HASMUKH UGARCHAND GADHECHA, HUF,AHMEDABAD V. THE ITO, WARD-5(2)(2), AHMEDABAD

ITA 591/AHD/2025

AI Insights

The case involves Hasmukh Ugarchand Gadhecha, HUF, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed the reopening of his assessment for the Assessment Year 2013-14 under section 147 of the Income Tax Act, 1961. The reassessment was based on allegations that the Long Term Capital Gains (LTCG) claimed by the assessee were not genuine but were accommodation entries provided by Shri Shirish Chandra Shah. The Tribunal examined whether the reopening of the assessment was justified and whether the assessee had truly and fully disclosed all material facts necessary for the assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835295 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 20-03-2025
• Other Referred Cases: Mitesh Ashokkumar Patel vs. ITO, South Yarra Holdings vs. ITO & anr.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARGOVIND SINGH
• Assessee Lawyers: DEEPAK R. SHAH
• Keywords: Bogus purchase; Reopening of assessment; Gross profit estimation; Capital Gains; Accommodation entries; Earning of tax free income; Loose papers; Assessment record; Reason to believe; Opportunity of cross examination; Bogus
• Section: 147; 148; 143(3); 68; 69C

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “सी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD \u0016ी संजय गग\u001a, \u0011ाियक सद\u001b एवं \u0016ी मकरंद वसंत महादेवकर, लेखा सद\u001b क े सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं /ITA No.591/Ahd/2025 िनधा \u000fरण वष\u000f /Assessment Year : 2013-14 Hasmukh Ugarchand Gadhecha, HUF 3rd Floor, Anjalee House CG Road Navrangpura Ahmedabad – 380 009 बनाम/ v/s. The ITO Ward-5(2)(2) Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: AAAHG 7194 K (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Deepak R. Shah, AR Revenue by : Shri Hargovind Singh, Sr.DR सुनवाई की तारीख/Date of Hearing : 12/11/2025 घोषणा की तारीख /Date of Pronouncement: 09/02/2026 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 26/12/2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2013-2014. 2. The assessee, in this appeal, has raised the following grounds of appeal: Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 2 “1. That the Ld.CIT(A) erred in law and in the facts of the case in confirming the order of the AO in reopening assessment u/s.147 of the Act. 2. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in reopening assessment u/s 147 of the act and not proceeding u/s 153C of the Act. 3. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs. 1,84,87,500/- u/s 68 of the Act. 4. That the Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the AO in making addition of Rs.3,69,750/- u/s 69C of the Act. 5. The Learned CIT(A) erred in law and on the facts of the case in not allowing an opportunity of cross examination of persons whose statements were relied upon and personal hearing before confirming addition U/S 68 of the Act 6. Your appellant craves for leave to add, amend or alter all or any of the grounds before or during hearing of this appeal.” 3. A perusal of the above grounds of appeal, reveals that the assessee apart from contesting additions made/confirmed by the lower authorities on merits, has also raised the legal ground relating to the validity of the reopening of the assessment u/s.147 of the Act. Since the legal ground raised by the assessee goes to the root of the case, hence, the same is taken first for adjudication. 4. The brief facts of the case are that the assessee filed its original return of income for AY 2013-14 on 25/07/2013 declaring total income of Rs.3,37,840/-. In the said return of income, the assessee has claimed Long Term Capital Gain (LTCG) of Rs.1,83,67,048/- and claimed the same as exempt u/s.10(38) of the Act. The said return was scrutinized u/s.143(3) of the Act and the capital gain claimed by the assessee as exempt were accepted as such by the Assessing Officer (AO), however, making a small addition of Rs.10,347/- on account of interest income vide assessment order dated Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 3 30/07/2015 passed u/s.143(3) of the Act. Thereafter, the assessment in this case was reopened u/s.147 of the Act by way of issuance of notice dated 30/03/2021 u/s.148 of the Act. 4.1. The reasons for re-opening of the assessment were that a search and survey action was carried out at the residence and office premises of one Shri Shirish Chandra Shah and at the residence of his key-employees and associates on 09/04/2013 and subsequent days. During the course of search, it was found that Shri Shirish Chandra Shah was engaged in providing accommodation entries of share capital, share premium share application money, unsecured loans, long term capital gains, short term capital gain/loss, trading loss etc. On analysis of the trade data and information, it was seen that the assessee had purchased/ sold 83500 shares of Sawaca Business Machine Limited (earlier known as Sawaca Finance Limited) (hereinafter referred as Sawaca) and received pay-in/pay out of Rs. 1,84,87,500/- in the AY 2013-14. As per facts of the case, it was