INFINITY INTERNATIONAL,AHMEDABAD vs. NFAC, DELHI PRESENT JURIS. THE ITO, WARD-3(3)(1), AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 518/Ahd/2025 (Assessment Year: 2016-17) Infinity International, NFAC, Delhi Vs. H-611, Titanium City Centre, Present Jurisdiction 100 Ft. Anandnagar Road, ITO, Ward 3(3)(1), Satellite, Ahmedabad-380015 Ahmedabad [PAN: AAEFI 2610 J] (Appellant) .. (Respondent) Appellant by: Shri S.N. Soparkar, Sr. Advocate, & Ms. Ukti Shah, AR Respondent by: Shri Alpesh Parmar, CIT-DR Date of Hearing 07.01.2026 Date of Pronouncement 10.03.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the assessee against order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”), dated 10.01.2025, passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), for the Assessment Year (AY) 2016-17.

“In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding validity of assessment order passed u/s 147 r.w.s 144 of the Act by the Ld. Assessing Officer which is void and deserves to be quashed. 2. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding proceedings initiated u/s 147 which are based on incorrect reasons wherein the Ld. AO has also failed to specify the nature of the transaction for which present case has been reopened. The Ld. CIT(A) has erred in not adjudicating the argument raised by the appellant. The Ld. CIT(A) ought to have appreciated that proceedings cannot be reopened on the basis of incorrect reasons. 3. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding proceeding initiated u/s 147 which are merely on the basis of borrowed

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satisfaction and without independent application of mind by the Assessing Officer. Such proceedings are bad in law and deserves to be quashed. 4. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in holding that the present case passes test of "tangible material" as there existed new information before the AO, before initiation of proceedings u/s 147 when such proceedings are initiated merely on the basis of change of opinion since entire details were duly available on record of AO during the course of proceedings u/s 143(3) of the Act and there is no fresh and tangible material before the AO at the time of initiating alleged proceedings. The present proceedings initiated u/s 147 of the Act deserves to be quashed. 5. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in holding that there is live link between information and formation of belief is established by the AO when there is no formation of belief by the AO and present proceedings are initiated merely on surmises and without any concrete evidence against the appellant.”

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assessment. We find that the Ld. CIT(A) has recorded a categorical finding that tangible material in the form of the Investigation Wing report, statement recorded on oath, and field enquiry constituted fresh information coming into possession of the Assessing Officer subsequent to completion of the original assessment.

8.1 The main arguments of the Ld. AR are that the reasons recorded were faulty as they were : i. Incorrect reasons ii. Failed to specify the nature of transactions, iii. Based on borrowed satisfaction, iv. Lack of independent application of mind, v. Absence of tangible material, vi. Inadequacy of live-link between the information and reasons

8.2 We have examined the reasons recorded by the Assessing Officer which are as under:- “Subject: REASON FOR REOPENING 1. The assessee is an individual and has filed return of income Assessment Year 2016- 17 on 23.03.2017 declaring total income at Rs.85,690/-. 2.1 As per information available, an enquiry was conducted in the case of M/s. Krrish Enterprise and M/s. Orange Tradex Pvt Ltd. On perusal of bank accounts of the said concerns, it was seen that there are huge inward credits immediately followed by outward debit transfers. However, the amount of debit and credit entries was almost equal.

Details of bank accounts under: Sl Account Bank Name Name of Account Holder 01 38/3609 Rajkot Nagrik Sahkari Bank Ltd, Mehta Malvika Ahmedabad, Rajkot Nagrik Sahakari Shrikeshbhal (Krrish Bank Mithakhali 6 Rasta Navrangpura Enterprise) Ahemdabad Gj in 380009 02 38/3468 Rajkot Nagrik Sahkari Bank Ltd, Mehta Malvika Ahmedabad, Rajkot Nagrik Sahakari Shrikeshbhal (Orange Bank Mithakhali 6 Rasta Navrangpura Tradex) Ahmedabad G) in 380009 2.1 Enquiries were also made from the Gujarat VAT department. It was found that VAT registration of both the concerns were cancelled by the VAT department. Main person

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of the concern is Chandresh Vyas (Applicant Name) Cancellation of VAT registration shows that there is lack of genuineness in the activities of these 2 concerns. 2.2 Further, Inspector of investigation wing of the department visited the business premises of Mis Orange Tradex. It was reported by him that the office remains closed most of the time during the month. Further, it is gathered that the office premise of Orange Tradex Pvt. Ltd. situated at said address hardly open for 3-4 hours in 15-20 days. Therefore, there is no genuineness in the activities of the assessees. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the period. 2.3 It may be noted here that maximum transactions in these bank accounts are carried out with persons of Ardor Group. It is worthwhile to mention here that a case has been registered by CBI against the directors of Ardor Group viz. Bharat Shah, Fenil Shah and other for submitting fraudulent books debts statements to the bank and dishonestly obtained the funds and diverted the same and thereby caused wrongful loss to the tune of Rs. 81.39 crores to the bank. It is also alleged in the complaint that many of the debtors are non-existent.

