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Issues Involved:
1. Validity of assumption of jurisdiction under section 147/148. 2. Validity of assessment under section 144. 3. Merits of the various additions made by the Assessing Officer. Detailed Analysis: 1. Validity of Assumption of Jurisdiction under Section 147/148: The primary issue was whether the Assessing Officer (AO) correctly assumed jurisdiction under section 147/148 of the Income Tax Act. The AO issued notices under section 148 based on information from the Investigation Wing, which indicated that the assessee was a front company providing accommodation entries. The assessee challenged this, arguing that the reasons for reopening the assessment did not show a formation of belief that income had escaped assessment. The Tribunal held that the AO was justified in forming a belief that income had escaped assessment based on the survey conducted on Shri Sanjay Rastogi, who admitted to providing bogus entries through front companies, including the assessee. The Tribunal noted that the reasons recorded by the AO had a rational connection with the formation of belief, satisfying the requirement of "reasons to believe" under section 147. Therefore, the issuance of notices under section 148 was upheld as valid. 2. Validity of Assessment under Section 144: The next issue was whether the AO correctly invoked section 144 to make a best judgment assessment. The assessee argued that the conditions for invoking section 144 were not satisfied, as no notice under section 142(1) was issued, and no opportunity to show cause was provided as required by the proviso to section 144(1). The Tribunal found that the AO erred in not issuing a show-cause notice before making the assessment under section 144. The Tribunal referred to the judgment of the Hon'ble Rajasthan High Court in CIT v. Agro Engineers, which held that the proper course was to set aside the assessment and remit the matter back to the AO to make a fresh assessment after affording the assessee an opportunity to show cause. Consequently, the Tribunal directed the AO to make fresh assessments after complying with the provisions of section 144. 3. Merits of the Various Additions Made by the Assessing Officer: Since the Tribunal set aside the assessments on procedural grounds, it did not delve into the merits of the additions made by the AO. The AO had made three types of additions: undisclosed commission income, unexplained cash deposits, and disallowed expenses. These issues were left open for reconsideration by the AO in the fresh assessments to be made after complying with section 144. Conclusion: The Tribunal upheld the validity of the AO's assumption of jurisdiction under section 147/148 but found procedural lapses in the invocation of section 144. The assessments were set aside, and the AO was directed to make fresh assessments after providing the assessee an opportunity to show cause as required by section 144. The appeals were partly allowed, with the AO required to address the procedural deficiencies before making any substantive determinations on the merits of the additions.
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