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TMI Blog2023 (10) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... . The notice u/s 148 of the Act was issued on 28.03.2018 which was served on the assessee on the same date and the assessee complied with the said notice by filing return of income on 30.04.2018 declaring total income of Rs. 7,08,918/-. Thereafter the assessee wrote to the AO to supply the copy of reasons for reopening of assessment which was provided on 23.08.2018. The assessment was completed by AO by making an addition of Rs. 41,12,845/- on account of disallowance bogus loss resulting from the trading in the equity shares of above penny stock company vide order dated 27.11.2018 passed u/s 147/143(3) of the Act. 4. The appeal of the assessee was dismissed by upholding the reopening of assessment u/s 147 of the Act after taking into account the contentions of the assessee by observing and holding as under: "5.3. Ground of Appeal No. 1 and 2: Vide the ground of appeal Nos. 1 and 2, the assessee has challenged the action of the AO in reopening the assessment alleging that the proceedings initiated u/s 147 of the act are bad in law since approval taken from the higher authority was not in accordance with law and only a mechanical approval was granted and the proceedings initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has traded in S.V. Electricals Ltd. which was subsequently changed M/s Nivyah Infrastructure and Telecom Services Pvt. Ltd. The Ld. A.R stated that there was totally non-application of mind by the AO at the time of recording a reasons as equity shares traded by the assessee were wrongly mentioned and therefore reopening of assessment on the basis of reasons recorded on wrong facts and without application of mind is bad in law. The Ld. A.R referred to the decision of Hon'ble Bombay High Court in the case of South Yarra Holdings vs. ITO & anr. In Writ Petition No. 3398 of 2018 dated 01.03.2019 and stated that the same scrip was subject matter of the decision. The Ld. A.R stated that Hon'ble Bombay High Court quashed the assessment on the ground that reopening has been done by the AO not on his own satisfaction and it is not open to AO to issue notice at the dictate of the investigation wing. The Ld. A.R therefore prayed that the order of reopening may kindly be quashed by reversing the order of Ld. CIT(A). 6. The Ld. D.R., on the other hand, relied heavily on the order of authorities below by submitting that though the fact of S.V. Electricals Ltd. which was subsequently converted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eve that income chargeable to tax in the case of the assessee company had escaped assessment within the meaning of section 147 o' the I.T Act, 1961 to the tune of Rs. 32,58,390/- during the A. Y under-consideration. Since the period of four years from the end of the A. Yr. has been expired, sanction for the issue of notice u/s 148 of the I. 7. Act, 1961 may kindly be given in terms of section 151(1) of the Income Tax Act, if deemed fit." We also note that the scrip of S.V. Electricals Ltd. was converted into M/s Nivyah Infrastructure and Telecom Services Pvt. Ltd. and the assessee has in fact dealt in share of S.V. Electricals Ltd. and not M/s Nivyah Infrastructure and Telecom Services Pvt. Ltd.. We also note that in the second last para the AO has simply stated that on the basis of information received from DDIT(Inv), Unit-8(3), Mumbai, the case is reopened. In our opinion, the reasons recorded by the AO are without any application of mind and without recording his own satisfaction and in fact it was a case of borrowed satisfaction as received from DDIT(Inv), Unit-8(3), Mumbai which is not permissible under the law. The case of the assessee finds support from the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly M/s Nivyah Infrastructure & Telecom Services Ltd vis-a-vis facilitating introduction of unaccounted income of members of beneficiaries in the form of exempt Capital gain or Short term Capital Loss in their books of account. These transactions are mostly in view of cash of equal amount and commission is charged over and above at certain fixed percentage for providing such accommodation entry. These accommodation entries were taken from various beneficiaries for introducing their unaccounted cash into their books of accounts without paying the due taxes. 2.4 The detailed investigation report containing the modus operandi of tax evasion through penny stock and discussion in entry operators from brokers and scripts has been provided along with the letter of DDIT (Inv) Mumbai. 2.5. Our assessee is one of the beneficiary who have availed accommodation entries by way of traded in shares to the tune of Rs. 3504000,000000000005 in M/s Nivyah Infrastructure & Telecom Services Ltd with a view to ultimately reduce tax liability and or to bring capital in the form of equity or debt or tax exempt income or a combination of the above transaction, therefore, it is necessary to verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Ltd" during the period relevant to the subject assessment. This order dated 28.9.2018 disposing of the objections is completely silent on the above objections while RNG 5/7 5-wp3398.18 rejecting the petitioner's objections. 6. The respondent's Assessing Officer has filed an affidavit-in reply dated 5.2.2019 of the Assessing Officer. However, the reply does not deal with this objection taken in the petition. Nevertheless, Mr. Suresh Kumar the learned counsel for the revenue submits that all these issues will be subject of consideration during the re-assessment proceedings. Thus, this Court should not interfere at this stage. 7. It is a settled position in law that re-opening of an assessment has to be done by an Assessing Officer on his own satisfaction. It is not open to an Assessing Officer issue a reopening notice at the dictate and/or satisfaction of some other authority. Therefore, on receipt of any information which suggests escapement of income, the Assessing Officer must examine the information in the context of the facts of the case and only on satisfaction leading to a reasonable belief that income chargeable to tax has escaped assessment, that re-op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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