2.4 The assessee Infinity International is one of the entities who has paid or received amounts from Krrish Enterprise/Orange Tradex bank accounts. 3. On analysis of the information, it is seen that: 3.1 The concerns viz. Orange Tradex Pvt Ltd and M/s Krrish Enterprise are merely paper Concerns who are involved in routing of money/providing accommodation entries. 3.2 Chandresh Vyas is authorized signatory and his mobile number is provided in bank account opening forms of these concerns. Further, main person (applicant) in these concerns as per VAT department is Chandersh C Vyas.

3.3 Shri Chandresh Vyas has deposed in his statement recorded on oath dated 20.07.2018 that he was made dummy director/partner of these concerns in lieu of salary of Rs.15000/- per month. He further deposed that no actual business activities have been carried out by these concerns.

3.4 CBI case against Ardor Group (which is largest beneficiary of transactions in bank accounts of these concerns) Indicates that bank accounts of these concerns are used for providing accommodation entries.

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Further, in this case more than 4 years have not lapsed from end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 of the LT. Act is required from the Additional Commissioner of Income-tax as per the provisions of section 151 of the I.T. Act. DEVENDRA KUMAR WARD 3(3)(1) AHMEDABAD”

8.3 We have also examined the letter dated 02.07.2021, wherein the assessee has taken up detailed objections before the Assessing Officer which are as under:-

“RE.: OBJECTIONS AGAINST NOTICE DATED 31.03.21 ISSUED UNDER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEAR 2016-17 AS WELL AS NOTICE SUPPLYING REASONS FOR REOPENING DATED 10-05-2021 - DIN NO. ITBA/AST/F/17/2021- 22/1032846256(1)

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3.1 The assessee was engaged in the activity of investment in shares, securities, movable and immovable properties and trading in merchandise goods. During the year under consideration, the assessee had taken certain unsecured loans from "Orange Tradex Pvt. Ltd." as well as "Krrish Enterprise". A portion of such loan was also repaid during the year under consideration. Such loans are duly reflected in the books of accounts of the assessee for the year under consideration. Copy of ledgers of "Orange Tradex Pvt. Ltd." and "Krrish Enterprise" is annexed herewith and marked as ANNEXURE "A (Colly.)".

Copy of Annual Accounts is annexed herewith and marked as ANNEXURE "B (Colly.)".

Copy of affidavit of Chandresh Vyas is annexed herewith and marked as ANNEXURE "C".

3.2 The assessee filed return of income for the year under consideration on 23.03.17 declaring total income at Rs.85,690/-. The same was processed under section 143(1) of the Act.

3.3 Now Your Goodself has reopened the case of the assessee for the year under consideration on account of reasons discussed hereinabove. Action of reopening the case of the assessee for the year under consideration is not at all justified in the eye of law in view of submissions raised here-in-under.

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4.2 REASONS LACKED VALIDITY: The assessee most respectfully submits that reasons for reopening lacked validity and hence, the reopening is not justified in the eye of law. The assessee would like to invite attention to the following vital aspects so as to demonstrate that reasons lacked validity: ➤ "Nature of transaction" with "Orange Tradex Pvt. Ltd." "Krrish Enterprise" is not emanating from reasons from reopening; ➤ Department is doubted merely amounts received by assessee from the two concerns in question and not at all doubted the amounts paid by the assessee to the two concerns in question;

In view of the above, it transpires that the Assessing Officer himself is not sure as to what sort of transaction has been entered into by the assessee with "Orange Tradex Pvt. Ltd." and "Krrish Enterprise". Also there is no rational behind doubting one part of the transaction and accepting another part of the transaction. Such an act is not in accordance with any of the provisions of the Act. Hence, reasons for reopening lacked validity. Accordingly, reopening is not justified in the eye of law.