concluded that LTCG of Rs.1,83,67,048/- claimed by the assessee as exempt were not genuine, but, in fact, were on account of accommodation entry provided by Shri Shirish Chandra Shah. On the basis of above information, the AO arrived at the conclusion that for the year under consideration, the assessee has not disclosed true and correct income and that the income chargeable to tax had escaped assessment in the said year. The reasons recorded by the AO to form the belief of escapement of income/reopening of assessment are reproduced as below: Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 4 “3.2. ANNEXURE “1. Brief details of the assessee: In this case, the assessee has filed its return of income for AY 2013-14 on 25.07.2013 declaring total income of Rs.3,37,840/-. The order u/s 143(3) of the Act was passed on 31.07.2015 determine the total income of Rs. 3,37,840/-. 2. Brief details of Information collected/ received by the AO: This office has received information from DCIT, Central Circle-1(1), Ahmedabad in connection with search and survey action was carried out at the resident and office of Shri Shirish Chandra Shah and at the residence of his key employees and associates on 09.04.2013 and subsequent days. During the course of search, it was found that Shri Shirish Chandra Shah is engaged in providing accommodation entries of share capital, share premium, share application money, unsecured loans, long term capital gains, short term capital gain/loss, trading loss etc. wherein cash is received by him from various clients and against this cash he provides accommodation entries. On analysis of the trade data and information, it is seen that the assessee has purchased/ sold 83500 shares of Sawaca and received pay-in/pay out of Rs. 1.84,67.500/- in the AY 2013-14. 3. Analysis of information collected / received: On verification of the information received the records of providing accommodation entries are maintained by Shri Shirish Chandra Shah in various excel sheets maintained in the name of intermediaries who have introduced clients to Shri Shirish Chandra Shah. Perusal of these streets and the statements of Shi Shirish Chandra Shah and his employees establishes that the main intermediary through whom clients availed accommodation entries from Shri Shirish Chandra Shah is Shri Rajesh Jhaveri of Ahmedabad. During the course of search, documents and digital data containing date wise details of receipt and payment of cash and cheques by Shri Shirish Chandra Shah was found to be maintained in form of cash and cheques sheets. The records of providing accommodation entries are maintained by SCS in various excel sheets maintained in the name of intermediaries who have introduced clients to Shri Shirish Chandra Shah. On examination of the seized impounded evidence, accounts in name of Rajesh Jhaveri have also been found to be recorded in excel sheets under various names such as \"rajesh Jhaver\"; “rj”; “n” Navkar\": \"R JHAVERI\", \"RAJESH JHAVERI” and “N NAVKAR(sawaca)\". These accounts contain the details of cash received from/through Rajesh Jhaveri by Shri Shirish Chandra Shah and the accommodation entries provided there against. During the course of survey conducted at the office of SCS situated at 3rd Floor, Dwarka Ashish Building “n Navkar sawaska\" in MS Excel file bom K-R.xls\" was impounded. This sheet contains the details of cash received by Shri Shirish Chandra Shah from/ through Rajesh Jhaveri and consequent payout made in the shares of Sawaca Business Machines Limited (earlier known as Sawaca Finance Limited) (hereinafter referred to as Sawaca). In this sheet the transactions of cash received by Shri Shirish Chandra Shah, cash paid by Shri Shirish Chandra Shah and the purchase and sale of shares Sawaca by through Shri Shirish Chandra Shah have been recorded. The entries recorded in this sheet entirely correlate with the entries recorded by Shri Shirish Chandra Shah in the daily cash sheets. Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 5 As per the said sheet cash aggregating to Rs. 8,38,09,500/- has been received by Shn Shirish Chandra Shah on account of the payout made on facilitating buying of shares of Sawaca. Further, he has facilitated buying of 437819 shares of Swaca and consequent payout of Rs. 9,27,92,843/- against the receipt of cash. Further, he has also facilitated sale of 111906 shares of Sawaca and received consequent pay in of Rs.13,37,45,459/-. Against the bogus pay in received, he has also facilitated payment of cash aggregating to Rs.35,50,000/-. Further there is also transfer of Rs.30,75,000/- to the main account of Rajesh Jhaveri. On perusal of the trade data obtained from BSE and its correlation with the entries recorded in the “n Navkar sawaska\" sheet, it has been found that the entries recorded in this sheet correlate with the actual trades executed on BSE. Entries with regard to the purchase and sale of shares of Sawaca by SCS through his infrastructure correlate with the actual trades executed on BSE. Entries with regard to the purchase and sale of shares of Sawaca by Shri Shirish Chandra Shah through his infrastructure correlate with the exchange data and with