14-09- 2023 passed by CIT(A)-11, Ahmedabad for assessment year 2012-13.
The grounds of appeal
are as under:- “[1] Assessment order is bad in law and invalid, the same being based on change of opinion and having been passed without consideration of the objections/submissions filed disputing the validity of notice u/s.148 and reassessment proceedings pursuant thereto.
1. The ld. CIT(A) has grievously erred in law and on facts in not appreciating the fact that the reopening of assessment vide notice u/s.148 dated 31/03/2019 is based on information received from a third party viz. DCIT, Central Circle-2(2), Mumbai vide Letter No. Mum/DCIT/CC- 2(2)/Intimation/2016-17/470 dated 05/12/2016. The appellant states that the information having been received before 3 years and since the entire observations and the allegations in the reasons recorded already forms part of Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 the original assessment order passed u/s.143(3) of the Act dated 31/03/2015 in case of the company itself as well as in the reasons recorded for reopening of assessment in case of other assesses of the group way back in the year 2015, the reopening of assessment is invalid and bad in law since no fresh tangible material has been brought or is available on record for reopening the completed assessment.
2. The ld. CIT(A) has further erred in not appreciating the fact that subsequent to the assessment u/s 143(3) of the Act vide order dated 31/03/2015, the department had initiated proceedings u/s 153C of the Act vide notice dated 02/11/2018 for A.Y.2009-10 to Α.Υ.2014-15 and had passed assessment orders dated 26/12/2018 u/s 153C of the Act. Thus, at the time of both initiation as well as completion of the proceedings u/s. 153C of the Act, the AO was already in possession of so called information dated 05/12/2016 received from DCIT, Central Circle-2(2), Mumbai on the basis of which the assessment has been reopened now vide notice u/s. 148 of the Act dated 28/03/2019 i.e. after lapse of 27 months from the date of receipt of information. However there was not an iota of reference of the said information in the proceedings/assessment order u/s 153C of the Act. The reopening of assessment is thus invalid and bad in law.
3. The appellant states that the assessment was reopened while alleging that the appellant company has not shown the purchase of shares of Chandni Textiles, Shri Ganesh Spinners and Avance Technologies aggregating to Rs.1,16,34,370/- in its books of accounts and that the funds utilized for purchase of such shares have not been accounted for in the return of income and therefore have not been offered to tax. The said observation being blatantly contrary to facts and evidences available on record since the purchases are duly accounted for in books of account, evidences in support of transactions having been filed and verified by the then AO prior to issuance of notice u/s.148 of the Act while passing order u/s.143(3) of the Act, the reopening of assessment now on the same set of facts and material vide notice dated 28/03/2019 and that also on incorrect observations has no legs to stand independently and thus requires to be dropped on facts itself.
4. The ld. CIT(A) has failed to consider the fact that the re-assessment proceedings and consequential reassessment order is bad in law and without jurisdiction and requires to be quashed as void-ab-initio inasmuch as notice us. 148 of the Act being itself bad in law and invalid since the same is reopened not only on the basis of BORROWED SATISFACTION but also CHANGE OF OPINION as well as general and vague material and information received from a third party and not case specific material/evidence found in case of the appellant.
5. The Id. CIT(A) has erred in not considering the fact that the AO had failed to furnish the copy of material or evidences relied upon including statements recorded as referred to and relied upon in the reasons recorded, along with an opportunity of cross examination of such persons for initiating the proceedings u/s 147 of the Act by issuing the notice u/s.148 of the Act.
6. The ld. CIT(A) has failed to appreciate the fact that the AO while passing order disposing of appellant's objections has erred in not addressing the specific objections raised before him and having rejected the objections on the basis of irrelevant observations apart from the fact that the objections have been disposed off only one day prior to the date of assessment order as a formality thus depriving the appellant to peruse the same and file a rejoinder. The impugned reassessment order is thus wholly unjustified and bad in law and hence requires to be quashed as void-ab-initio.
7. The ld. AO has grievously erred in reopening the assessment on different stands to the convenience of the department in the reasons recorded in case of Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 various members of the appellant's family/group concerns. The AO in some cases have disallowed only the net loss incurred in trading of shares of various companies allegedly held as penny stock companies while in some cases have disallowed and added the entire purchase value of shares of such companies on identical facts and though all such companies were treated/alleged to be penny stock companies. The appellant states that such contradictory and fluctuating stands in different cases itself speaks of the manner in which the assessment has been reopened and additions have been made.
