2019 (5) TMI 1754 - AT - Income Tax

Reopening of assessment - as alleged assessee's business activities is to provide accommodating entries - petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details - HELD THAT - As decided in case of Chandra Devi Kothari 2015 (2) TMI 1313 - KARNATAKA HIGH COURT as held that since the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details, the matter is required to be reconsidered by the AO by providing fair and reasonable opportunity of hearing to the assessee after furnishing details / copy of the statement based on which the impugned assessment order has been passed. From the above Para from the judgment of Hon ble Karnataka High Court, it is seen that matter was restored back to the file of the AO for fresh decision after providing copy of the statement of Shri Mukesh Choksi and other related details. - Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against CIT(A) order for Assessment Year 2008-09.

Analysis:
1. The case involves the reopening of the assessment for Assessment Year 2008-09 based on information regarding alleged bogus share dealings through the Mahasagar Group. The Assessing Officer (AO) re-assessed the income under section 143(3) r.w.s. 147 of the Income Tax Act, 1961. The CIT(A)-2, Bangalore, dismissed the appeal against this reassessment.

2. The appellant raised multiple grounds challenging the validity of the reassessment and subsequent orders. The grounds included issues related to the legality of the notice u/s. 148, compliance with legal procedures for reopening, violation of principles of natural justice, and lack of proper consideration by the CIT(A).

3. The main contention was regarding the treatment of Short Term Capital Gain as unexplained purchases and sale of shares, leading to taxation under the head 'Income from other sources'. The appellant argued against the authorities' conclusions about the nature of share transactions and alleged fraudulent activities.

4. Ground No. 3.1 specifically addressed the validity of the reassessment order, highlighting the denial of fair hearing and cross-examination of persons crucial to the case. Citing a judgment of the Hon'ble Karnataka High Court, the appellant sought reconsideration of the matter with proper disclosure of relevant details.

5. The Tribunal, in its decision, referred to the judgment of the Hon'ble Karnataka High Court in a similar case and concluded that the matter required reconsideration by the AO with a fair hearing and provision of necessary details. As a result, the CIT(A)'s orders for Assessment Year 2008-09 were set aside, and the case was remanded to the AO for a fresh decision following the directions outlined in the court's judgment.

This detailed analysis covers the issues raised in the appeal against the CIT(A) order for Assessment Year 2008-09, highlighting the legal arguments, challenges to the reassessment, and the Tribunal's decision based on relevant legal precedents.