4.3 NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPEMENT ASSESSMENT:

4.3.1 The assessee most respectfully submits that as per the scheme of the Act, an Assessing Office can reopen the case of an assessee within the prescribed time limit provided he has "reason to believe" that some income chargeable to tax has escaped assessment in the hands of such assessee. Thus, pre-requisite for the purpose of reopening an assessee's case is that there must be "reason to believe" that some income chargeable to tax has escaped assessment. Such "reason to believe" must be based on some tangible material and must prima-facie establish that there is escapement of any income chargeable to tax. Further, such "reason to believe" must be borne out from the "reasons for reopening" recorded prior to reopening the case of an assessee and the action of reopening is to be justified on the basis of contents of the "reasons recorded for reopening" only. If the "reason to believe" is not emanating from the "reasons recorded for reopening", then the very pre-requisite for reopening does not get fulfilled and under such circumstances, action of reopening is not justified in the eye of law.

4.3.2 The Assessing Officer has merely relied upon the information received from the Department for the purpose of reopening the case of the assessee. This is evident from the fact that the Assessing Officer did not even bother to look into the aspect as to what is the nature of transaction entered into by the assessee with "Orange Tradex Pvt. Ltd." and "Krrish Enterprise". Without knowing the real nature of transaction, it is not possible for the Assessing Officer to have reason to believe that any income chargeable to tax has escaped assessment in the hands of the assessee on account of such transactions. Even on that score, the action of reopening is not justified in the eye of law at all.

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4.4 STATEMENT OF CHANDRESH VYAS HAS NOT BEEN INTERPRETED IN THE CORRECT MANNER: 4.4.1 The assessee further submits that statement of Chandresh Vyas has not been interpreted in the correct manner by the Department and hence, even reopening based on the same is not justified. At this stage, attention is invited to the following vital aspects of the affidavit of Chandresh Vyas: ➤ Role of Chandresh Vyas in Krrish Enterprise and Orange Tradex Pvt. Ltd. emanates from the affidavit; ➤ Copy of statement of Chandresh Vyas dated 20.07.18 recorded by the Investigation Wing of the Department was not provided to Chandresh Vyas; ➤ Statement of Chandresh Vyas dated 20.07.18 recorded by the Investigation Wing of the Department was wrongly noted and interpreted by Department for reopening the case of Infinity International (ie. the assessee). Contents of such excerpts, as reproduced in the reasons for reopening of the assessee, are denied by Chandresh Vyas; ➤ Chandresh Vyas resigned as a Director of Orange Tradex Pvt. Ltd. and partner of Krrish Enterprise on 31.03.14; ➤ In the year 2017, the respective director of Orange Tradex Pvt. Ltd. and partner of Krrish Enterprise had applied for cancellation of VAT registration on account of closure of business. Such application was not made by Chandresh Vyas; ➤ Chandresh Vyas was never a dummy director or dummy partner in Orange Tradex Pvt. Ltd. and Krrish Enterprise respectively; ➤ VAT assessments and Income-tax assessments of the firm have been completed without any adverse inference till the time Chandresh Vyas was a partner; ➤ Statement was recorded by the Investigation wing under duress and tremendous pressure. 4.4.2 In view of the above, statement of Chandresh Vyas has not been correctly interpreted by the Department. Hence, even on that score, reopening is not justified. 4.5 STATEMENT OF "CHANDRESH VYAS", WHICH IS THE VERY BASIS FOR REOPENING, IS NOT RELEVANT FOR YEAR UNDER CONSIDERATION SINCE CHANDRESH VYAS RESIGNED AS A DIRECTOR OF "ORANGE TRADEX PVT. LTD." AND PARTNER OF "KRRISH ENTERPRISE" (i.e. PARTIES NAMED IN REASONS FOR REOPENING) ON 31.03.14: The assessee further most respectfully submits that the very basis for drawing adverse inference in the case of the assessee and for resorting to reopening is the statement of Chandresh Vyas dated 20.07.18 wherein he has stated that "Orange Tradex Pvt. Ltd." And "Krrish Enterprise" are engaged in the business of providing accommodation entries. However, it may be noted that Chandresh Vyas resigned as a

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Director of "Orange Tradex Pvt. Ltd." and Partner of "Krrish Enterprise on 31.03.14, as is evident from affidavit of Chandresh Vyas. Accordingly, Financial Year 2014-15 (Assessment Year 2015-16) onwards, Chandresh Vyas was not at all associated with the said firms. Hence, for the period commencing from Assessment Year 2015-16, statement of Chandresh Vyas is not at all relevant. Accordingly, case for the year under consideration could not have been reopened even on that score.

