MAHESH S. JAIN,MUMBAI vs. ITO WD 24(2)(4), MUMBAI

The captioned appeal filed by the assessee pertaining to assessment year 2008-09 is directed against an order passed by CIT(A)- 39 Mumbai dated 10/02/2017, which in turn arises out of an order passed by the Assessing Officer under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’) dated 27/03/2015.

“1- REASSESSMENT 1.1 The Ld. Commissioner of Income - tax (Appeals) - 39, Mumbai ["Ld. CIT (A)"], erred in confirming the action of the A.O. in initiating reassessment proceedings and framing the assessment of the Appellant by invoking the provisions of section 147 r.w.s. 148 of the Income tax Act, 1961 ["the Act"].

1.2 While doing so, the Ld. CIT (A) failed to appreciate that: (i) The case of the appellant did not fall within the parameters laid down by section 147 r.w.s. 148 of the Act; (ii) The necessary preconditions for initiating and completion thereof were not satisfied. 1.3 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment framed is bad, illegal and void.

WITHOUT PREJUDICE TO THE ABOVE i-

2. NATURAL JUSTICE 2.1 The Ld. CIT (A) erred in confirming the action of the A.O, in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the assessment.

2.2 It is submitted that in the facts and the circumstances of the case, and in law, the assessment so framed be held as bad and illegal, as the same is framed in breach of the principles of natural justice and without application of mind to the facts brought on record by the Appellant. WITHOUT FURTHER PREJUDICE TO THE ABOVE 3.1 The Ld. CIT (A) erred in confirming the addition of Rs. 12,72,828/-, being long term capital gain of Rs.1261,895/- and short term capital gain of Rs.10,933/-as claimed by the Appellant u/s. 68 on the ground of alleged receipt from accommodation entry.

3.2 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.

3.3 Without prejudice to the above, assuming - but not admitting - that some addition was called for, it is submitted that the computation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law.

WITHOUT FURTHER PREJUDICE TO THE ABOVE 4.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of Rs. 21,777/- to the income of the Appellant on account of alleged estimated commission paid for alleged accommodation entry. 4.2 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.

WITHOUT FURTHER PREJUDICE TO THE ABOVE 5.1 The Ld. CIT (A) erred in confirming the action of the A.O. in holding that purchases of shares during the year, amounting to Rs. 4,08,515.50 were only accommodation entry. 5.2 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. LIBERTY 6. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.”

4. Notably, the appellant is an individual whose assessment for the year under consideration was reopened by issuance of notice under section 147/148 of the Act dated 27/03/2014. The relevant discussion in the assessment order reveals that the reassessment was initiated on the basis of the information found in the course of search and seizure action carried out on 25/11/2009 in the case of M/s. Mahasagar Securities Pvt. Ltd. group cases. Be that as it may, in the ensuing assessment, the total income was assessed at Rs.17,84,730/- as against the originally returned income of Rs.2,54,440/- by treating the profit on sale and purchase of shares as being in the nature of accommodation entry procured from M/s. Mahasagar Securities Pvt. Ltd. group of concerns. The additions made by the Assessing Officer have also been sustained by the CIT(A), against which assessee is in further appeal before the Tribunal.

5. At the time of hearing, the Ld. Representative for the assessee has raised a preliminary ground, which is based on the proposition laid down by the Hon'ble Bombay High Court in the case of CIT vs. Trend Electronics, 379 ITR 456 (Bom). It is sought to be pointed out that the reasons recorded by the Assessing Officer to issue notice under section 148 of the Act were not furnished to the assessee and that such failure to furnish the reasons recorded renders the reassessment as invalid. In this context, the Ld. Representative for the assessee pointed out that vide communication dated 23/06/2014, which was acknowledged in the office of the Assessing Officer on 25/06/2014, assessee has sought copies of reasons recorded to issue the notice under section 148 of the Act. It was contended that there has been no compliance to the aforesaid request by the assessee and, therefore, in the light of the decision of the Hon'ble Bombay High Court in the case of Trend Electronics (supra), the reassessment is invalid.

6. It was asserted by the Ld. Representative for the assessee that though the plea of the assessee is emerging from the Paper Book filed, so however, there is no determination of the said issue in the order of the CIT(A). The Ld. Representative for the assessee submitted that the assessee would be satisfied if the matter is restored back to the file of CIT(A) for determination of the said issue in accordance with law.

Order pronounced in the open court on 13/10/2017.