AO issued notice under section 148 on the reasoning that search conducted on numerous entry operators and their beneficiaries revealed that assessee had received huge amount of accommodation entries in the garb of exempt LTCG. Assessee challenged this on the ground of no independent application of mind by AO. Held: AO merely acted on the basis of information received from investigation wing and had not independently verified from record available to him in the form of return of income filed by assessee. So, there was only suspicion that some income had escaped assessment which could not, by itself, be sufficient to sustain action under section 147 read with section 148. AO borrowed satisfaction from search conducted on numerous entry operators and their beneficiaries. If any action was required to be taken on the basis of certain documents found from other persons during search, then assessment could have been framed under section 153C but no such action was taken in assessee's case, rather action was taken indirectly under section 147 read with section 148, which was not valid.
IN THE ITAT, CHANDIGARH BENCH
N.K. SAINI, V.P. & SANJAY GARG, J.M.
Sanjay Singhal (HUF) v. DCIT
I.T.A. Nos. 702 to 704/Chd/2018
19 June, 2020
In favour of assessee.
Assessee by: S.K. Tulsiyan, Advocate, Ashwani Kumar, C.A., Abha Aggarwal, C.A., Bhoomija Verma, C.A. and Aditya Kumar, C.A.
Revenue by: G.C. Srivastava, Special Counsel, C. Chandrakanta, CIT-DR
Per Bench:
These three appeals by the assessee are directed against the consolidated order of the learned Commissioner (Appeals)-3, Gurgaon dt. 31-3-2018.
2. Since the issues involved are common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.
3. At the first instance we will deal with the appeal in ITA No. 702/Chd/2018 for the assessment year 2011-12.
4. Following grounds have been raised in this appeal :--
1. That order passed under section 250(6) of the Income Tax Act, 1961 by the learned Commissioner (Appeals)-3, Gurgaon is against law and facts on the file in as much as he was not justified to uphold the action of the learned assessing officer in initiating proceedings under section 148 of the Income Tax Act, 1961.
2. That the learned Commissioner (Appeals)-3, Gurgaon gravely erred in upholding the action of the learned assessing officer in making and addition of Rs. 22,37,80,889 representing the sale proceeds of listed equity shares held by the Appellant for more than 12 months by invoking the provisions of section 68 of the Act by ignoring the relevant specific facts and circumstances of the case any by relying on extraneous arguments and evidences, including in particular, circumstantial evidence, which has no bearing and applicability to the case.
3. That the learned Commissioner (Appeals)-3, Gurgaon was not justified to uphold the action of the learned assessing officer in treating the transactions relating to purchase and sale of equity shares as ingenuine transactions.
4. That the learned Commissioner (Appeals)-3, Gurgaon further gravely erred in upholding the action of the learned assessing officer in making an addition of Rs. 1,40,77,758 on account of alleged commission expenses paid by the Appellant for arranging the alleged entries in respect of Long Term Capital Gains by invoking the provisions of section 69C of the Act on sheer presumptive basis.
5. That the learned Commissioner (Appeals)-3, Gurgaon while adjudicating the appeal, has dismissed various grounds of appeal raised by the Appellant by relying on statements of various persons and data without affording any opportunity to cross examine such persons thereby ignoring the basic principles of natural justice despite the fact that a specific ground was raised to this effect.