9911796707
TMI Blog2024 (7) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition was made in the assessment proceedings. And the assessee had duly disclosed in its return to have received share application by account payee cheques from M/s Suryadeep Salt Refinery Chemical Works Ltd and pursuant thereto, they were allotted shares of assessee as per the Companies Act and details of which were produced before the AO in the original assessment proceedings and accepted by him. In such a back drop, where the AO received adverse information from office of the CIT(A)-37, Mumbai vide letter he ought to have made preliminary enquiry and noted the correct facts in respect of the issue, rather than forming his belief of escapement of income on incorrect assumption of facts as noted which action of AO cannot be countenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment u/s 144 of the Act on 10.12.2010, wherein he made an addition of Rs. 40 lakhs u/s 68 of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to dismiss the same. Aggrieved the assessee is before us. 4. We have heard both the parties and perused the records. Since the assessee has challenged the jurisdiction of AO to have reopened the assessment, we need to examine the reasons recorded by AO need to be examined to see whether he had satisfied the conditions precedent necessary for doing so, as prescribed u/s Section 147 of the Act i.e. Firstly whether AO has recorded the reasons before reopening the assessment. And if so, whether the reasons recorded fulfil the requirement of law or not. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the reasons recorded by AO has to be tested on a standalone basis. Nothing can be added nor anything be deleted from the reasons so recorded. No inference can be allowed to be drawn on the basis of reasons not recorded by him. AO has to speak through the reasons so recorded by him. The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide the link between conclusion and evidence. So the reasons recorded by the AO before re-opening as it is, it should be examined to see whether AO had met in the reasons recorded , the essential condition precedent to do so i.e. Reason to believe, escapement of income . So in this back-drop let us look at the reasons recorded in this case by AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares of M/s Suryadeep Salt Refinery Chemical Works Ltd entered into by the assessee on 01.12.2009 for value of Rs. 10 lakhs are found to be bogus (hawala transaction). According to the Ld. AR a perusal of the ibid information from the office of the CIT(A)-37, Mumbai would reveal that the informant CIT(A) came across a case of Shri Narendra R Shah who has submitted a paper book containing the name of the 1314 persons who allegedly laundered their black money and became beneficiaries of the penny stock scam by availing accommodation entries in the form of bogus long term capital gain from shares of M/s Suryadeep Salt Refinery Chemical Works Ltd etc. According to the Ld. AR, based on the first part of aforesaid information, the AO has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to AO changing the facts from the initial reasons recorded as on 18.03.2018. Therefore according to Ld. AR, the improvement made in the facts recorded in the reasons recorded to reopen the assessment on 18.03.2010 cannot be looked into as held by the Hon ble Bombay High Court in the case of Hindustan Leave Ltd, (268 ITR 332), and the impugned addition of Rs. 40 lakhs is not sustainable became the AO has not made any addition on the basis of the issues / facts alleged in the reasons recorded on 18.03.2010 and refered to the Hon ble Bombay High Court decision in Jet Airways (331 ITR 236). Further according to Ld. AR, the AO on receipt of adverse information against the assessee, ought to have conducted preliminary enquiry and collected mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has claimed to have earned any income from business income / capital gain (long term capital gain / short term capital gain / loss) in respect of shares of M/s Suryadeep Salt Refinery Chemical Works Ltd and since we have to test the reasons recorded by the AO on standalone basis while examining its validity for assumption of jurisdiction u/s 147 of the Act, we find that the foundation on the basis of which the AO has formed the belief is itself incorrect, in other words the AO has reopened the assessment based on the wrong assumption of fact. We note that the assessee had already undergone scrutiny assessment u/s 143(3) of the Act on 24.12.2007, wherein some addition was made in the assessment proceedings. And the assessee had duly disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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