In view of the above, the appellant company submits that both i.e. notice issued u/s 148 of the Act as well as the impugned assessment order passed in pursuance of the said notice requires to be quashed.
[II] AO has erred in making various additions outside the scope and ambit of reassessment proceedings
1. The ld. CIT(A) has erred in not appreciating the fact that the AO has grievously erred in law and on facts in making various additions which did not form part of information received on the basis of which reasons were recorded. The appellant states that since the said issues being outside the scope and ambit of reasons recorded and having been raised for the first time by issuing show cause notice only a couple of days prior to limitation period is wholly unjustified, arbitrary and bad in law and thus requires to be deleted on this general ground itself.
2. The ld. CIT(A) has further erred in not appreciating the fact that the AO has erred in making such additions which are not only beyond Jurisdiction but have resulted in a high pitched assessment in flagrant violation of the principles of natural justice and equity, more particularly when the said issues have been raised at the fag end of the limitation period though the alleged information was already available with the AO since long. The appellant thus states that it was effectively deprived/denied by the AO a fair chance in filing a reasonable reply in response to the show cause notice and defend its case within the short time granted notwithstanding the fact that the said issues already having been fully considered and dealt with in the original assessment proceedings u/s.143(3) of the Act.
[III] Addition on account of disallowance of purchase consideration of shares of Chandni Textile & Engineering Industries Ltd., Shri Ganesh Spinners Ltd. and Avance Technologies Ltd, as unexplained income u/s.69 of the Act Rs.1,16,34,370/-
1. The ld. CIT(A) has grievously erred in law and on facts in confirming the addition of Rs.1,16,34,370/- made by the AO being the purchase value of shares of Chandni Textile & Engineering Industries Ltd., Shri Ganesh Spinners Ltd. and Avance Technologies Ltd. as unexplained income u/s.69 of the Act while not considering and/or blatantly ignoring the details and comprehensive evidences available/filed in support of genuineness of the purchase/sale transactions of 3 companies as well as without verification of facts by mechanically relying upon the information received from a third party before 3 years. In view of facts, submission and evidences filed during the course of original assessment proceedings u/s 143(3) of the Act and the stand taken therein by the then AO and considering the fact that the appellant is engaged in the business of trading in shares, the impugned addition of Rs. 1,16,34,370/- ought to have been deleted.
2. The ld. CIT(A) erred in not considering the fact that the impugned addition is made by the AO while alleging that the appellant company has not shown the purchase of shares of Chandni Textiles, Shri Ganesh Spinners and Avance Technologies aggregating to Rs.1,16,34,370/- in its books of accounts Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 and that the funds utilized for purchase of such shares have not been accounted for in the return of income and therefore have not been offered to tax, which observation is blatantly contrary to facts and evidences available on record since the purchases are duly accounted for in books of account and evidences in support of transactions having been filed and verified by the then AO prior to issuance of notice u/s.148 of the Act while passing order u/s.143(3) of the Act. The reopening of assessment vide notice dated 28/03/2019 on the basis of such incorrect observations is bad in law and against the settled tenets of law.
3. The ld. CIT(A) has failed to appreciate in not considering or appreciating the fact that the AO while passing the assessment order u/s.143(3) of the Act has considered all the transactions entered into by the assessee company with all the companies alleged to be controlled and managed by Shirish C. Shah and after due verification of facts and application of mind has also disallowed the loss in trading of shares of Shri Ganesh Spinners Ltd. amounting to Rs.9,73,389/-. Thus, now adding back the entire purchase value of shares of the same company viz. Shri Ganesh Spinners Ltd., the trading loss of which has already been disallowed in original assessment proceedings is not only beyond jurisdiction and based on change of opinion but is also contrary to the stand taken by the AO in the original assessment proceedings and thus requires to be deleted.