the sauda sheets impounded from the office of Shri Shirish Chandra Shah. Further, on analysis of the evidence impounded from the office of Shri Shirish Chandra Shah situated at \"Bokadia Mansion\" during the course of survey held on 09.04.2013, it has been found that sauda sheets for the trades executed by Shri Shirish Chandra Shah through synchronized trading have been impounded as Annexure A-6 & A-7. The loose papers impunded in these Annexures contain the trades in various shares executed by Shri Shirish Chandra Shah using the infrastructure of the persons and companies under his control. It was found that Shri Damodar Attal is the key person, an employee of Shri Shirish Chandra Shah, who was looking after the share manipulation and LTCG entry operations being undertaken by Shirish Shah, In the statement recorded u/s. 132(4) of the Act on 09.04.2013, Shri Damodar Attal has stated that he works for Shirish Shah he purchases and sells shares of BSE listed companies operated by Shirish Chandrakant Shah which include Sawaca; Shri Shirish Chandra Shah through synchronized trading jacked up the prices of the shares managed and controlled by him and these shares were sold at low prices to persons and bought back from them at high prices after one year and thus, they would get exempt long term capital gains from the said transactions. He has clearly admitted that he himself was involved in synchronized trading as per the instructions of Shirish Shah in the shares of the BSE listed companies managed by Shri Shirish Chandra Shah. These facts have also been accepted by Shri Shirish Chandra Shah. He has specifically stated that synchronized trading was resorted to so as to jack up the prices of shares and buy the shares from the clients and provide them payout against the receipt of cash from them. From the above, it is clear that bogus payout has been facilitated by Shri Shirish Chandra Shah against cash received from Rajesh Jhaveri (on behalf of beneficiaries) in shares of Sawaca by reorting to synchronized trading. On analysis of the trade data and information, it is seen that the assessee has purchased/sold 83500 shares of Sawaca and received pay-in/pay out of Rs. 1,84,87,500/- in the AY 2013-14, 4. Enquiries made by the AO as sequel to information collected/ received: The facts enumerated above have been found out on examination on the return of income of the assessee Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 6 it is found that the assessee has shown exempt income of Rs. 1,83,67,048/-. Therefore, no further enquiry is required in this case. On the basis of the same there are reasons to believe that the income chargeable to tax has escaped assessment. 5. Findings of the AO: On verification from the return of income of the assessee, it is found that the assessee has claimed exempt income of Rs. 1,83,67,048/-being income on sale of investment. Hence, it is found that income of Rs. 1,84,87,500/- as per information received from DCIT, Central Cir. 1(1), Ahmedabad for the year under consideration has escaped assessment within the meaning sec. 147 of the IT. Act. 6. Basis of forming reasons to believe and details of escapement of income: From the detailed discussion made above, it is very clear that the assessee has purchased/sold 83500 shares of Sawaca and received pay-in/pay-out worth of Rs.1,84,87,500/-. Further, the assessee has claimed exempt income of Rs.1,83.67,048/-, In view of the above facts, I have reason to believe that income of Rs. 1,84,87,500/-has escaped assessment within the meaning of section 147. of the Act. Therefore, it is a fit case for reopening of the assessment by invoking the provision of section 147 of the I.T. Act 1961. Accordingly, it is fit case for issuing notice u/s. 148 of the I.T. Act. 7. Applicability of the provisions of section 147/151 to the facts of the case: In this case, the retum of income was filed for the AY 2013-14 by the assessee and assessment u/s 143(3) was made on 31.07.2015 determining total income of Rs. 3,37.8410/-. Since, 4 years from the end of the relevant year has expired in this case and the assessee has not truly and correctly disclosed material facts necessary for the assessment year under consideration. It is pertinent to mentioned here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer Para 6 above). I have carefully considered the assessment records containing submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the following material facts necessary for its assessment for the year under consideration: From the detailed discussion made in above, it is seen that during the year the assessee has purchase/sold 83500 shares of Sawaca and received pay-in/ pay-out worth of Rs. 1,84,87,500/-. The name of the assessee has been reported as one of such beneficiaries who received accommodation entries by way of bogus payout has been facilitated by Shri Shirish Chandra Shah against cash received from Rajesh Jhaveri (on behalf of beneficiaries) in shares of Sawaca by resorting to synchronized trading. