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2023 (6) TMI 920 - AT - Income TaxReopening of assessment u/s 147 - reason to believe -reopening on wrong facts - AO proceed to assess income under some other issue independently - Addition on account of increase in share capital being share capital issued by the company - HELD THAT:- AO has reopened the assessment based upon wrong facts, wrong appreciation of facts and without any application of mind, in as much as, the assessee has not taken any credit entry from White Collar Management Ltd. We find that the AO has gone one step further and has made addition being the increase in share capital from Rs. 25 lakhs to Rs. 2 crores, which has nothing to do with the reopening of the assessment, which means that on the one hand the AO has reopened the assessment on wrong facts and on the other hand, the AO has completed assessment on totally irrelevant facts which were never confronted to the assessee. A perusal of the reasons recorded, for reopening of assessment clearly shows that the AO has reasons to believe that the assessee was beneficiary of accommodation entry from White Collar Management Ltd. Strictly keeping in mind the reasons for reopening, assessment has been concluded by making addition on account of increase in share capital being share capital issued by the company to Shri Gautam Goyal, Shri Gaurav Goyal and Saraswati Properties, Goyal Investment and Shudd Edible Products Ltd. Individuals are directors of the assessee company and corporate investors are part of the group. Since the additions have been made other than the reasons recorded for reopening assessment, in our considered view, the Assessing Officer has drawn support from Explanation 3 to section 147 of the Act which was inserted by the Finance [No. 2] Act, 2009 We find that the Assessing Officer has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of JET AIRWAYS (I) LTD. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it would not be open to the Assessing Officer to assess income under some other issue independently. No merit in the re assessment proceedings initiated by AO on wrong facts and therefore, the said assessment order deserves to be quashed. Decided in favour of assessee.
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