4. The ld. CIT(A) has erred in not considering or appreciating the fact that the AO while passing the assessment order u/s.143(3) of the Act has considered all the transactions entered into by the assessee company with all the companies alleged to be controlled and managed by Shirish C. Shah, which interalia, includes Chandni Textile Engineering Industries Ltd. and Avance Technologies Ltd. and after due verification of facts and application of mind has not made any addition in respect of purchase/sale as well as resultant profit/loss in trading of shares of said companies since the appellant had not incurred any loss but had earned profit of Rs.33,87,207/- and Rs.2,62,645/-resp. as a result of trading in shares of the said 2 companies. Thus, now adding back the entire purchase value of shares of the said companies as bogus and unexplained income u/s. 69 of the Act is not only beyond Jurisdiction and based on change of opinion but is also contrary to the stand taken by the AO in the original assessment proceedings and thus requires to be deleted.
5. The ld. CIT(A) has further failed to appreciate the fact that not a single transaction entered into even remotely with the companies and entities purportedly controlled by Shirish C. Shah has been left unverified during the original assessment proceedings by the then AO and conscious decisions have been taken while passing assessment order u/s.143(3) of the Act. Thus, the reopening of assessment on the same facts, which also stood verified extensively by the then AO is wholly unjustified and bad in law, the same being purely based on change of opinion and the same information which was available at the time of original assessment u/s.143(3) of the Act.
6. The AO has erred in not considering and appreciating the fact that the purchase/sale transactions as well as trading in shares of Chandni Textile & Engineering Industries Ltd., Shri Ganesh Spinners Ltd. and Avance Technologies Ltd. and the resultant profit/loss, if any, is genuine and has been carried out on screen based faceless digital platform i.e. on a terminal in normal course of trading activity, through BSE/NSE and registered stock brokers, receipts/payments are through banking channels, shares are duly reflected in demat account, purchase and sale is at prevailing market rates and the STT and other Govt. levies on sale of shares have been duly paid. Thus, in absence of any contrary evidence brought on record to disprove the comprehensive evidences filed, the impugned addition of Rs. 1,16,34,370/- requires to be deleted.
7. The appellant states that since it is not the case of the AO that the said alleged bogus transactions have been carried out in connivance with BSE and registered brokers and keeping in view the fact that BSE has also not treated transactions in the said companies as bogus or sham and having also not classified theses penny stock companies, the impugned addition being based on mere surmises and conjectures is wholly unjustified and bad in law.
8. The ld. CIT(A) has also erred in not considering the fact that the AO has failed to provide the complete details/material/evidences including the information/data collected from BSE, evidence in support of approval obtained u/s.151 of the Act as well as statements recorded, if any, along with an opportunity of their cross examination as referred to and relied upon in the reasons recorded and the assessment order for making the impugned addition.
9. The ld. CIT(A) has erred in not considering the fact that the AO has reopened the assessment on different stands to the convenience of the department in the recorded in case of various members of the appellant’s family/group concerns. The AO is some cases have disallowed only the net loss incurred in trading of shares of various companies allegedly held as penny stock companies while in some cases have disallowed and added the entire purchase/sale value of shares of such companies on identical facts and though all such companies were treated/alleged to be penny stock companies. The appellant states that such contradictory and fluctuating stands in different cases itself speaks of the manner in which the assest has been reopened and additions have been made. The impugned addition of 1,16,34,370/- thus requires to be deleted on this ground itself.
The ld. CIT(A) has also erred in not appreciating the fact that the AO has taken contradictory stands in as much as treating the purchase value of shares of some companies as bogus and unexplained income while accepting the sale of shares of the very same companies as genuine. That apart, the AO while accepting the profit in trading of shares of various companies has disallowed the loss in trading of shares of same/other companies though all such companies were treated/alleged to be penny stock companies. Such an approach is wholly unjustified arbitrary and bad in law.
In view of the above, the addition of Rs.1,16,34,370/- being the purchase of stars of Chandni Textile & Engineering Industries Ltd. Shri Ganesh Spinners Ltd. and Avance Technologies Ltd. requires to be deleted.
