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TMI Blog2016 (9) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition under section 68 of the Act amounting to Rs. 25,19,697/- as undisclosed income. 5. Brief facts of the case are that assessee filed return of income on 31.10.2006 declaring income of Rs. 1,72,524/- + Rs. 25,19,697/- from short term capital gain. The Assessing Officer completed the assessment under section 143(3) on 06.05.2008 at an income of Rs. 27,57,000/- after making addition of Rs. 16,780/- and Rs. 48,000/- on account of interest and low household withdrawals respectively. An information was received by the Assessing Officer from CIT Central-4, Mumbai that search was conducted on 25.09.2009 in the business and residential premises of M/s. Maha Sagar Group of cases whose key person was Shri Mukesh Choksi. During the course of search at the premises of M/s. Maha Sagar Group of cases, it was admitted by Shri Choksi that he and his group were engaged in fraudulent billing activities and in giving accommodation entries in order to enable the clients to declare speculation profit/loss, short term capital gain, long term capital gain, profit/loss on account of commodity trading, introduced share capital money, or introduced money in the form of gifts. On the basis of infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce Shri Mukesh Choksi for cross-examination which was never done. The submissions of the assessee were forwarded to the Assessing Officer and Assessing Officer in his remand report, reiterated that information was received that assessee had business dealings with an entry operator, therefore, re-opening is valid. The assessee further submitted that reasons recorded by the Assessing Officer are incorrect as they have made payment to M/s. Maha Sagar group of cases and never received back even a penny from them. So reasons were bad and contrary to the facts of the case and information supplied by DIT (System) was incorrect. Further, the Assessing Officer has never mentioned the income chargeable to tax as escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts which is essential as per proviso to Section 147, particularly when original assessment was completed under section 143(3) and four years have elapsed from the end of such assessment year. 7. The ld. CIT (Appeals), however, did not accept contention of the assessee and found that information was received that income escaped in the case of the assessee and there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the Assessing Officer. The assessee has filed copy of the reasons recorded under section 148 of the Income Tax Act at page 14 of the Paper Book. The same reads as under: Annexure. "A" Name & Address of the assessee : Shri Prem Sagar Jain C/o M/s Kaia Mandir, D.C. Road Ambala Cantt. PAN : ABLPJ2713K Assessment Year : 2006-07 REASONS FOR ISSUING NOTICE U/S. 148 OF THE INCOME TAX ACT The assessee filed its return of income for the Asstt. year 2006-07 declaring income of Rs. 2692221/- including Short term capital gain of Rs. 2519697/- and the assessment was completed u/s. 143(3) at an income of Rs. 2757000/- on 06.05.2008. As per in-formations received from DIT (System), New Delhi, through the Addl. CIT, Ambala Range, Ambala on 26.03.2013 that the assessee has obtained accommodation Entries from M/s. Mahasagar Group of cases during the F.Y. 2005-06 relevant to Asst. year 2006-07 from the sale/purchase of shares. The Assessee has shown income from Short term capital gain of Rs. 2519697/- from purchase & sale of shares and taxed the same @ 10%. The assessee has earned income from other source, which has shown as short term capital gain by obtaining acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal assessment stage. The assessee also pleaded before ld. CIT (Appeals) that assessee has not received any payment from M/s. Maha Sagar group Securities of cases and have never received back even a penny from them. It was also pleaded that reasons recorded by the Assessing Officer are bad and contrary to the facts of the case and information supplied by DIT (System) was incorrect. The assessee also filed documentary evidences before ld. CIT (Appeals) to show that shares were sold through D-MAT account with M/s. S.P. Jain Securities and all transactions have been carried out through banking channel. The Assessing Officer, however, recorded in the reasons for reopening of the assessment that assessee has obtained accommodation entries from M/s. Maha Sagar group of cases. The sole reason for re-opening of the assessment was that assessee obtained accommodation entries from M/s. Maha Sagar Securities group of cases on account of short term capital gain. This fact itself is wrong and incorrect. The Assessing Officer also referred to information received from DIT (System), New Delhi through Addl. CIT, Ambala Range, Ambala that assessee has received accommodation entries from M/s. Maha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial available with the Assessing Officer to make out a case of escapement of income in the case of the assessee. A valid re-opening of the assessment had to be based only on tangible material to justify the conclusion that there was escapement of income. The Assessing Officer had recorded wrong facts in the reasons and had not applied his mind before forming the belief of escapement of income. The Assessing Officer had not validly assumed jurisdiction under section 147/148 of the Income Tax Act for re-opening of the assessment. The Division Bench of ITAT Chandigarh Bench in the case of Smt. Sarika Jain & Others Vs. ITO 46 ITR 246 (CHD) considering various decisions including the decision of Signature Hotels Pvt. Ltd. (supra) held as under: "Held, allowing the appeal, that the reasons recorded did not clarify how there was a failure on the part of the assessee to disclose fully and truly all material facts. No information was provided, by the Assessing Officer of the donors about any bogus gift given by the donors to the donee. Despite making specific enquiry with regard to the genuineness of the gift even in the case of the donor and examining one of the donees, no adverse infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Titanor Components Ltd. Vs. ACIT 343 ITR 183 held as under: "Where a reassessment is sought to be made after four years the power conferred by section 147 of the Income-tax Act, 1961, does not provide a fresh opportunity to the Assessing Officer to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of a failure of the assessee to fully and truly disclose all materials facts necessary for assessment. There is a difference between a wrong claim made by an assessee after disclosing all the true and material facts fully and truly and a wrong claim made by the assessee by withholding the material facts fully and truly. It is only in the latter case that the Assessing Officer would be entitled to proceed under Section 147. Held, allowing the petition, that the Assessing Officer had not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What was recorded was that the petitioner had wrongly claimed certain deductions which he was not entitled to. The reassessment proceedings initiated in the year 2004 were not valid" 11(ii) Hon'ble D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings under section 147/148 of the Income Tax Act and additions under section 68 of the Income Tax Act of Rs. 21,98,180/- and Rs. 20,22,785/- as undisclosed income respectively on account of short term capital gain. 14(i) The Assessing Officer, similarly recorded reasons for re-opening of the assessment in both the cases that assessees have obtained accommodation entries from M/s. Maha Sagar group of cases, which fact is incorrect because the assessee have sold the shares through different brokers as have been considered in the case of Shri Prem Sagar Jain (supra). The ld. counsel for the assessee pointed out that the only difference is that in these cases, the returns were processed under section 143(1) of the Income Tax Act. Therefore, the issue is same as have been considered in the case of Shri Prem Sagar Jain (supra). I, therefore, following the reasons for decision in the case of Shri Prem Sagar Jain (supra) (except on change of opinion), set aside the orders of authorities below and quash the re-opening of the assessments in the matter. Resultantly, all additions on merit are also deleted. There is no need to consider the issues on merit. 15. In the result, both appeals of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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