4.6 REOPENING IS NOT PERMISSIBLE FOR CARRYING OUT 4.6 "ROVING AND/OR FISHING INQUIRY" OR "INVESTIGATION" WITHOUT THERE BEING A SPECIFIC FINDING AS TO ESCAPEMENT OF INCOME:

The assessee further submits that there is no material whatsoever with Your Goodself so as to demonstrate that the transactions in question are not genuine. In fact, it transpires that Your Goodself wants to verify the said aspect. Accordingly, it becomes amply clear that Your Goodself merely has some suspicion as to escapement of some income chargeable to tax in our hands and hence, Your Goodself is looking forward to reopen our case for further verification with a hope that some concrete income chargeable to tax might have escaped assessment in our hands. Your Goodself may appreciate that a particular transaction entered into by an assessee need not necessarily result into any income in the hands of such assessee. It may be desirable from the point of view of revenue authorities to examine the matter in detail but reassessment proceedings cannot be resorted to only to examine facts of a case, no matter how desirable that be, unless there is reason to believe, rather than suspect, that an income has escaped assessment. Merely because some further investigations have not been carried out, which if made, could have led to detection of income escapement, cannot be reason enough to hold view that income has escaped assessment. Suspicion, howsoever strong, cannot be the ground for reopening. In light of the above, the action of reopening is not tenable in the eye of law. Hence, the reopening proceedings initiated by Your Goodself may be dropped in the larger interest of justice. 4.7 "NO CAUSE AND EFFECT RELATIONSHIP" BETWEEN "REASONS RECORDED" & "INCOME ESCAPING ASSESSMENT":

4.7.1 The assessee further submits that it is important to bear in mind the subtle but important distinction between "factors which indicate an income escaping assessment" and "factors which indicate a suspicion about income escaping assessment". The former category consists of facts which, if established to be correct, will have a cause and effect relationship within income escaping assessment. The latter category consists of facts which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of income which has escaped assessment. There has to be some kind of cause and effect relationship between "reasons recorded" and "income escaping assessment." Reliance is placed on decision of Hon'ble the Apex Court in case of "ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437".

4.7.2 In the case of the assessee for the year under consideration, there is no such cause and effect relationship between "reasons recorded" and "income escaping assessment". In fact, it transpires from the reasons for reopening that Your Goodself

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aims at making further investigation which might lead to detection of certain income which might have escaped assessment. Such an act is not permissible in the eye of law. Hence, on this count as well, action of reopening is not at all justified in the eye of law and hence, reopening proceedings initiated by Your Goodself in the case of the assessee for the year under consideration must be dropped in the larger of justice.

4.8 REOPENING IS BASED ON BORROWED SATISFACTION:

The assessee further most respectfully submits that Your Goodself has acted illegally and without jurisdiction in issuing the impugned notice under section 148 of the Act. Statutory notice u/s 148 can be issued if and only if "an Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment". It implies that an "Assessing Officer" himself must be satisfied that some income chargeable to tax has escaped assessment. Such satisfaction must be of the concerned AO himself. In our case, no such satisfaction has been recorded by Your Goodself. In fact, Your Goodself has merely relied upon some information received from the Department for the purpose of reopening the assessment. Your Goodself has not applied your mind independently so as to reach a conclusion that any income has escaped assessment. In absence of any such exercise, it becomes clear that the assessment has been reopened merely based on "Borrowed satisfaction as against the statutory requirement of "Independent satisfaction". Such an action is not tenable in the eye of law. It is a settled law that an Assessing Officer does not get jurisdiction to reopen an assessment unless he records his own independent satisfaction to the effect that some income chargeable to tax has actually escaped assessment Such satisfaction cannot be based on application of mind by a third party as in the present case. On this count as well, reopening is unjustified. 4.9 OTHER SUBMISSIONS: 4.9.1 The assessee further submits that transactions entered into by the assessee with the parties referred to in reasons for reopening are very much genuine, duly recorded in the books of accounts, carried out through proper banking channel and also in accordance with the provisions of the Act as well as other applicable statutes. Hence, no fault can be found with such transactions. 4.9.2 The assessee further submits that the VAT registration of Orange Tradex Pvt. Ltd. And Krrish Enterprise has been cancelled with effect from 30.06.17. Copy of surrender applications of VAT registration of the said concerns were attached with the affidavit of Chandresh Vyas. Such application was made by the concerned parties i.e. it was not a case of suo-motu cancelled by VAT Department on account of any adverse finding. Hence, cancellation of VAT registration can, by no means, demonstrate that transactions entered into by the assessee with those parties were not genuine. The assessee, at the time of dealing with those companies had obtained copies of registration certificate under the VAT Act so as to ensure that the parties were active when transactions were carried out with them by the assessee. In any case, VAT registration has no bearing on the transaction in question entered into between the assessee and Orange Tradex Pvt. Ltd. for the year under consideration. 4.9.3 The assessee further submits that reference to visit of the Inspector to the premises of Orange Tradex Pvt. Ltd. is also not relevant since such visit might have