[IV] Addition on account of disallowance of loss in trading of shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekharati Poly Yarn Ltd. Rs.38,48,145/-, Rs.5,95,620/- and Rs.1,13,31,105/-respectively
1. The ld. CIT(A) has grievously erred in law and on facts in confirming the addition of Rs. 38,48,145/- Rs.6,95,620 and Rs. 1,13,31,105/- made by the AO being loss made in trading of shares of Gujarat Meditech Ltd. Divani Chemicals Ltd. and Shettava Poly Tam Ltd. merely on surmises and conjectures as well as without verification of facts by mechanically relying upon the various findings, allegations and observations in the information received from a third party. In view of facts, submission and evidences filed and more particularly the fact that the appellant is engaged in the business of trading in shares the impugned addition of Rs.38,48,145/- Rs.6,95,620/- and Rs.1,13,31,105/- requires to be deleted.
2. The ld. CIT(A) has erred in not considering and appreciating the fact that the trading in shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekhavati Poly Yarn Ltd. and the resultant loss is genuine and has been carried out on screen based faceless digital platform i.e. on a terminal in normal course of trading activity, through BSE/NSE and registered stock Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 brokers, receipts/payments are through banking channels, shares are duly reflected in demat account, purchase and sale is at prevailing market rates and the STT and other Govt. levies on sale of shares have been duly paid. Thus, in absence of any contrary evidence brought on record to disprove the comprehensive evidences filed, the impugned addition of Rs.38,48,145 Rs.6,95,620/- and Rs.1,13,31,105/-requires to be deleted.
3. The appellant states that since it is not the case of the AO that the said alleged bogus transactions have been carried out in connivance with BSE and registered brokers and keeping in view the fact that BSE has also not treated the transactions in the said companies as bogus or sham and having also not classified them as penny stock companies, the impugned addition being based on mere surmises and conjectures is wholly unjustified and bad in law.
The appellant also states that in assessment orders passed u/s.143(3) of the Act in earlier and subsequent years, including the assessment order passed by the earlier AO u/s.143(3) of the Act, the trading in shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekhavati Poly Yarn Ltd. and the resultant profit/loss having been accepted and no addition having been made, the addition on account of disallowance of loss of Rs.38,48,145/- Rs.6,95,620/- and Rs.1,13,31.105/-on account of trading in shares of the said 3 companies in the reassessment proceedings is not justified and is bad in law in absence of any change in facts.
5. The ld. AO has erred in not providing the complete details/material/evidences including the information/data collected from BSE, evidence in support of approval obtained u/s.151 of the Act as well as statements recorded, if any, along with an opportunity of their cross examination as referred to and relied upon in the reasons recorded and the assessment order for making the impugned addition of Rs.38,48,145/-, Rs.6,95,620/- and Rs. 1,13,31,105/- on account of loss incurred in trading of shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekhavati Poly Yam Ltd., during the course of assessment proceedings for appellant's rebuttal.
In view of the above, the addition of Rs.38,48,145/- Rs.6,95,620/- and Rs.1,13,31,105/- being loss incurred in trading of shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekhavat Poly Yarn Ltd. is required to be deleted.
(V) Addition on account of commission allegedly paid on purchase consideration of shares of Chandni Textile & Engineering Industries Ltd., Shri Ganesh Spinners Ltd. and Avance Technologies Ltd. and loss incurred in trading of shares of Gujarat Meditech Ltd., Dhvanil Chemicals Ltd. and Shekhavati Poly Yarn Ltd. aggregating to Rs.2,75,09,240/- @ 0.25% - Rs.68,773/-
1. The ld. CIT(A) has erred in law and on facts in confirming the notional/estimated addition of Rs.68,773/- made by the AO being commission allegedly paid on purchase consideration of shares of 3 companies and loss incurred in trading in shares of another 3 companies of entirely on surmises, conjectures and assumptions. In view of facts and elaborate contentions raised in Ground of Appeal No. III & IV hereinabove, since the additions itself being on wrong premises and assumptions and liable to be deleted, the corresponding addition of notional commission allegedly paid also requires to be deleted.
2. The ld. CIT(A) ought to have considered the fact that no such addition is made in case of other family/group assesses' on identical facts and hence in absence of change in facts, the impugned addition deserved to be deleted on the basis of AO's stand in other cases of the group entities on identical facts.
The appellant company craves leave to add, amend, alter, modify or delete any of the above grounds and to submit additional grounds at the time of hearing of the appeal.”
