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Issues involved: Reopening of assessment under sec. 148 of the Income-tax Act, 1961 and deletion of addition of Rs. 40 lacs in the assessment.
Reopening of Assessment: The appellant challenged the reopening of assessment u/s 148 based on information received regarding accommodation entries provided by M/s. MKM Finsec (P) Ltd. The Assessing Officer formed a prima facie opinion that income had escaped assessment due to the appellant's involvement with M/s. MKM Finsec (P) Ltd. The CIT(A) upheld the reopening after considering the appellant's contentions and relevant case laws. The ITAT affirmed the reopening, as the appellant failed to establish that all material facts were disclosed fully and truly, and there was a live nexus between the information and the escapement of income. Deletion of Addition of Rs. 40 lacs: The appellant sold parts of investments through M/s. MKM Finsec (P) Ltd. and received Rs. 40 lacs, which the Assessing Officer sought to add back. However, the CIT(A) deleted the addition, noting that the investment in M/s. Young Builders (P) Ltd. and M/s. Youth Construction (P) Ltd. was not disputed, and the sale was made without any capital gains or losses. The ITAT concurred, stating that since the shares sold were part of the opening stock, no addition could be made solely on the basis of doubting the sales without concrete evidence. In conclusion, both the appeal and cross-objection were dismissed by the ITAT, upholding the reopening of assessment and the deletion of the addition of Rs. 40 lacs.
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