INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - -

AO reopened assessment based on utilization of creation of bogus capital. Assessee challenged validity of reopening of assessment on the ground that addition made by AO on other grounds which did not form part of reasons recorded by him could not be sustained.Held: Reopening of assessment was based on utilization of creation of bogus capital at Rs. 16,97,252. AO had duly discussed this fact in the assessment order and observed that addition made by him in respect of various instalments amounting to Rs. 12,70,054 and other amount of Rs. 54,433 was covered by the bogus capital created at Rs. 16,97,252 to the extent of investments discussed in assessment order and remaining capital was accommodated in cash and various loan advances. Thus, AO had duly considered addition to be made because of opening capital, but did not make separate addition of said amount, as he allowed set-off of the same against investment holding that, same was made out of bogus capital created by assessee. Therefore, contention of assessee that no addition was made on account of opening capital was devoid of any merits and not correct on facts and in law. Hence, same was rejected and reopening of assessment done by AO was perfectly in order.

Distinguished:CIT v. Jet Airways (I) Ltd. (2010) 195 Taxman 117 (Bom) : 2011 TaxPub(DT) 218 (Bom-HC) and CIT v. Mohmed Juned Dadani (2013) 30 Taxmann.com 1 (Guj) : 2013 TaxPub(DT) 967 (Guj-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2000-01

INCOME TAX ACT, 1961

Section 69B

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