TMI Blog2021 (4) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction. It has been held in various decisions that when the reopening of the assessment is based on incorrect or wrong appreciation of facts, such reopening is not in accordance with law. It has also been held in various decisions that when the reopening is made on the basis of report of the Investigation Wing and without independent application of mind by the Assessing Officer to the return field by the assessee, such reopening of assessment is also not in accordance with law and has to be quashed. Since, in the instant case, the Assessing Officer has acted mechanically on the basis of report from the Investigation Wing and without independent application of mind and the reopening of assessment is on wrong appreciation of facts, therefore, such reopening of the assessment, in our opinion, is not in accordance with law. - Decided in favour of assessee. - ITA No. 5712/Del/2019 - - - Dated:- 19-4-2021 - SHRI R. K. PANDA , ACCOUNTANT MEMBER For the Appellant : Raj Kumar and Aman Gupta, CAs For the Respondents : Farat Khan, Sr. DR ORDER Per R. K. Panda , AM This appeal filed by the assessee is directed against the order dated 18.06.2019 of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajesh Gupta (HUF) AAGGR9262M ₹ 1,90,800/- 3. Information received is analyzed at our end and after analyzing it is observed that the assessee Sh. Rajesh Gupta (HUF), was involved in buying the bogus inflated/deflated shares through the prearranged transactions on the Stock Exchange in the shares of M/s. DMC Education Ltd. and made total trade value of ₹ 1,90,800/-. The trading pattern of shares of M/s. DMC Education Ltd. shows that the prices rose and fell sharply in a prearranged trading pattern. Further, the fluctuation in the share prices is not in synchronizing with the general sensex level. Also the sharp rise and fall in the price of shares of M/s. DMC Education Ltd. is not correlated with the fundamentals of company. The financials of the company also do not justify the sharp rise fall in the price of the shares for the purpose of giving bogus entry/bogus LTCG to the different beneficiaries on commission. 4. On perusal of information received from the office of the ADIT(Inv.) Unit-1(3), Mumbai and after Verification of return of income filed by the assessee, it is observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings, the Assessing Officer asked the assessee to explain as to why addition should not be made on account of accommodation entry for Long Term Capital Gain amounting to ₹ 1,90,800/- u/s. 68 of the Income Tax Act and the commission on account of providing such accommodation entry. Rejecting the various explanation given by the assessee and invoking the provisions of section 68 of the Act and genuineness of the claim of Long Term Capital Gain u/s. 10(38) of the Act, the Assessing Officer made addition of ₹ 1,90,800/- to the total income of the assessee. He further made addition of ₹ 9,540/- being commission paid for arranging such accommodation entry. 4. In appeal, the learned CIT(A), sustained the addition made by the Assessing Officer. He also upheld the validity of reassessment proceedings challenged before him. 5. Aggrieved with such order of the learned CIT(A), the assessee is in appeal before the Tribunal by raising following grounds of appeal 1. That under the facts and circumstances, proceedings u/s. 147/148 are without jurisdiction, without application of mind, unwarranted, mechanical, on borrowed satisfaction and on the basis of wrongly taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal manner and under borrowed satisfaction has reopened the assessment which is not valid in law. He submitted that when the reopening is based on wrong appreciation of facts, such reopening is held to be invalid in view of the decision of the Hon'ble Delhi High Court in the case of CIT vs. Kamdhenu Steel Alloys reported in 248 CTR 33 (Del.), in the case of CIT vs. Sh. Atul Jain and Vinit Jain reported in 292 ITR 383 (Del.) and in the case of Pr. CIT vs. Rmg Polyvinyl (I) Ltd. reported in 396 ITR 5 (Del.). 7. The learned counsel for the assessee submitted that as per notice u/s. 148, the case of the assessee was reopened after getting approval from the Pr. CIT-11, New Delhi. The assessee vide letters dated 02.05.2018 and 13.08.2018 requested the Assessing Officer to provide the copy of the approval taken u/s. 151(1) of the Act. However, no such copy of approval was ever provided by the Assessing Officer to the assessee. Referring to various decisions, he submitted that when the approval has been given in a mechanical manner, such approval is not accordance with law and therefore, the reassessment proceedings has to be held as invalid. He submitted that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained by the learned CIT(A) is not in accordance with law. Referring to the various decisions placed in the paper book, the learned counsel for the assessee submitted that the reassessment proceedings in the instant case is not in accordance with law and therefore has to be quashed. 10. The learned DR, on the other hand, heavily relied on the order of the learned CIT(A). 11. I have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the learned CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the Assessing Officer in the instant case, on the basis of information obtained from the Investigation Wing that the assessee has traded in a penny stock namely shares of M/s. DMC Education Ltd. and has not disclosed the income arising out of such transaction, reopened the assessment, the reasons of which have already been reproduced in the preceding paragraph. I find rejecting the various explanation given by the assessee, the Assessing Officer made addition of ₹ 1,90,800/- u/s. 68 of the Act and made further addition of ₹ 7,540/- u/s. 69C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in various decisions that when the reopening of the assessment is based on incorrect or wrong appreciation of facts, such reopening is not in accordance with law. It has also been held in various decisions that when the reopening is made on the basis of report of the Investigation Wing and without independent application of mind by the Assessing Officer to the return field by the assessee, such reopening of assessment is also not in accordance with law and has to be quashed. The Hon'ble Delhi High Court in the case of Pr. CIT vs. G And G Pharma India Ltd. (supra) has held that where the Assessing Officer has not applied his mind independently to the information received from the Director of the Investigation Wing and no prima facie opinion formed, such reassessment proceedings is invalid. The Hon'ble Delhi High Court in the case of Sarthak Securities Co. (P.) Ltd. (supra) has held that where there is no independent application of mind by the Assessing Officer but acting under information from Investigation Wing, such notice u/s. 147 has to be quashed. The Hon'ble Delhi High Court in the case of CIT vs. Kamdhenu Steel Alloys Ltd. reported in (2012) 248 CTR (Del) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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