REKHA DINESH SHAH,MUMBAI vs. ITO WD 16(3)(2), MUMBAI

Following revised grounds were raised by the assessee: - “1. On the fact and circumstances of the case as well as in Law, the Learned Assessing Officer has erred in reopening the completed assessment without recording the proper reasons, hence the assessment is bad in law.

On the fact and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of Rs.8,334/- on account of alleged commission paid in cash, without considering the facts and circumstances of the case.”

Aggrieved, assessee contended before the CIT(A) that the assessee was assessed to tax for the past several years and for this year also the return of income was filed declaring total income of `6,46,769/- which was processed under section 143(1) of the Act. Thereafter it was sought to be reopened on the ground that the assessee purchased shares worth `4,17,223/- through M/s. Alliance Intermediaries and Network Pvt. Ltd. and they are nothing but accommodation entries. It was also contended that the assessee merely purchased shares of Reliance Natural Resources to the tune of `1,51,110/- which was sold in the next year and the long term capital gains were assessed to tax. It was also submitted that on identical circumstances the ITAT deleted similar addition.

The learned CIT(A) observed that the assessee was required to provide complete information in respect of the transactions and to show

Further aggrieved, assessee is in appeal before the Tribunal. By way of revised grounds assessee raised a legal contention challenging the validity of reopening of assessment, in addition to challenging the addition made by the AO under section 69 of the Act. The learned counsel for the assessee adverted attention of the Bench to pages 13 and 16 of the paper book to submit that the assessee in fact purchased shares of only Reliance Natural Resources, which were sold in subsequent year and the capital gain thereof was offered to tax (claimed as exempt) whereas the AO has wrongly formed the opinion that assessee purchased shares of Essar Oil, Reliance Natural Resources and Jai Corporation. He placed reliance upon the decision of the IAT ‘SMC’ Bench in the case of Smt. Sangeeta Ramesh Shah (ITA No. 7263/Mum/2014 dated 29.01.2015) wherein, under similar circumstance, the Tribunal held that there is no material on record to suggest that the assessee purchased and sold shares of Essar Oil, Jai Corporation, etc. and also observed that the amount mentioned in the assessment order is not tallying with the material on record which amply proves that the AO mechanically issued notice under section 148 of the Act and therefore reopening was held to be invalid.

The learned D.R. also admitted that the facts and circumstances in this case are identical to the facts in the case of Smt. Sangeeta Ramesh Shah (supra).

Having regard to the rival submissions, I am of the view that the AO had issued notice without proper recording of satisfaction and Smt. Rekha Dinesh Shah hence reopening of assessment is bad in law. Under the circumstances the proceedings initiated by the AO under section 148 is bad in law.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 8th October, 2015.