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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dated 15/10/2015 of the CIT (A)-9,Mumbai, the assessee has filed the present appeal. Assessee, an individual, filed his return of income on 29/08/2005, declaring total income of Rs. 1.03 lakhs. The Assessing Officer (AO) completed the assessment, u/s. 143(3) of the Act,on 28/12/2007,determining his income at Rs.2.58 lakhs. The AO, after recording the reasons for reopening,issued a notice u/s. 148 of the Act on 23/03/2011.He completed the assessment u/s.143(3) r.w.s.147 on 23/12/2011,computing the income of the assessee at Rs. 22.41 lakhs by making an addition of Rs.19.82 lakhs u/s. 68 of the Act. 2.The assessee has filed additional grounds challenging the reopening of the assessment. During the course of hearing before us, the Authorised Representative(AR)stated that additional grounds were arising out of the order passed by the First Appellate Authority (FAA), that same were of legal nature and no enquiries about the facts was to be carried out. The Departmental Representative (DR) stated that matter could be decided on merits. We find that in the additional grounds the assessee has raised related issues only and do not require scrutiny about the facts and they deal with jurisdiction.Considering these facts,we are admitting the additional grounds raised by the assessee.
330/M/16-suresh PS(05-06)
3.First three grounds deal with non-issue of notice u/s.143 (2), reopening of the assessment beyond four years, and violation of natural justice. Thus, the additional ground and the original grounds deal with jurisdiction. Before deciding the additional ground, we want to take notice of the facts of the case also. After completing the assessment, the AO received information from the investigation wing that the assessee was one of the beneficiaries of bills issued by Mahasagar Securities Private Ltd. of Mukesh Chokshi(MC),that MC had admitted that he had issued bogus bills to various persons for claiming long-term and short-term capital gains,that during the year under consideration the assessee had sold shares of Talent Info Ways Ltd. through MC.He directed the assessee to file explanation about the transaction.After considering his submissions,the AO held that genuineness of the transaction was not acceptable, that the assessee had reduced the tax lability by entering into non-genuine transaction of sale of shares case. Finally, he made an addition of Rs.19,82,670/- to the total income of the assessee as unexplained credits u/s.68 of the Act. Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA. He produced additional evidences. The FAA called for remand report from the AO. Dismissing the appeal filed by the assessee, he held that there was no violation of principle of natural justice, that it was not mandatory for an AO to issue notice u/s.143 (2) before passing order u/s.143 (3) read with section 147.
4.During the course of hearing before us, the AR argued that the AO had not supplied the assessee reasons recorded for reopening, that there was no failure on part of the assessee, that assessee had objected to reopening, that the objections raised by him were not attended to, that copies of the statement of MC not provided to the assessee, that MC had not stated that the assessee had entered into bogus share transactions. The DR supported the order of the AO and the FAA. Before proceeding further,we would like to reproduce the reasons recorded by the AO for reopening the assessment and they read as under: “Search and seizure operations conducted in case of M/s. Mahasagar Securities Private Ltd (now Alag Securities Private Ltd) and its related group of companies revealed that you have entered into transactions purchase and sale of shares of the following script for the period relating to AY. 2005 – 06: Talent Info ways Limited. The details of the said transaction are reflected in the investment schedule filed with the return of income. Since investigation is mentioned above has revealed that the aforesaid transaction is a bogus transaction the undersigned has reason to believe that income has escaped assessment for the assessment year 2005-06.” 2
330/M/16-suresh PS(05-06)
5.We find that in the case under consideration the original return of income was filed on 9/08/2005,that the period of four years ended on 31/03/2010, that the notice u/s.48 was issued on 23/03/2011.As the assessment was reopened beyond a period of four years, so,the failure of the assessee to disclose fully and truly the material facts for computing the assessment was a precondition.The AO has to not only record the failure of the assessee but has also to demonstrate it.Without fulfilling the basic condition, no notice u/s.148 should be issued. Reopening of a completed assessment beyond the period of four years and within six years is a serious matter and that is the reason as to why the proviso to the section mandates certain pre -conditions.It is also a fact that the AO had not supplied the copy of reasons recorded for reopening. We would like to refer to the case of Business India(354ITR154),delivered by the honorable Bombay High Court and it reads as under: The grounds for reopening of assessments u/s. 148 of the Income-tax Act, 1961, beyond the period of four years from the end of the relevant assessment year have to specify the failure on the part of the assessee to disclose fully and fully all material facts necessary for assessment. It is only on the satisfaction of the jurisdictional requirement that a notice u/s. 148 can be issued by the Assessing Officer seeking to reopen an assessment beyond the period of four years from the end of the relevant assessment year…. ………the notices were issued to the assessee beyond the period of four years from the end of the relevant assessment year. The reasons, as furnished to the assessee, did not indicate even remotely any failure on the part of the assessee to disclose truly and fully material facts necessary for assessment. The reasons proceeded on the basis that for the subsequent assessment year, the Assessing Officer had held the interest paid on borrowings was capital in nature and, therefore, not allowable as an expenditure and that consequently, income chargeable to tax had escaped assessment. However, the reasons nowhere indicated any failure on the part of the assessee to disclose truly and fully material facts necessary for assessment. The reliance placed on behalf of the Revenue upon the order rejecting the assessee's objections and the affidavit-in-reply to contend that there had been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment was not permissible. The notices would stand or fall on the basis of the reasons recorded at the time when the notices were issued. These reasons could not be improved upon, substituted or supplemented either by affidavits or while disposing of the objections of the assessee. Therefore, the Revenue had to justify the notices only on the basis of the reasons recorded at the time of issuing the notices. The reasons, as recorded and furnished to the assessee, did not disclose even remotely any failure on the part of the assessee to disclose truly and fully material facts necessary for assessment ……… Thus, the notices being without jurisdiction could not be sustained.” It is also a fact that the assessee had raised objections about re-opening,but the AO did not dispose the same.It is clear violation of the judgment of GKN Driveshafts(I)Ltd.(259ITR19) delivered by the Hon’ble Apex Court.Lastly the AO had not issued notice u/s.143(2)of the Act before completing the re-assessment.Thus,on all the three counts the re-assessment order is in valid.So.reversing the order of the FAA,we decide GOA 1-3 and additional ground in favour of the assessee.As we have held that the order passed by the AO was invalid,so,we are not deciding the other grounds raised by the assessee. As a result, appeal filed by the assessee stands allowed. फलतःिनधा�रती �ारा दािखल क� गई अपील मंजूर क� जाती है.
330/M/16-suresh PS(05-06)