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby necessitating reopening u/s. 147 of the Act. It is evident from the above discussion that in this case the issues under consideration were never examined by the AQ during the course of regular assessment, In this case, return of Income has been filed for the year under consideration, however, no assessment was made Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 7 u/s 143(3) of the Act and the only requirement to initiate proceeding us. 147 is reason to believe which has been recorded at above paragraphs. In view of the above, the provisions of clause(b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case more than four years have been lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s. 148 has been obtained separately from Pr. Commissioner of Income Tax as per the provisions of Sec. 151 of the Act. Yours faithfully, SHAHANK SHARMA Ward 5 (3)(1), AHMEDABAD” 5. Being aggrieved by the said order of the AO, the assessee preferred appeal before the Ld.CIT(A). 6. Before the Ld. CIT(A) the assessee raised the legal ground that the reopening of the assessment was bad in law being hit by the first proviso to section 147 of the Act as the assessment in this case was reopened after the lapse of 4 years from the end of the relevant assessment year and that the original assessment order was passed u/s 143(3) of the Act. The assessee also contested the additions on merits. The Ld.CIT(A), however, dismissed the appeal of the assessee deciding both the legal as well on merits issues against the assessee. 7. Being aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before the Tribunal. 8. We have heard the rival contentions of the Ld. Representatives of the parties and gone through the available material on record. The assessee has Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 8 challenged these additions both on merits and on the jurisdictional ground that the reopening of assessment under section 147 was bad in law. Since the legal issue regarding the validity of reopening goes to the root of the matter, therefore the same is adjudicated first. 8.1. The undisputed facts are that the assessee filed the original return on 25.07.2013 declaring an income of ₹3,37,840 and claiming exempt Long Term Capital Gain (LTCG) on Sawaca Business Machines Ltd. This return was scrutinized, and a regular assessment order was passed under section 143(3) on 30.07.2015 assessing the income of the assessee at Rs. 348147/-. 8.2. Under the first proviso to section 147 of the Act, where an assessment has been concluded under section 143(3), the assessment cannot be reopened after four years unless there is a failure on the part of the assessee to disclose fully and truly all material facts. Upon perusal of the reasons recorded by the AO, we find that the AO relied on information from the Investigation Wing regarding a search on Shri Shirish Chandra Shah, alleging that the assessee was a beneficiary of accommodation entries. However, such information disseminated on the Insight Portal was a general information that required independent verification by the AO before forming the belief of escapement of the income of the assessee for the relevant assessment year. 8.3. In the present case, as is revealed from the reasons recorded by the AO for reopening of the assessment, the only information available to the AO was that the assessee had traded in the shares of Sawaca and has claimed tax exempt long term capital gains and nothing more. The AO, in the reasons recorded under the heading \"Enquiries made by the AO as a sequel to information collected/received,\" has stated that “on examination of return it Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 9 was found that the assessee had shown exempt income of Rs. 18367048/- therefore no further enquiry is required in this case”. This shows that the crucial fact on the basis of which the assessment was reopened, in this case, after the lapse of four years from the end of the relevant assessment year, was already on record during the original scrutiny assessment. Therefore, the reopening, in this case, is hit by first proviso to section 147 of the Act. 8.4. The Coordinate Bench of this Tribunal in the case of “Mitesh Ashokkumar Patel vs. ITO” in ITA No.1622/Ahd/2019 & 580/Ahd/2024, vide order dated 26/08/2025 has observed that if the AO had all the material facts during the original assessment, the reopening after four years is hit by the proviso especially when there is no mention by the AO as to what the assessee was supposed to disclose which he has not disclosed along with the return of income or during the enquiries made by the AO in the original assessment carried out u/s 143(3) of the Act. The relevant part of the order in the case of “Mitesh Ashokkumar Patel vs. ITO” (supra), is reproduced as under: “9. It is pertinent to mention here that the AO, himself, has noted in the impugned assessment order that the assessee had filed the copy of Annual Financial Report and Audited P&L account and balance-sheet along with return of income, wherein various information/material were disclosed. At this stage, we had specifically put a query to the Ld.DR as to whether as per the legal requirement, the assessee was supposed to file along with return of income any