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been made after 30.03.17 i.e. the date on which the said concern ceased its business activities. In fact, Orange Tradex Pvt. Ltd. had also surrendered VAT registration on 30.06.17 as the said concern had ceased its business activities since 30.03.17. Hence, it is very much obvious that when field verification is carried later on, the office of the said concern would be functional for limited hours in a day.

4.9.4 The assessee further submits that the fact that maximum transactions in the banks accounts referred to in reasons for reopening are with Ardor group has no bearing at all on the transactions entered into between the assessee and the concern named in the reasons for reopening. Also the assessee has no hold over such transactions entered into between Orange Tradex Pvt. Ltd. and third parties. Hence, that cannot be a guiding factor for reopening the case of the assessee.

4.9.5 The assessee further submits that as regards statement of Chandresh Vyas, the same cannot be taken as a base for reopening the case of the assessee since the assessee has not been given an opportunity of cross examination. In any case, affidavit of Chandresh Vyas throws substantial light on the issue on hand and makes it clear that the inference drawn by the Department on the basis of statement of Chandresh Vyas is not correct in the eye of law.

4.9.6 The assessee further requests Your Goodself to provide a copy of the followings: ➤ Information relied upon for reopening the case of the assessee and referred to in reasons for reopening; ➤ Complete set of communication carried out by Your Goodself with the person / authority who has provided the information referred to in reasons for reopening and reply received from the said person /authority before recording reasons for reopening; ➤ Complete set of documents showing the approval taken of the higher authority for initiating the reassessment proceedings; ➤ Complete set of documents pertaining to statement of Chandresh Vyas recorded on 20.07.18.

4.10 The assessee reserves liberty to raise further objections against reopening once the aforesaid documents are supplied to the assessee.

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reopening in our case for the year under consideration prior to the issue of notice under section 148 of the Act.

(QUOTE)

"In ITO v Biju Patnaik (1991)(188 ITR 2470, the Apex Court has sounded the note of caution that the stage of notice u/s 147/148 of the Act, the court is not to go into the merits of the controversy whether the particular income is taxable.

In view of the above discussion, this petition is dismissed with a clarification that if the assessee lodges his preliminary objections before the Assessing Officer with reference to the impugned notice u/s 148 and also in relation to the reasons as disclosed in the additional affidavit dated February 10, 2004, the Assessing Officer shall consider and decide the preliminary objections by passing a speaking order. In case the order is adverse to the assessee, the assessee shall be at liberty to challenge such order on the preliminary objections by filing a writ petition and the Assessing officer shall not proceed with the reassessment proceedings for a period of one month from the date of dispatch of the order to the petitioner by RPAD."

(UNQUOTE)

Thus, Hon'ble the Gujarat High Court has imposed restriction on Assessing Officer in framing the reassessment order after passing the order dealing with the objections raised by the assessee…..”

8.4 The Assessing Officer, vide a separate order dated 09.02.2022, disposed off and rejected the objections raised by the assessee against the reopening of the assessment, recording his findings as under:-

“ORDER DISPOSING THE OBJECTIONS FILED BY ASSESSEE AGAINST THE REOPENING OF THE ASSESSMENT FOR THE A.Y. 2016-2017 1. The original return of income for the A.Y. 2016-17 was filed by the assessee declaring total income of Rs.85,690/ Subsequently information became available in the Insight Portal of the department that an enquiry was conducted in the case of M/S Krrish Enterprise and M/S Orange Tradex Pvt. Ltd. and on perusal of the bank accounts of the said concerns it was seen that there are huge inward credits immediately followed by outward debit transfers. The amount of credit and debit entries was almost equal. Enquiries were also conducted from Gujarat VAT department. The assessee was one of the entities who has paid or received amount from these concerns. On analysis of information it is seen that these two concerns are

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merely paper concerns who are involved in routing of money/ providing accommodation entries

(On Facts)

4.1 It is very clearly mentioned by the AO in the reasons of opening that on perusal of bank accounts of these concerns it is seen that there are huge inward credits immediately followed by outward debit transfers. Also the amount of debit and credit entries were almost equal. Therefore the analysis and inference of the AO is very much right which needs further investigation and therefore objections of assessee le no reason to believe that the income chargeable to tax has escaped assessment are not tenable and therefore rejected. 5. In his objection (in Para 4.4) the assessee has stated that statement of Chandresh Vyas has not been interpreted in the correct manner.

