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2025 Supreme(Online)(ITAT) 7062
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
SHRI OM PRAKASH KANT, ACM, SHRI RAJ KUMAR CHAUHAN, JM
Lekhraj J. Jain – Appellant
Versus
DCIT 19(1) – Respondent
Income Tax Appeal|AY 2014-15
Important Points
Subject
Taxation - Income Tax
Act Referred
Headnote
Facts of the case:
The appeal relates to the reopening of assessment for AY 2014-15, where the assessee was accused of converting undisclosed income into tax-free long-term capital gains through transactions involving penny stocks, leading to additions made by the Assessing Officer without proper validation of facts.
Findings of Court:
The Tribunal determined that the Assessing Officer acted on erroneous assumptions, failing to establish a genuine reason to suspect undeclared income, thus invalidating the reassessment.
Issues: The core issue was the jurisdiction and validity of the reassessment proceedings initiated without proper groundwork and erroneous assumptions.
Ratio Decidendi: The court emphasized that assessments cannot be reopened simply on suspicion or inconclusive information, reaffirming principles established in earlier cases where non-application of mind by the Assessing Officer was deemed inadequate for reassessment.
Result: The appeal filed by the assessee is allowed.
For the Appellants/Petitioners: Mr. Suchek Anchaliay, Ms. Vanshika Agarwal
For the Respondents: Mr. Surendra Mohan, Sr. DR
| Table of Content |
|---|
| 1. reopening proceedings require accurate facts for jurisdiction. (Para 4) |
| 2. assessing officers must establish valid grounds and independent belief for reopening assessment. (Para 5 , 6) |
| 3. the appeal was allowed based on invalid jurisdiction of reassessment. (Para 7) |
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 10.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds:
1. On the facts and in the circumstances of the case and in law, the assumption of jurisdiction by the Ld. AO was bad in law as the conditions laid down for initiating assessment proceedings u/s 147 of the Income Tax Act, 1961 have not been fulfilled.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 55,49,342/- as unexplained cash credits u/s 68 of the Act, being sale proceeds received through banking channel on sale of shares of Matra Kaushal Enterprises Limited on recognised stock exchange, disregarding the ample documentary evidences furnished by the appellant to prove the genuineness of the impugned transactions and without appreciating that the addition was made by the Ld. Assessing Officer solely on the basis of suspicion, conjectures and surmises relying upon general, vague and non-assessee specific forwarded information received from Investigation Wing.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.1,10,986/- u/s 69C of the Act, being alleged commission paid by the appellant at 2% of sale proceeds on sale of shares of Matra Kaushal Enterprises Limited, disregarding that the appellant has not taken any alleged accommodation entry and without appreciating that the addition was made by the Ld. Assessing Officer solely on the basis of estimation and conjectures.
4. On the facts and circumstances of the case and in law, the Ld. Assessing Officer erred in making the additions of Rs. 55,49,342/- u/s 68 of the Act and of Rs. 1,10,986/- u/s 69C of the Act without providing the appellant a copy of the material and statement relied upon as well as an opportunity of cross-examination of the persons on whose statement reliance was placed, in gross violation of principles of natural justice, thereby making the additions unsustainable.
2. Before us, the Ld. counsel for the assessee submitted that ground No. 1 of the appeal might be treated as additional ground and same being legal ground going to the root of the matter may be admitted.
3. We have heard the rival submissions of the parties on the issue relating to the admissibility of the additional ground. The assessee has made an oral plea to treat this ground as an additional ground, submitting that the same has already been incorporated in Form No. 36. The learned Departmental Representative (Ld. DR) has not raised any serious objection to the admission of this ground. Since the ground challenges the very validity of the reassessment proceedings and goes to the root of the matter, without necessitating any further investigation into facts, we deem it appropriate to admit the same for adjudication.
4. Addressing the additional ground impugning the validity of the reassessment proceedings, the learned counsel for the assessee drew our attention to the Paper Book filed, comprising pages 1 to 33. He specifically referred to page 8 thereof, containing the reasons recorded by the Assessing Officer for reopening the assessment, which, for the sake of completeness, are reproduced below:
“Reasons for re-opening of the assessment u/s. 147 of the Income Tax,
The assessee has not filed return of income for the year under consideration.
2. An information was received in this case from the Directorate of Income-tax (investigation), Kolkata, stating that the investigation carried out by the department had proved that a schem