other information/documents apart from that have been filed by the assessee along with return of income. He however, could not point out any such specific requirement, but, insisted that the aforesaid information as narrated in above points (a) to (d), was necessary for the just and correct assessment of income of the assessee. However, the Ld.Counsel for the assessee has submitted that the assessee had duly disclosed all the material information and particulars of income, which as per law, the assessee was required to disclose. The assessee as per the requirement of law, was not supposed to disclose in particular about any specific fact about the nature of his business transactions relating to different purchases made by the assessee from various Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 10 concerns including that from the two parties as mentioned by the AO in point (a) above. He inviting our attention to the assessment order has submitted that during the assessment year, the assessee had made purchases from 11 different parties which were duly disclosed in the audited accounts of the assessee. The assessee having disclosed all the material facts necessary for the assessment, if the AO wanted to enquire further particulars regarding to any of the purchases, he would have called for such particular information from the assessee. However, the plea that the assessee was supposed to disclose further or more particulars about all the purchases without any query being raised by the AO in relation to any of the purchases, in our view, is not tenable. The Ld.Counsel for the assessee has submitted that the assessee has carried out numerous transactions during the year, which fact has also been noted by the AO in the assessment order, and, hence, it was not possible otherwise to furnish any further details of each of the transaction carried out by the assessee during the year unless such or any information was called for by the AO in relation to any or all the purchase transactions. The Ld.Counsel for the assessee has further invited our attention to the copy of the original assessment order passed u/s.143(3) of the Act, a perusal of which reveals that the AO has already examined the issue of low Gross Profit (GP) rate and made an addition of Rs.1,00,000/- into the income of the assessee and thus, the issue of alleged bogus purchases, was under the circumstances, was examined by the AO. Further, the said addition made on account of low GP rate was confirmed by the Ld.CIT(A), however the same stood deleted by the ITAT in further appeal. Therefore, the aforesaid issue of low GP having been examined during the original assessment proceedings, it cannot be said that the assessee had not furnished the requisite particulars which he was supposed to furnish for the purpose of assessment of true and correct income of the assessee. 10. We find force in the contention of the Ld.Counsel. Now coming to the four points (a) to (d) as reproduced above by the AO to suggest that the assessee was supposed to disclose these particulars during the original assessment proceedings, we note that the assessee had already furnished all the particulars of his purchases and sales before the AO which were duly included in the audited accounts of the assessee. As noted above, the assessee had made numerous transactions and purchases during the year. If the AO doubted any of the particular transaction, he should have called for further details relating to such transaction from the assessee. However, there was no requirement as per law for the assessee to furnish any further information as to the nature of transaction regarding each of the purchase transactions as alleged. The assessee had duly disclosed that the nature of transaction was purchases of the gold ornaments/bullion from the said parties. The copies of delivery Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 11 challan/receipt/proof of transportation, the names of parties, to whom the further sales were made from all the parties were furnished. The confirmations of purchasers, etc. were not required to furnished at the first instance along with a return filed u/s.139(1) of the Act. No doubt, during the assessment proceedings, the AO could have called for further information regarding any or each of the transaction. However, the AO proceeded to estimate the net profit by enhancing the same by Rs.1,00,000/-. The AO sat silently on the information received from Investigation Wing for four years and did not make any effort to verify the aforesaid information and re-open the assessment. After the lapse of four years, the case of the assessee is hit by proviso to section 147 of the Act, and the assessment cannot be reopened unless the conditions stipulated in the first proviso to section 147 of the Act are satisfied. However, such conditions have not been satisfied in this case. In view of this, re-opening of the assessment, in this case, is bad in law and subsequent assessment framed u/s.143(3)/147 of the Act is also bad in law and the same is hereby quashed. 