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(On Facts)

5.1 Assessee's objection was considered carefully and on perusal of the records it is seen that Sh. Chandresh Vyas has recorded his statement on oath with his free will and without any pressure and with his senses before the investigation wing on 20.07.2018 in which he has clearly admitted that he was a dummy director/ partner of these concerns in lieu of a nominal salary of Rs.15,000/- p.m. He further deposed in his statement that no actual business activities have been carried out by these concerns. The same facts were also verified by the inspector of the department by carrying out field enquiries. In his report the inspector has clearly mentioned that these concerns hardly open for 3-4 hours in 15-20 days and hence no genuineness of activities of the assessee. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the times. Therefore the the analysis and inference of the AO is very much right which needs further investigation and therefore objections of assessee i.e. statement of Chandresh Vyas has not been interpreted in the correct manner are not tenable and therefore rejected.

6.1 Assessee's objection was considered carefully and on perusal of the records it is seen that Sh. Chandresh Vyas has recorded his statement on oath with his free will and without any pressure and with his senses before the investigation wing on 20.07.2018 in which he has clearly admitted that he was a dummy director/ partner of these concerns in lieu of a nominal salary of Rs.15,000/- p.m. He further deposed in his statement that no actual business activities have been carried out by these concerns. The same facts were also verified by the inspector of the department by carrying out field enquiries. In his report the inspector has clearly mentioned that these concerns hardly open for 3-4 hours in 15-20 days and hence no genuineness of activities of the assessee. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the times. Therefore it is very clear that statement of Sh. Chandresh Vyas is not the only basis of reopening of the case and proper enquiries have been made by the department/AO before reopening which needs further investigation and therefore objections of assessee i.e. statement of Chandresh Vyas which is the basis of reopening is not relevant for the year under consideration since Chander Vyas resigned as a director of Orange Tradex Pvt. Ltd and partner of Krrish Enterprise on 31.03.2014 are not tenable and therefore rejected. 7. In his objection (in Para 4.6) the assessee has stated that reopening is not permissible for carrying out roving and/or fishing enquiry or investigation without there being a specific finding as to escapement of income. (On Facts) 7.1 Assessee's objection was considered carefully and on perusal of the records it is seen that Sh. Chandresh Vyas has recorded his statement on oath with his free will and

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without any pressure and with his senses before the investigation wing on 20.07.2018 in which he has clearly admitted that he was a dummy director/ partner of these concerns in lieu of a nominal salary of Rs 15,000/- p.m. He further deposed in his statement that no actual business activities have been carried out by these concerns. The same facts were also verified by the inspector of the department by carrying out field enquiries in his report the inspector has clearly mentioned that these concerns hardly open for 3-4 hours in 15-20 days and hence no genuineness of activities of the assessee. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the times which clearly implies that the assessee entities are just paper concerns who just work on accommodation of entries and nothing else. Therefore it is very clear that proper enquiries have been made by the department/AO before reopening of the case and which needs further investigation and therefore objections of assessee le reopening is not permissible for carrying out roving and/or fishing enquiry or investigation without there being a specific finding as to escapement of income are not tenable and therefore rejected.