The original return of income for assessment year 2012-13 is filed by the assessee on 30-09-2012 declaring total income at Rs. 1,51,61,150/-. The scrutiny assessment in this case u/s. 143(3) of the Act was completed on 31-03- 2015 wherein the income of the assessee was assessed at Rs. 12,39,18,389/-. Being aggrieved by the said assessment order, the assessee filed appeal before ITAT and subsequently the Tribunal deleted the addition vide order dated 13-06-2024 in to 403/Ahd/2023. On the basis of information regarding accommodation entries received from DCIT, Central Circle-2(2), Mumbai, the case of the assessee was reopened u/s. 147 of the Act and a notice u/s. 148 of the Act was issued to the assessee on 28-03- 2009. Subsequently, the notice u/s. 143(2) of the Act dated 14-09-2019 and notice u/s. 142(1) of the Act dated 07-10- 2019 along with questionnaire was issued to the assessee. In response to the notice u/s. 148 of the Act dated 31-03- 2019, the assessee filed return of income on 20-04-2019 declaring total income at Rs. 1,51,61,150/-. A copy of reasons recorded for reopening of the assessment for assessment year 2012-13 was provided to the assessee vide letter dated 09-10-2019. The details furnished by the assessee was taken on record by the Assessing Officer. The Assessing Officer observed that the assessee is engaged in the business of trading of shares, securities, derivatives and commodities. As per information, the assessee company purchased shares of Chandani Textiles from various entities 7 Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 through off line transactions. The companies through which shares have been purchased are the companies managed and controlled by Shri Shirish C. Shah, an accommodation entry provider from Mumbai. A search and survey action was carried out at the residences and offices of Shri Shirish C. Shah along with his key employees and associates.
3.1 The Assessing Officer observed evidences were found that Shri Shirish C. Shah was engaged in providing accommodation of share capital, share premium, share application money, unsecured loan, LTCG and STCG wherein he used to receive cash from various clients and against the cash so received he used to provide accommodation entries through web of 212 companies which were used for layering of funds and purchase and sale of shares. Date-wise and entity-wise details of transactions in the scrip of Chandani Textile was reproduced by the Assessing Officer in para 4.1 of the assessment order. The Assessing Officer observed that on the basis of various evidences and statement of Shri Shirish C. Shah, it was established that he was giving arranged accommodation entries through various companies which were controlled by dummy directors. The companies namely; Chandani Textile and Avance Tech and Shri Ganesh Spinners are also part of entities controlled by him. These companies have also been utilised for providing accommodation entries in the form of capital/LTCG/STCG etc.
Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 3.2 The Assessing Officer observed the source of funds remained unexplained and one of the directors of assessee company namely Shri Rajesh N. Javeri was one of the key associates of Shri Shirish C. Shah and he had introduced various clients of accommodation entries to Shri Shirish C. Shah. From the excel sheet seized during the search proceedings from Shri Shirish C. Shah it was revealed that names of Shri Rajesh N. Javeri, N Navkar, R. Jhaveri and N. Navkar (Sawaca) entered into the cash sheet of excel file seized from Shirish Shah related to Shri Rajesh Javeri. Similarly, the accommodation entries recorded to have been paid in the cheque sheets with these references, were found. The Assessing Officer issued show cause notice dated 20- 12-2019 thereby asking as to why the bogus loss of Rs. 1,16,34,317/- for purchase of aforesaid shares be not treated as unexplained income u/s . 69 of the Income Tax Act.
3.3 In response to the said show cause notice, the assessee furnished objections dated 25-05-2019. After taking cognizance of the same, the Assessing Officer observed that physical shares in the aforesaid scrip purchased by assessee company were utilized through unaccounted money of the assessee company. These funds were controlled by Shri Shirish C. Shah and utilized for accommodation entries in the capital/LTCG/STCG. Therefore, an amount of Rs. 1,16,34,370/- for purchase of shares of the said scrips were treated as unexplained income u/s. 69 of the Income Tax Act.
3.4 The Assessing Officer further observed that scrip of Gujarat Meditech Pvt. Ltd. and Veronic Production Ltd. are amongst the web companies involved providing accommodation entries to various beneficiaries. The directors of companies/persons are not carrying out genuine business of activities and are engaged into providing accommodation entries. Shri Jignesh Shah also admitted in his statement on oath u/s. 131 of the Income Tax Act that he had facilitated accommodation entries of long term capital gains. Such entries were facilitated mainly through Shri Sanjay Shah and Shri Tushar Shah. He used to receive cash against said sale through mediators and cash received used to be given to the mediators or Angadia passing the cash used to be transferred through buyers. In such manner, the beneficiaries used to buy shares from their own cash through him and he used to get commission for accommodation entries of LTCG @ 0.25 paisa per Rs 100. After discussing the details of the transactions, the Assessing Officer observed that the assessee company has paid commission throughout these transactions. Thus, the Assessing Officer made addition of Rs. 38,48,145/- towards disallowance of loss in transactions of shares of Gujarat Meditech Pvt. Ltd..
3.5 The Assessing Officer also made addition of Rs. 6,95,620/- towards disallowance of loss in transaction of shares of Dhvanil Chemical Ltd..
Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 3.6 The Assessing Officer also made addition of Rs. 1,13,31,105/- towards capital gain/loss claimed through the scrip of M/s. Sekhavati Polly Yarn Ltd. as the same was held to be not genuine. Thus, claim of loss incurred by the assessee company in transactions of purchase/sale of shares of Shekhavati Polly Yarn Ltd. was rejected and added to the total income by the Assessing Officer.
3.7 The Assessing Officer also made addition of Rs. 68,773/- towards commission paid by the assessee @ 0.25% of the total transactions.
4. Being aggrieved by the assessment order, the assessee file appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The ld. A.R. challenged the validity of reopening of the assessment vide notice u/s. 148 dated 31-03-2019 thereby stating that the information having received to be from three years and since the entire observations and allegations for the reasons recorded already forms part of the original assessment order passed u/s. 143(3) of the Act dated 31- 03-2015 in case of assessee company as well as in the reasons recorded for reopening of assessment in case of other assessees of group way back in the year 2015. The reopening of assessment is invalid and bad in law since no fresh tangible material has been brought on record for reopening the completed assessment. The A.R. further submitted that at the time of both initiation as well as Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 completion of proceedings u/s. 153C of the Act, the Assessing Officer was already in possession of so called information dated 05-12-2016 received from DCIT Central Circle-2(2), Mumbai on the basis of which the assessment has been reopened vide notice u/s. 148 of the Act dated 28- 09-2019 which is issued after laps of 27 months from the date of receipt of information. However, the ld. A.R. submitted that there was no iota of reference of the said information in the proceedings/assessment order u/s. 153C of the Act.
The ld. D.R. relied upon the assessment order and the order of the CIT(A). The ld. D.R. submitted that the Assessing Officer has rightly reopened the matter u/s. 147 within the prescribed time limit as issued u/s. 148. The contention of the assessee that at the time of both initiation as well as completion of the proceedings u/s. 153C of the Act, the Assessing Officer was already in possession of the information dated 05-12-2016 was not substantiated by the assessee.
We have heard both the parties and perused all the relevant materials available on record. There is a delay of 52 days in filing the present appeal, the same is condoned. It is pertinent to note that in the original assessment order the fact of purchase was not paid was known to the Revenue and in fact in para 7 of the reasons and from the perusal of the books of accounts, it is clear that the purchases were not paid and therefore the assessment order Jhaveri Trading and Investment Pvt. Ltd., A.Y. 2012-13 u/s. 143(3) has dealt with the said issue and not made the addition at the original assessment stage. The contention of the ld. A.R. that the reasons recorded were already the part of the original assessment order passed u/s. 143(3) of the Act dated 31-03-2015 appears to be justified as the reasons recorded has basically relied on the said purchases itself and the fact that the same was not paid enumerates in para 7 and para 9 of the reasons recorded. Thus, the reopening of the assessment u/s. 147 is merely a change of opinion and cannot be invoked u/s. 147 and thus the reopening of assessment is invalid and bad in law. Therefore, the very basis of the assessment order becomes infructuous and void ab-initio and therefore assessment passed u/s. 143(3) r.w.s. 147 of the Act is quashed. Thus, ground no. I (1,2,3,4,5,6 & 7) and ground no. II (1 & 2) are allowed.
Since the very basis of assessment order and the assessment order itself has been quashed, the grounds related to the merits are not adjudicated.
In the result, the appeal of the assessee is allowed.