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TMI Blog2014 (4) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that in the case of the assessee there is specific information received from the CCIT (Central)-1 wherein it was mentioned that during the course of appellate proceedings before CIT(A)-37, Mumbai in the case of Shri Narendra R. Shah, a havala operator, wherein he has stated that he was involved in giving havala entries so that the beneficiaries can declare capital gains thereon. Shri Narendra R. Shah appears to have furnished particulars of the persons who have laundered their black money and became beneficiary of impugned penny stock scam. As per the said information the assessee purchased 16000 shares of M/s. Tribhuvan Housing Ltd., which was allotted on payment of cash and hence it is a fit case for reopening of assessment. 4. In response thereto the assessee clarified that the impugned shares were purchased through the stock broker M/s. G.R. Pandya Share Broking Ltd. and she was not aware of Shri Narendra R. Shah. It was also submitted that she has purchased the shares after paying the applicable service tax and through a proper contract note. Even if the terminal of M/s. G.R. Pandya Share Broking Ltd. was deactivated, it was clarified that the shares were purchased thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not disputed and it is also not in dispute that she has incurred an expenditure of Rs.42,564/-. Therefore, the difference of about Rs.80,000/- ought to have been treated as unexplained investment but the AO, without quoting any section, has treated it as unexplained cash credit. 6. Aggrieved, assessee contended before the CIT(A) that the correct addition should have been only Rs.80,636/- because the investment to the tune of Rs.42,564/- was already disclosed in the books in which event the unexplained investment, if any, only should be added. The learned counsel for the assessee filed a paper book alongwith written submission before the CIT(A) wherein it was contended that reopening of assessment is bad in law since section 149 of the Act empowers the AO to reopen the assessment beyond a period of four years only in the event of showing that the income escaped assessment is in excess of Rs.1,00,000/- whereas in the instant case the escapement of income, if any, cannot exceed Rs.80,636/- and thus the reassessment is barred by limitation. Even on merits it was contended that so far as the assessee is concerned the shares were purchased through M/s. G.R. Pandya Share Brok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is in appeal before the Tribunal. The learned counsel for the assessee submitted that admittedly the assessment was sought to be reopened beyond a period of four years from the end of the assessment year and in order to reopen the assessment beyond a period of four years the AO should be satisfied that the income chargeable to tax but has escaped assessment amounts to or likely to amount to Rs.1,00,000/- or more. In the instant case the AO has in fact sought to reopen the assessment without application of mind if one were to assume that he sought to make addition of Rs.1,23,200/- because the material on record clearly suggests that under no circumstances any person who has reasonable insight in law could fathom that it is a fit case for making addition of Rs.1,23,200/- and as rightly observed by the learned CIT(A) the addition, if any, could never be beyond Rs.80,636/-. He, therefore, contended that either the AO has sought to reopen the assessment without application of mind or if he has applied his mind it could not have been beyond Rs.1,00,000/- in which event reassessment proceedings ought to have been initiated with four years from the end of the assessment year whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 149(b) of the Act. 10. I have carefully considered the rival submissions and perused the record. At the outset it may be noticed that the AO, in the instant case, appears to have not applied his mind at all, which is evident from the several observations made by him in his order and in the notice issued under section 148 of the Act. He assumed that the assessee intended to convert the unexplained cash through the route of capital gains whereas in the instant case, even after several years the assessee did not sell the shares, as stated by the assessee. It has been emphatically stated that the shares were demated and available in the name of the assessee but no mention was made at any stage of the proceedings on this aspect though the shares were purchased at a particular price and service tax, commission, etc. have been paid based on the rate for which it was purchased. There is no dispute with regard to the fact that the assessee had declared the investments in the books of account and even if the AO is of the opinion that the assessee has invested more than what is recorded in the books the differential amount can at best be treated as unexplained investment under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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