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TMI Blog2015 (12) TMI 1738X X X X Extracts X X X X X X X X Extracts X X X X ..... ion profit/loss and that assessee had procured profit of `29,95,981/- in share transaction carried out by this group. The AO observing that income of assessee amounting to `1,61,875/- had escaped assessment on account of the above transaction, initiated proceedings under section 147 of the Act and issued notice under section 148 of the Act on 14.03.2012 after taking approval of the Add. CIT, Range 16(2), Mumbai. The assessment was concluded under section 143(3) r.w.s. 147 of the Act vide order dated 25.03.2013 wherein income of the assessee was determined at `31,57,856/- as against the returned income of `1,61,875/- in view of addition of `29,55,981/- on account of profit on share transactions with M/s. Mahasagar Securities Pvt. Ltd. 2.2 Aggrieved by the order of assessment for A.Y. 2005-06 dated 25.03.2013, assessee preferred an appeal before the CIT(A)-27, Mumbai, who dismissed assessee's appeal vide order dated 27.01.2014. 3. Aggrieved by the order of CIT(A)-27, Mumbai dated 27.01.2014 assessee has preferred this appeal raising the following grounds: - "1. Violation of principles of Natural Justice: 1.1 The learned CIT(A) erred in not giving any finding as regards ground Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in treating Rs. 29,95,981/- as the unexplained investment of the Appellant without bringing any evidence to support of the same and the provisions of Section 69 cannot be applied to the facts of the appellant, based on the statement of third party. 3.3 Without prejudice to above, the Learned CIT(A) failed to appreciate that the appellant has shown speculation profit after setting off loss from speculative transaction and paid tax thereon hence addition of Rs. 29,95,981/- may be deleted." 4. Ground No. 2: Reopening is bad in law: 4.1.1 At the outset, the learned A.R. for the assessee took up this ground and assailed the orders of authorities below alleging that the reopening was bad in law. In the ground raised, assessee has alleged that AO had erred in reopening the assessment for A.Y. 2005-06 as the return of income filed was accepted under section 143(1) of the Act and that since no new material or facts were brought on record contrary to those in the return of income, the reopening on the same set of facts constituted only a change of opinion based on a third party's statement recorded in the case of Mahanagar Securities Pvt. Ltd. In the grounds raised it was also contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at are the basic postulate for formation of belief that any income of the assessee has escaped assessment for that assessment year in order to reopen the assessment under section 147 of the Act. It is submitted that since the reasons recorded by the AO have factually no nexus with the transactions, income or business of the assessee in the year under consideration and the same not being considered for addition or discussed in the order of assessment, there was absolutely no basis for the AO to form a belief that income of assessee chargeable to tax had escaped assessment on account of assessee's non-existent transaction with Gold Star Finvest Securities Pvt. Ltd. The learned A.R. for the assessee submitted that in these circumstances, the initiation of proceedings under section 147 of the Act is bad in law and therefore liable to be quashed as the reopening of assessment for A.Y. 2005-06 was bad in law. In support thereof, the learned A.R. for the assessee placed reliance on the decision of the Hon'ble Delhi High Court in the case of Sarthak Securities Co. P. Ltd. vs. ITO (2010) 329 ITR 110 (Del). 4.2 The learned D.R. for Revenue supported the orders of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.3 On an appreciation of the details on record we find that the reasons recorded by the AO and provided to assessee vide letter dated 04.10.2012 extracted at para 4.2.1 (supra) are at variance with the facts narrated in the order of assessment wherein the AO in para 1 on page 1 records: - "..... during the year the assessee had taken profit of `29,95,981/- in the shares, the transactions were carried out through M/s. Mahasagar Securities Pvt. Ltd. Since the taxable income of `1,61,875/- has escaped assessment for the reasons attributable to the assessee, the assessment was reopened by issue of notice under section 148 of the I.T. Act on 14.03.2011 ...." This variance in the reasons recorded by the AO as provided to the assessee vide letter dated 04.10.2012 and that recorded in the order of assessment, in our view, prevented the assessee from putting up any defence in respect of the reopening of assessment under section 147 of the Act. This has clearly violated the principles of natural justice as the AO proceeded on a different premise while finalizing the order of assessment dated 25.03.2013. 4.3.4 As contended by the learned A.R. for the assessee it is clearly evident that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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