2024 (9) TMI 139 - AT - Income Tax

Reopening of assessment - Reasons to believe - while the 148 proceedings were initiated on the ground that assessee was engaged in purchase and sale of shares of Nyssa Corporation, however, at the time of passing of the final assessment order, the assessing officer made addition on a totally different basis - HELD THAT - The case of the assessee was reopened on the basis that the assessee was engaged in purchase/sale of shares of Nyssa Corporation. During the course of assessment proceedings, the assessing officer formed the view, on the basis of certain facts which were brought on record, that the assessee had not actually carried out purchase/sale of shares Nyssa Corporation, but the assessee has lent his PAN to the concerned broker, in exchange of certain unaccounted payment of approximately 2% on the total value of such transactions (which is common in such line of business, as found in certain cases by the Ld. AO). Therefore, on going through the instant facts, we observe that it is not a case where no additions were made in the hands of the assessee in respect of purchase/sale of shares of Nyssa Corporation, but the assessing officer, on consideration of the facts of the case, had come to the conclusion that though the assessee had not taken actual delivery of such shares of Nyssa Corporation, however the assessee s role was that of providing its PAN for transactions involving purchase and sale of shares of Nyssa, in exchange of certain payments, computed at 2% of the transaction value. Accordingly, in our considered view, this is not a case where no addition had been made in the hands of the assessee in respect of purchase/sale of shares of Nyssa Corporation, in which case, we could have considered the applicability of judicial precedents cited by the assessee. However, from the contents of the assessment order, which were also later confirmed by Ld. CIT(Appeals), it is observed that with respect to the very same script i.e. Nyssa Corporation, the assessing officer had in fact made certain additions in the hands of the assessee. Therefore, we are unable to accept the contention of the counsel for the assessee on this issue. In the result, the assessee s challenge to reopening of assessment under section 147 of the Act, is dismissed.

Summary

Issues Involved:
1. Legality of Reassessment Proceedings
2. Jurisdictional High Court Judgments and Proper Inquiry
3. Addition of Amounts not Originally Recorded
4. Addition of Rs. 2,55,000/- Based on Incorrect Information
5. Partial Confirmation of Addition of Rs. 62,694/-
6. Addition of Rs. 16,19,130/- Based on Assumptions
7. Violation of Principles of Natural Justice
8. Consideration of Submissions and Binding Judgments
9. Overall Allowance of Appeal

Detailed Analysis:
1. Legality of Reassessment Proceedings
The appellant argued that the reassessment proceedings were invalid, illegal, and without jurisdiction. However, the Tribunal found that the reassessment was based on information received about non-genuine share transactions and upheld the legality of the reassessment proceedings.

2. Jurisdictional High Court Judgments and Proper Inquiry
The appellant contended that there was no proper inquiry based on the information that led to the reopening of the assessment. The Tribunal noted that the assessing officer had sufficient basis for reopening the case and had followed due process, thus rejecting the appellant's claim.

3. Addition of Amounts not Originally Recorded
The appellant argued that no other items of alleged income could be added in reassessment if the recorded reasons for reopening were not added. The Tribunal found that the assessing officer had made additions related to the same script (Nyssa Corporation) and upheld the additions.

4. Addition of Rs. 2,55,000/- Based on Incorrect Information
The appellant claimed that the addition of Rs. 2,55,000/- was based on incorrect information. The Tribunal found that the assessing officer had sufficient evidence to support the addition and upheld it.

5. Partial Confirmation of Addition of Rs. 62,694/-
The appellant argued that the entire addition, including Rs. 62,694/-, should be deleted. The Tribunal did not find merit in this argument and upheld the partial confirmation of the addition.

6. Addition of Rs. 16,19,130/- Based on Assumptions
The appellant contended that the addition of Rs. 16,19,130/- was made without evidence and based on assumptions. The Tribunal noted that the assessing officer had sufficient basis for the addition, including repetitive contact with the broker and the use of the appellant's PAN for manipulated transactions. However, the Tribunal found that the Department did not bring forth any corroborative evidence to substantiate the claim that the appellant earned a commission by lending his PAN. Therefore, the Tribunal ruled in favor of the appellant on this issue.

7. Violation of Principles of Natural Justice
The appellant argued that the order was passed in violation of the principles of natural justice. The Tribunal found that the assessing officer and Ld. CIT(Appeals) had followed due process and rejected this claim.

8. Consideration of Submissions and Binding Judgments
The appellant claimed that the Ld. CIT(Appeals) failed to consider detailed submissions and binding judgments. The Tribunal found that the Ld. CIT(Appeals) had considered the submissions and judgments but had reached a different conclusion based on the facts of the case.

9. Overall Allowance of Appeal
The appellant argued that the appeal should have been allowed in toto. The Tribunal partly allowed the appeal, dismissing some grounds and accepting others, particularly the issue of the addition of Rs. 16,19,130/-.

Conclusion:
The Tribunal upheld the legality of the reassessment proceedings and the additions made by the assessing officer, except for the addition of Rs. 16,19,130/-, which was found to be based on assumptions without corroborative evidence. Grounds 4 and 5 were dismissed as not pressed. The appeal was partly allowed.