11. Before parting, it is pertinent to mention here that the assessee has raised another legal ground that, in this case, re-opening has been made on the basis of various material/information collected during the course of search action in the case of Shri Rajendra Jain and under the circumstances, the only recourse available with the Department was to proceed against the assessee u/s.153C of the Act and that the re-opening of the assessment u/s.148 was not justified on this score also. However, we have already held that the re-opening of the assessment in this case is bad in law being hit by first proviso to section 147 of the Act. Hence, at this stage, no adjudication is made on this legal ground of appeal and the same is kept open and the assessee may raise this ground at proper stage, if need be. The consequential assessment framed u/s.143(3)/147 of the Act in this case is also accordingly quashed.” 8.5. The Hon’ble Bombay High Court in exactly similar circumstances in the case of “South Yarra Holdings vs. ITO & anr.” in Writ Petitiion No.3398 of 2018 dated 01.03.2019 has held that the Assessing Officer was required to examine the information received in the context of the facts on record and if such an exercise would have been done and the Assessing Officer would have Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 12 come to the conclusion that there was failure on the part of the assessee to disclose truly and fully all material facts necessary, only then he would have been justified in issuing the notice u/s.148 of the Act. The Hon’ble Bombay High Court, therefore, held that the reopening of the assessment was hit by First Proviso to section 147 of the Act. The Hon’ble Bombay High Court also held that since the Assessing Officer has not applied his mind to the information received in the context of the facts on record, therefore, the notice issued u/s.148 of the Act was also bad in law and therefore, the Hon’ble Bombay High Court quashed the notice and assessment framed u/s.148 of the Act. 8.6. Even as noted from the reasons recorded, in case of search action in case of third party, no direct incriminating evidence has been found against the assessee otherwise the AO could have proceeded u/s 153C of the Act. Even the AO has wrongly observed that no assessment was carried out u/s 143(3) of the Act and hence the AO proceeded to reopen the assessment on the wrong premises, whereas, the original assessment was carried out u/s 143(3) of the Act. Hence, the AO erred in reopening the assessment despite the said action being hit by the first proviso to section 147 of the Act under the misbelief that the original assessment was not carried out u/s 143(3) of the Act. This shows a complete lack of application of mind and a failure to correlate the portal information with the actual assessment records on the part of the AO. The AO also failed to identify what specific material fact remained undisclosed; instead, the AO made a bald assertion of non- disclosure, which as per the settled law is not a valid ground for reopening of the assessment beyond 4 years. As per the settled law, the AO must examine the information in the context of the facts on record to determine if there was a failure to fully and truly disclose the relevant facts necessary for Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 13 the assessment. In this case, the AO's own reasons admit that the claim was on record, and there was no direct incriminating evidence found against the assessee. The wisely crafted reasoning by the AO that the information was \"embedded\" in the records is a mere pretense when the AO had already examined the exempt income in the original u/s 143(3) of the Act proceedings and, hence, the reopening in this case is squarely hit by the restriction as imposed under first proviso to section 147 of the Act, therefore, the assumption of jurisdiction by the AO in this case under section 147 of the Act was invalid and without jurisdiction. Accordingly, the notice under section 148 and the subsequent reassessment order are quashed. 8.7. Since we have quashed the assessment order on the legal ground, therefore, the issues raised on merits of the additions made by the AO have been rendered academic in nature and the same are not adjudicated at this stage. 9. With the above observations, the appeal of the assessee stands allowed. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 09 /02/2026. Sd/- Sd/- (Makarand V. Mahadeokar) Accountant Member ( Sanjay Garg ) Judicial Member िदनांक/Dated 09/02/2026 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS Printed from counselvise.com ITA No. 591/Ahd/2025 Hasmukh Ugarchand Gadhecha, HUF vs. ITO Asstt.Year : 2013-14 14 आदेश की ितिलिप अ!ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\" / The Appellant 2. #थ\" / The Respondent. 3. संबंिधत आयकर आयु% / Concerned CIT 4. आयकर आयु% ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स#ािपत ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by H-JM in his comp.)) : 4.2 2026 2. Date on which the typed draft is placed before the Dictating Member. : 4.2.2026 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 9.2.26 7. Date on which the file goes to the Bench Clerk. : 9.2.26 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "