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Prem Sagar Jain and ors. Versus JCIT, Ambala Range

2016 (9) TMI 1374 - ITAT CHANDIGARH

Reopening of assessment - addition u/s 68 - claim of the assessee of short term capital gain - Held that:- At the original assessment stage, assessee declared short term capital gain and the Assessing Officer after raising specific query in this regard and considering facts and material on record, accepted the claim of the assessee of short term capital gain under section 143(3) dated 06.05.2008. There is no failure on the part of the assessee to disclose truly and correctly the material facts n .....

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h the parties, perused the findings of authorities below and considered the material available on record. Ld. Representatives of both the parties mainly argued in the case of the assessee Shri Prem Sagar Jain and submitted that issue is same in remaining appeals. The appeals are decided as under. ITA 71/2015: Shri Prem Sagar Jain 3. This appeal by assessee has been directed against the order of ld. CIT (Appeals) Panchkula dated 15.12.2014 for assessment year 2006-07. 4. In this appeal, assessee .....

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t under section 143(3) on 06.05.2008 at an income of ₹ 27,57,000/- after making addition of ₹ 16,780/- and ₹ 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 Saga .....

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commodation entries taken from the above group. Based on the information, Assessing Officer recorded reasons under section 148 of the Act. The Assessing Officer recorded that assessee has shown income from short term capital gain of ₹ 25,19,697/- from purchase of sale of shares and paid tax on the same @ 10%. The assessee has earned income from other sources which was shown as short term capital gain by obtaining accommodation entries from M/s. Maha Sagar Securities group of cases during t .....

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44,75,142/- as accommodation entries which represent undisclosed income of the assessee. The Assessing Officer completed re-assessment vide order dated 28.02.2014 at an income of ₹ 44,75,142/-. 6. During the appellate proceedings, the assessee challenged the re-opening of the assessment and submitted that there is no whisper to the effect that income had escaped assessment on account of any failure on the part of the assessee to disclose fully and truly all material facts necessary for it .....

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by any tangible material nor there is a mention of assessee's name in any such information. Therefore, the information was non-specific and not reliable. No transaction was found to be bogus as all transactions were carried through banking channel and through D-MAT account. The Assessing Officer was requested many times to 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 .....

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ver 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 o .....

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ssessee also furnished evidence in the shape of photo copies of the contract note, photo copy of D-MAT account with M/s. S.P. Jain Securities and bank accounts statements to show that sales of the shares have been made to M/s. S.P. Jain Securities. The ld. CIT (Appeals) from the details found that investments of ₹ 19,55,480/- towards acquisition of shares stand explained and accordingly, deleted the addition to that extent, however, addition of ₹ 25,19,697/- was confirmed treating th .....

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sessee from M/s. Maha Sagar Security group of cases. He has submitted that there is a change of opinion on the part of Assessing Officer, therefore, re-opening of assessment is bad in law. He has submitted that all the transactions were conducted through D-MAT account. The purchase of shares have been accepted by ld. CIT (Appeals) on which there is no departmental appeal. The details of sale proceeds of assessee have been filed to show that sales of the shares have been made through brokers Ashi .....

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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 ₹ 2692221/- including Short term capital gain of ₹ 2519697/- and the .....

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taxed the same @ 10%. The assessee has earned income from other source, which has shown as short term capital gain by obtaining accommodation entries from M/s. Mahasagar Securities Group of cases during the F.Y. 2005-06 relevant to Asst. year 2006-07. Thus, the income of ₹ 2519697/- has been under assessed at too low rate. Therefore, I have the reasons to believe that the amount of ₹ 2519697/- has escaped assessment in the case of assessee for the Assessment year 2006-07. Since inco .....

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which Assessing Officer asked for all the documentary evidence to be produced with regard to the same short term capital gain. The assessee filed detailed reply before Assessing Officer (PB-5) alongwith documentary evidences. The Assessing Officer passed the order under section 143(3) dated 06.05.2008 and accepted the genuineness of the short term capital gain. Copy of the same is filed at page 10 of the Paper Book. The Assessing Officer in the assessment order discussed the issue of short term .....

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refore, fatal for the re-opening of the assessment. The Assessing Officer has not recorded in the reasons for re-opening of assessment whether there was any failure on the part of the assessee to disclose truly and fully material facts necessary for assessment. 10(i) The assessee filed details of sale proceeds of the shares and ld. counsel for the assessee highlighted that assessee made sale of shares through M/s. Ashish Stock Broking Pvt. Ltd. and M/s. S.P. Jain Securities Pvt. Ltd. The same fa .....

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ppeals) 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 te .....

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of assessee have been mentioned. The information of purchase of shares have no connection with the assessee and further the ld. CIT (Appeals) has deleted the addition on finding the purchase of shares to be genuine and there is no departmental appeal filed by the revenue. Certain annexures are also attached with report of DIT (System) to show that purchases have been made through Alliance Intermediary & Network Pvt. Ltd. Copy of the statement of Shri Mukesh Choksi is also filed to show that .....

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sh Stock Broking Pvt. Ltd. and M/s. S.P. Jain Securities Pvt. Ltd. Therefore, there was no tangible material found against assessee to have reason to believe that assessee received any accommodation entry as alleged in the reasons for re-opening of assessment from anybody including M/s. Maha Sagar group of cases. There was no reason to believe that income of the assessee chargeable to tax has escaped assessment. The Assessing Officer recorded wrong and incorrect facts in the reasons recorded for .....

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rokers but the authorities below failed to consider the explanation of the assessee which is supported by the evidences and material on record. There was no material 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 h .....

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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 inference was drawn against the transaction of the gifts. There was no material available with the Assessing Officer of the donors to giv .....

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he Act for reopening of the assessment. The addition was to be deleted." 11. Considering above discussion, I am of the view reopening of the assessment is wholly unjustified in the matter. The Assessing Officer has not validly assumed jurisdiction under section 147/148 of the Act. The same is, therefore, liable to be set aside and quashed. 11(i) Apart from above findings, it is clear that at the original assessment stage, assessee declared short term capital gain and the Assessing Officer a .....

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he case of Kelvinator of India 256 ITR 1, decision of Supreme Court in the case of Kelvinator of India 320 ITR 561, decision of Gujrat High Court in the case of Garden Silk Mills Pvt. Ltd. 237 ITR 668, decision of Calcutta High Court in the case of Berger Paints India Ltd. 245 ITR 648 and decision of Supreme Court in the case of CIT V Foramer France 264 ITR 566. Hon'ble Supreme Court in the case of Indian Oil Corporation 156 ITR 956 held that, "No case under section 148 is made out when .....

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ide 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 latt .....

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High Court in the case of Techman Buildwell P. Ltd. V ACIT 370 ITR 771 held as under: Held, allowing the petition, that the "reasons to believe" nowhere highlighted what, if at all, was the material which the Assessing Officer came upon or became aware of subsequent to the original assessment. In other words, what triggered the Assessing Officer's curiosity to impel him to re-examine the files and documents pertaining to a completed assessment was unknown. Nor did the materials pl .....

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he Assessing Officer in the first instance did not perform his job properly for which the assessee could not be faulted. The Assessing Officer's omission was the sole basis for issuing the reassessment notice and, consequently, proceeding to make the demand. Therefore, the notice and the demands arising consequent to the notice were quashed". 12. Considering the facts of the case in the light of the above decisions, it is clear that re-opening is done merely on change of opinion which i .....

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