8.1 Assessee's objection was considered carefully and on perusal of the records it is seen that Sh. Chandresh Vyas has recorded his statement on oath with his free will and without any pressure and with his senses before the investigation wing on 20.07.2018 in which he has clearly admitted that he was a dummy director/ partner of these concerns in lieu of a nominal salary of Rs 15,000/- p.m. He further deposed in his statement that no actual business activities have been carried out by these concerns. The same facts were also verified by the inspector of the department by carrying out field enquiries. In his report the inspector has clearly mentioned that these concerns hardly open for 3-4 hours in 15-20 days and hence no genuineness of activities of the assessee. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the times which clearly implies that the assessee entities are just paper concerns who just work on accommodation of entries and nothing else. Therefore it is very clear that proper enquiries have been made by the department/AO before reopening of the case AND THERE IS CLEAR CAUSE AND EFFECT RELATIONSHIP between reasons recorded and income escaping assessment and which needs further investigation and therefore objections of assessee le that no cause and effect relationship between reasons recorded and income escaping assessment are not tenable and hence rejected. As far as the assessee's reliance on Hon'ble Apex Court judgement in case of Lakhmani Mewal Das- (1976)103ITR437 is concerned which implies that the reasons for the formation of belief must have a rational connection with or relevant bearing on the formation of belief, in the instant case as elaborated above THERE IS CLEAR CAUSE AND EFFECT RELATIONSHIP and hence the judgement is completely followed in letter and spirit. Also in it's judgement the Hon'ble Apex Court has further stated that IT IS NO RESPONSIBILITY OF THE ASSESSEE TO ADVISE THE INCOME TAX OFFICER WITH REGARD TO THE INFERENCE WHICH HE SHOULD DRAW FROM THE PRIMARY FACTS.

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Therefore it is very clear that proper enquiries have been made by the department/AO and duly analyzed by the AO before reopening of the case and which needs further investigation and therefore objections of assessee i.e. that reopening is based on borrowed satisfaction is not tenable and therefore rejected.

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investigation wing on 20.07 2018 in which he has clearly admitted that he was a dummy director/ partner of these concerns in lieu of a nominal salary of Rs.15,000/- p.m. He further deposed in his statement that no actual business activities have been carried out by these concerns. The same facts were also verified by the inspector of the department by carrying out field enquiries. In his report the inspector has clearly mentioned that these concerns hardly open for 3-4 hours in 15-20 days and hence no genuineness of activities of the assessee. Even furthermore, such huge turnover cannot be attributed to a concern having an office which remains closed for most of the times which clearly implies that the assessee entities are just paper concerns who are involved in routing of money/providing accommodation entries and nothing else. This fact is further substantiated by the fact that CBI FIR against Ardor Group (which is the largest beneficiary of transactions in bank accounts of these concerns) indicates that bank accounts of these concerns were used for providing accommodation entries. Also the investigation Wing of the department is an integral part of the department and a not an outer agency from whom borrowed satisfaction have been incorporated by the AO. Also evidently, there was application of mind and basis of reason is based on information examined and verified as received from Investigation wing as well as during post examination with reference to the record available with the AO. Thus, in facts and circumstances of the case, it is apparent that the AO has sufficient information in his possession to form a belief that the income chargeable to tax has escaped assessment. Thus, in facts and circumstances of the case, it is apparent that the AO has applied his independent mind at that point of time on the basis of information in his possession and record available to form a belief that the income chargeable to tax has escaped assessment

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reopened assessment. The Hon'ble Gujarat High Court held the reopening of the assessment to be justified. The Hon'ble Gujarat High Court observed that the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment and the basis for formation of such belief were several inquiries and Investigation by Investigation Wing that there had been escapement of income of assessee from assessment because of his failure to disclose fully and truly all material facts.

8.5 We find that against the objections raised by the assessee, the Revenue has dealt with each and every aspect of the objection and hence it cannot be held that the proceedings under Section 148 have been initiated in right earnest.

a. It is a fact on record that no doubt the assessee has received loans from M/s. Krrish Enterprise and M/s. Orange Tradex Pvt Ltd, and the bank accounts show immediate transfer of funds in and out of the accounts.

b. There is no dispute that the enquires were conducted by the Gujarat VAT Department in the case of the entities.

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c. It is an undisputable fact that the assessee is one of the entities who entered the transactions with the two entities which were proved to be involved in providing accommodation entries.

d. Based on the investigation by the Gujarat VAT Department and the investigations, enquiries conducted, due credence to the reasons to believe about the non-genuineness of the transactions entered by the assessee with the two involved concerns. It is not mere doubt, uncertainty or suspicion which led to reopening of the assessment, but the reopening was done based on the tangible material available with the Assessing Officer.

e. It is not in doubt that the inward amounts have been moved out as outward amounts in the shortest span. The Assessing Officer has analyzed the transactions which rightly led to reasons to believe that income chargeable to tax has been escaped.

