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TMI Blog2016 (5) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of which assessment was reopened and further an opportunity of cross examination, in spite of a specific request made by the Appellant in this behalf. Therefore, the assessment order dt. 25/03/2013 is against the principles of natural justice, and hence, bad in law. 2. Reopening is bad in law: 2.1 The CIT(A) erred in confirming the order of the Assessing Officer in reopening the assessment u/s. 147 of the Act, without appreciating the facts that there was no escapement of assessment in the assessee's case as the original return was accepted u/s. 143(1) dtd. 26/10/2006. And there is no new material or facts brought on record, thus reopening is nothing but based on change of opinion and hence had in law. 2.2 The CIT(A) failed to appreciate that The Assessing Officer failed to provide a copy of the recorded reasons to the Appellant on the 2.3 The CIT(A) erred in confirming the action of the Assessing Officer and failed to appreciate the fact that the notice u/s 148 dtd. 14/03/2011 was issued on the basis of third party's statement recorded on oath in the search and seizer action u/s. 132 in the case of M/s. Mahasagar Securities Pvt. Ltd., Hence the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings under section 147 on the plea that she was not involved in any such share transaction as referred to by the Assessing Officer in the reasons recorded for re-opening the assessment. The Assessing Officer finding no merit in the objections raised by the assessee, proceeded to complete the assessment under section 143(3) r/w section 147 of the Act on 25th March 2013, by holding that the sale of shares shown by the assessee amounting to Rs. 36,45,853, is nothing but an accommodation entry provided by Mahasagar Securities Pvt. Ltd. to the assessee. The Assessing Officer relying upon the statement recorded from one Shri Mukesh Choksi, held that the assessee had not actually entered into any share transaction but in reality it is assessee's unaccounted money which has been routed back to him through bogus purchase and sale of shares. Accordigly he treated the amount of Rs. 36,45,853 as unexplained investment of the assessee under section 69 of the Act. Being aggrieved of such addition made in the assessment order, the assessee preferred appeal before the learned Commissioner (Appeals) challenging the assessment order both on the validity of initiation of proceedings under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his order submitted, Shri Mukesh Choksi, in respect of another group company, viz. Gold Star Finvest Securities Ltd., has admitted that the company was providing accommodation entry, therefore, the Assessing Officer was justified in re-opening the assessment. 7. We have considered the submissions of the parties and perused the material available on record. Undisputedly, the Assessing Officer in the present case, has re-opened the assessment after expiry of four years from the end of the relevant assessment year. However, it needs to be mentioned in the present case earlier no assessment under section 143(3) has been made. Be that as it may, it is noticed, as per the communication dated 4th October 2012, of the Assessing Officer to the assessee, assessment was re-opened for the following reasons:- "The assessee has obtained accommodated entries amounting to Rs. 36,45,853 for F.Y. 2004-05 relevant to A.Y. 2005-06 for Gold Star Finvest Securities Ltd." 8. He also requested to file the details as per the reasons mentioned above. Thus, it is clear from the reasons recorded that the alleged escapement of assessment pertains to share transactions made through Gold Star Finvest Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2005-06 which was processed under section 143(1) of the Act and issued notice under section 148 of the Act to assessee on 27.03.2012 (copy placed on pages 4 & 5 of paper book). In response thereto, assessee, vide letter dated 27.04.2012 (pages 6 & 7 of paper book), submitted that there was no escapement of income and that the return of income for A.Y. 2005-06 filed on 17.12.2005 be treated as filed in response to the aforesaid notice issued under section 148 of the Act. The assessee also requested the AO to furnish the reasons recorded for reopening the assessment. In response thereto, the AO vide letter dated 04.10.2012 (copy placed at page 8 of the paper book) provided the assessee with the reasons recorded by him for reopening of the assessment for A.Y. 2005-06 and which were as under: - "The assessee has obtained accommodation entries amounting to `29,95,981/- for F.Y. 2004-05 relevant to A.Y. 2005-06 from M/s. Gold Star Finvest Securities Pvt. Ltd. You are requested to file the details as per the reasons mentioned above." 4.3.2 From the above, it is seen that the AO made available a copy of the reasons recorded by him for reopening the assessment by letter dated 27.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below, was not able to controvert the arguments put forth by the assessee and factual errors in the reasons recorded by the AO for initiating the proceedings under section 147 of the Act in the case on hand for A.Y. 2005-06. 4.3.5 It is also a matter of record that though the assessee had raised grounds in this regard, which are recorded at B, 1 & 2 at pages 3 & 4 of the impugned order, the learned CIT(A) has failed to consider and adjudicate the grounds raised by the assessee. 4.3.6 In the facts and circumstances of the case, on the issue of the reopening of assessment for A.Y. 2005-06 under section 147 of the Act, as discussed at paras 4.1 to 4.3.5 of this order (supra), we are of the view that formation of belief by the AO was a condition precedent as regards the escapement of tax pertaining to the relevant assessment year. Before proceeding to issue the notice under section 147 of the Act, the AO was required to form an opinion, the validity of which are supposed to sustain the formation of an opinion, which can be challenged. Though conclusive evidence is not requisite at the stage of formation of belief, it must be based on application of mind which a reasonable person wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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