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TMI Blog2020 (3) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation report has recorded his satisfaction without conducting preliminary inquiry, which is nothing but the borrowed satisfaction from the report of Investigation Wing. The condition precedent to reopen an assessment that is reason to believe should be that of the AO not that of the investigation wing, so in the absence of the condition precedent to reopen, the AO lacks jurisdiction to reopen the assessment. Even though the department was aware as on 09 Jan. 2014 itself about the demise of late Sushila Choudhari, the notice issued u/s. 148 in the name of deceased person is also bad in law. So I find that reason recorded by AO does not satisfy the jurisdictional requirement as per the settled law on the subject and therefore AO lacks jurisdiction to reopen and thereafter notice u/s. 148 is bad in law and therefore, the same cannot be sustained in the eyes of law and therefore, the same is hereby quashed. - Decided in favour of assessee. - I.T.A No. 1934/Kol/2019 - - - Dated:- 18-3-2020 - Shri A. T. Varkey, JM For the Appellant : Shri Sushil Kumar Pransukha, FCA, ld.AR For the Respondent : Shri Jayanta Khanna, JCIT, ld.Sr.DR ORDER This is an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR, on this technical ground reassessment order of the AO cannot be faulted. 4. In his rejoinder, the ld.AR referred to the case laws to the Pune Bench of Tribunal in Smt. Archana Ashok Dukre Vs. ITO, Latur, ITA No. 2237/Pun/2016 dt. 15-11-2019, wherein the Tribunal on similar case has quashed the initiation of reopening itself by referring the decision of Hon ble Bombay High Court in Rupa Shyamsundar Dhmatkar Vs. ACIT in Writ Petition No. 404 of 2019 and Hon ble Supreme Court s decision in PCIT Vs. Maruti Suzuki India Ltd reported in (2019) 416 ITR 613 (SC). The ld. AR also referred to the reasons recorded by the AO for reopening u/s. 147 as under:- Reasons for reopening u/s 147 of the I.T Act. 1961: 1. The assessee is an Individual who filed its return of income electronically for the relevant assessment year on 26.03.2012 declaring total income of ₹ 3,02,358/-. 2. Information was received from the Pr. DIT (Inv.), Kolkata vide his letter bearing F. No. 75A/2015-16/2733 dated 21-09-2015 that the investigation carried out by the Directorate revealed that a very large number of persons had taken entries of huge bogus Long Term Capital Gain in an organize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Various judgments have also held that the money came by cheque and was paid through the process of banking transactions as not by itself of any consequences. However, as discussed above the said transactions are neither verifiable from the details provided by the assessee nor it is verifiable from the return of income. The AO also had no such information before receiving the said report along with the data as mentioned above from Pr. DIT(Inv.), Kolkata. 4. On analyzing the information so received from PDIT(Investigation), Kolkata vis-a-vis return filed by the assessee on 26.03.2012, I am of the firm believe that the assessee on sale of share of BLUEPRINT SECURITIES LTD. has plough backed his unaccounted money of ₹ 3,05,800/- into the regular books of account in the garb of Long Term Capital Gain (LTCG) on which no tax has been paid by claiming the same as exempt u/s. 10(38) of the I.T. Act 1961 through accommodation entry in lieu of cash. 5. In view of the above facts and after analyzing the information available on record, I have the reason to believe that the assessee had suppressed its income by using the device of LTCG treating it as exempted to the tune of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation furnished in the report of DIT (Inv.), Kolkata, that assessee had transacted in shares of BLUEPRINT SECURITIES LTD and sold shares of BLUEPRINT SECURITIES LTD involving trade value at ₹ 3,05,800/- during AY 2011-12 and the assessee had long term capital gain (LTCG) on such sum. After noting down general modus operandi, the AO concludes as under:- 4. On analyzing the information so received from PDIT(Investigation), Kolkata vis-a-vis return filed by the assessee on 26.03.2012, I am of the firm believe that the assessee on sale of share of BLUEPRINT SECURITIES LTD. has plough backed his unaccounted money of ₹ 3,05,800/- into the regular books of account in the garb of Long Term Capital Gain (LTCG) on which no tax has been paid by claiming the same as exempt u/s. 10(38) of the I.T. Act 1961 through accommodation entry in lieu of cash. 5. In view of the above facts and after analyzing the information available on record, I have the reason to believe that the assessee had suppressed its income by using the device of LTCG treating it as exempted to the tune of ₹ 3,05,800/- which is/are reported as bogus by the directorate of investigation and by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment was a rigged transaction. Based on this information, the AO has reopened without making any preliminary enquiry and recorded the reasons to re-open. The AO before re-opening the assessment should have satisfied the condition precedent required to usurp jurisdiction under section 147 of the Act that is he has the requisite reason to believe escapement of income. It has to be kept in mind that reason to believe postulates a foundation based on information and belief based on reason. Even if there is foundation based on information, there still must be reason warrant holding a belief that income chargeable to tax has escaped income. According to me, a bare reading of the reasons recorded to reopen reveals that there was non application of mind before reopening the assessment. Based on an information/investigation report, the AO has jumped into the conclusion that the assessee is involved in the activities of penny stock rigging etc. It has to be kept in mind that information from the Investigation Wing(Income-tax Department) can only trigger the reasons to suspect . Then the AO to make some preliminary inquiry and collect some material which would suggest the escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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