f. Further, it is a fact on record that Shri Chandresh Vyas was the partner of M/s. Krrish Enterprises by Partnership Deed dated 01.05.2012 with profit sharing ratio of 50%. It is a fact on record that Shri Keyur Modi was the other partner in M/s. Krrish Enterprises has also the director at the time of incorporation of M/s. Orange Tradex Pvt Ltd on 03.01.2011 and Shri Chandresh Vyas was appointed as a Director on 31.03.2012 and continued till 01.04.2014. He submitted that no actual business activities were carried out by these concerns. Hence, it can be concluded the statements recorded of Shri Chandresh Vyas who is in know of incorporation/ management of the entities in question can be given due credence.

g. It is also a fact that the Gujarat VAT Registration Certificate has been cancelled after due verification of the documents. These materials were sufficient enough to reopen the assessment and cannot be constituted as to carry out roving and fishing enquiries. The reliance on the FIR filed by the

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CBI against Ardor Group pertains to the same accounts of these two concerns through which the amounts have been routed is a supplementary fact corollary to the main allegation. The enquiries in the group was also proved that these two entities in question have been utilized for transacting of the monies to other entities in addition to the assessee.

h. Based on the above tangible material gathered, we place reliance on the decision of the Hon'ble Gujarat High Court dated 09.08.2021 in the case of M/s. Priya Blue Industries (P) Ltd. v. ACIT, 437 ITR 155, wherein the Hon’ble Court upheld the validity of the reopening based on the enquiries conducted by the Investigation Deptt. Further, in the case of M/s. Anderson Biomed (P) Ltd. v. ACIT, 282 Taxman 490, the Hon’ble Jurisdictional High Court justified the reopening of the assessment on the grounds that there was a live-link between the material available to the Assessing Officer and formation of belief in the case wherein the assessee is involved in receipt of accommodation entry from the Accommodation Entry Operators. Additionally, reliance is being placed on the judgment of the Hon’ble High Court of Madras in the case of Coastal Energy Pvt. Ltd. v. DCIT, dated 20th August, 2024, wherein it was held that the Assessing Officer has rightly reopened the assessment under Section 147 of the Act when the reasons recorded demonstrate that the assessee has not fully and truly disclosed all material facts necessary for completing the assessment. The Hon’ble Jurisdictional High Court in the case of Amit Polyprints Pvt Ltd. Vs. DCIT, 94 taxmann.com 393, held that reassessment proceedings initiated on the basis of information received from Investigation Wing that the assessee has received amounts from shell companies/accommodation entry provider is valid. Similar propositions were laid down by the Hon’ble High Court of Delhi in the case of Experion Developers Pvt Ltd. Vs. ACIT, 115 taxmann.com 338.

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i. Hon’ble Supreme Court judgment in the case of Raymond Woollen Mills Vs. ITO, 236 ITR 34 held that Courts can only consider whether there was a prima facie cause for reopening of the assessment and sufficiency of material cannot be considered at the stage of issuing the notice u/s 148 of the Act. In the instant case, the Assessing Officer went further and could make a case not only for prima facie cause but also to prove sufficiency of material.

j. The Hon’ble Supreme Court in the case of Kelvinator of India Limited in Civil Appeal Nos. 2009-2011 of 2003 emphasized on the test of tangible material and live-link has been duly met in the instant case.

8.6 Under the relevant provisions of section 147 & section 148 of Act, for assuming jurisdiction to reopen an assessment by the Assessing Officer, the condition precedent that the AO must have reasons to believe that the income of the assessee for that year has escaped assessment. It is a settled proposition that such reasons to believe must have a material bearing on the question of escapement of income and the AO ought to have objective satisfaction based on the material. The reasons must have a rational connection with or relevant bearing on the formation of the belief. Cogent connection postulates that there must be a live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding escapement of income. In the instant case, the reasons were correct, specifying the nature of transactions, satisfaction based on the examination of records and independent application of mind in the background of availability of tangible material which has a live-link to arrive at the belief that income has escaped assessment.

8.7 In the light of the foregoing discussion and having regard to the totality of facts and material available on record, we are of the considered view that the Assessing Officer had before him tangible and credible material, including the Investigation Wing report, bank account analysis, field enquiries and the statement

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recorded on oath, on the basis of which the Assessing Officer has reached to believe that sufficient reasons are available that the income chargeable to tax had escaped assessment. The reasons recorded demonstrate an independent application of mind and establish a live link between the material and the formation of belief. We, therefore, find no infirmity in the order of the Ld. CIT(A) in upholding the validity of reopening. Consequently, the grounds raised by the assessee challenging the jurisdiction under section 147 are dismissed.

Order pronounced in the open Court on 10.03.2026

Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 10.03.2026 *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. आयकर आयु�(अपील) / The CIT(A)- 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad