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TMI Blog2025 (4) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year 2016-17. 2. Brief facts of the case is that the assessee is an individual, salaried person working is an Executive Director in a Private Limited Company. For the Asst. Year 2016-17, assessee filed his original Return of Income on 30-01-2017 declaring total income of Rs. 12,64,960/-. The return was processed u/s. 143(1) and no regular assessment was made. Later the return was reopened by issuing a notice dated 30-03-2021 u/s. 148 of the Act on the ground that based on search action u/s. 132 of the Act in the case of Kushal Group Companies, Ahmedabad, it was noticed that the assessee has done suspicious transaction aggregating to Rs. 57,50,682/- durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal: 1. Learned CIT(A) erred in law as well as on fact by upholding the addition of Rs. 62,42,018/- u/s. 69A of the Act being genuine sale consideration received as unexplained money and declared as Long Term Capital Gain in return. 2. Learned CIT(A) erred in law as well as on fact upholding the issue of Long Term Capital Gain of Rs. 56,48,229/- u/s. 10(38) of the Act as accommodation entry on sale of shares of Kushal Trade Link treating same as penny stock shares. 3. Learned CIT(A) erred in law as well as on fact in upholding the addition of the entire sales consideration without giving deduction of cost of acquisition. 4. Learned CIT(A) erred in law as well as on fact upholding the re-opening assessment on the basis of invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be quashed and relied upon two unreported judgements of jurisdictional High Court in the case of Ashishbhai Jashwantbhai Desai HUF vs. ITO and Mumtaz Haji Mohmad Memon vs. ITO. 7. Per contra Sr. DR appearing for the Revenue supported the orders passed by the lower authorities and requested to up hold the addition. 8. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. It is undisputed fact that the assessee filed original return of income declaring the LTGC and claim of exemption u/s. 10[38] of the Act, since the Ld AO in his opening paragraph of the reassessment order itself admits the above fact. However, in the reasons recorded for reopening of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. In the above circumstances the very reopening of assessment itself is invalid in law based on the "borrowed satisfaction" from investigation wing of the department. 9. The Jurisdictional High Court in the case of Ashishbhai Jashwantbhai Desai HUF vs. ITO in R/Special Civil Application No. 1998 of 2022 vide judgment dated 07-01-2025 held as follows: "8. Considering the submissions made by learned advocates for both the sides and on perusal of the reasons recorded, it appears that the Assessing Officer has failed to give the requisite details in the reasons recorded so as to form a requisite prima-facie belief that income has escaped assessment. The reasons recorded only refer to the information received from the credible sources t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: "10. We are conscious that in the present case, the return filed by the assessee was not taken in scrutiny. Nevertheless, in such a case also the requirement that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment, would apply. Reference in this respect can be made to the decision of this Court in case of Inductotherm (India) P. Ltd. v. M. Gopalan, Deputy Commissioner of Income Tax reported in [2013] 356 ITR 481 (Guj). Validity of the reasons recorded by the Assessing Officer would therefore be one of the issues. 11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1,18,95,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage the impugned notice. Through the affidavit in reply a faint attempt has been made to entirely shift the center of the reasons to a completely new theory viz. the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was Rs. 50 lakhs and that the assessee had by filing the return offered his share of such proceeds by way of capital gain. 13. In the result, impugned notice is quashed. Petition is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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