AI Insights
The case involves Jayantilal Rajmal Seth, who appealed against the revisional order passed by the Principal Commissioner of Income Tax, which set aside the original reassessment order. The reassessment was based on information that Seth was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. The Tribunal examined whether the reassessment and subsequent proceedings under section 263 were valid. The Tribunal found that the Assessing Officer had conducted the necessary inquiries and that the reassessment was based on a reasonable belief that income had escaped assessment, thus upholding the PCIT's order.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 793425 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-09-2025
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
F
Assessment Year
2018-2019
Appeal Filed On
07-05-2025
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 3260/MUM/2025 Assessment Year: 2018-19 Jayantilal Rajmal Seth, A-3, Saibaba Shopping Centre, Mumbai Central, Mumbai-400008. Vs. DCIT-CC-4(3), BKC, Mumbai-400051. PAN NO. AGEPJ 0499 E Appellant Respondent Assessee by : Mr. Jayant Bhat Revenue by : Mr. Vivek Perampurna, CIT-DR Date of Hearing : 18/09/2025 Date of pronouncement : 22/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against revisional order dated 30.03.2025 passed by the Ld. Principal Commissioner of Income-tax - 2, Mumbai [in short ‘the Ld. PCIT’] for assessment year 2018-19, raising following grounds: 1. On the facts and circumstances of the case and in law the order passed by the Ld. PCIT bring bad in law and that the same should be annulled set aside 2. On the facts and circumstances of the case and in law the Ld. PCIT has erred in not appreciating the faet that the ground on which the assessment was reopened u/s 148 Printed from counselvise.com itself failed assessment could not be done on any other ground and hence the order of the Ld. PCIT treating the order as erroneous and as such the order passed U/S 263 being bad in law the same should be annulled/ set aside. 3. On the facts and circumstances of the case and in law Ld. PCIT has erred in passing an order u/s 263 against the order of counts the review of the order also being bad in law and that the same should be annulled/ 2. Briefly stated, the facts of the case are that t originally filed his return of income for on 28.07.2018, which was subsequently revised on 03.06.2019, declaring a total income of Rs. 4,24,550/ was received by the Assessing Officer from the office of the Joint Commissioner of Income the effect that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. Acting upon such information, the Assessing Officer issued notice under section 148 of the Act on 24.06.2021. 2.1 In response thereto, the assessee filed return of income on 29.06.2021 declaring the same income as disclosed in the revised return filed earlier on 03.06.2019 under section 139(5) of the Act. The reassessment was thereafter completed on 25.02.2022, wherein no addition was made in respect of the alleged accommodation entry from M/s Aneri Fincap Ltd. The Assessing Officer, in fact, recorded a categorical finding that no unsecured loan had been availed by the assessee from the said concern during the year under itself failed assessment could not be done on any other ground and hence the order of the Ld. PCIT treating the order as erroneous and prejudicial to interest itself fails and as such the order passed U/S 263 being bad in law the same should be annulled/ set aside. On the facts and circumstances of the case and in law Ld. PCIT has erred in passing an order u/s 263 against the order of the AO passed itself being bad in law on various counts the review of the order also being bad in law and that the same should be annulled/ set aside Briefly stated, the facts of the case are that t originally filed his return of income for the relevant assessment year on 28.07.2018, which was subsequently revised on 03.06.2019, declaring a total income of Rs. 4,24,550/-. Thereafter, information was received by the Assessing Officer from the office of the Joint Commissioner of Income-tax (OSD), Central Circle-7(2), Mumbai, to the effect that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. Acting upon such information, the Assessing Officer issued notice under section 148 of the Act on 24.06.2021. response thereto, the assessee filed return of income on 29.06.2021 declaring the same income as disclosed in the revised return filed earlier on 03.06.2019 under section 139(5) of the Act. The reassessment was thereafter completed on 25.02.2022, wherein no addition was made in respect of the alleged accommodation entry from M/s Aneri Fincap Ltd. The Assessing Officer, in fact, recorded a categorical finding that no unsecured loan had been availed by the assessee from the said concern during the year under Jayantilal Rajmal Seth 2 ITA No. 3260/MUM/2025 itself failed assessment could not be done on any other ground and hence the order of the Ld. PCIT treating the and prejudicial to interest itself fails and as such the order passed U/S 263 being bad in law On the facts and circumstances of the case and in law Ld. PCIT has erred in passing an order u/s 263 against the the AO passed itself being bad in law on various counts the review of the order also being bad in law and Briefly stated, the facts of the case are that the assessee the relevant assessment year on 28.07.2018, which was subsequently revised on 03.06.2019, . Thereafter, information was received by the Assessing Officer from the office of the Joint 7(2), Mumbai, to the effect that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. Acting upon such information, the Assessing Officer issued notice under section 148 response thereto, the assessee filed return of income on 29.06.2021 declaring the same income as disclosed in the revised return filed earlier on 03.06.2019 under section 139(5) of the Act. The reassessment was thereafter completed on 25.02.2022, wherein no addition was made in respect of the alleged accommodation entry from M/s Aneri Fincap Ltd. The Assessing Officer, in fact, recorded a categorical finding that no unsecured loan had been availed by the assessee from the said concern during the year under Printed from counselvise.com consideration and that only repayment of an earlier loan had been effected. 2.2 Subsequently, the Hon’ble Supreme Court in Ashish Agarwal [Civil Appeal No. 3005 of 2022, order dated 04.05.2022], while considering the effect of the Financ directed that all notices issued under section 148 of the unamended Act be deemed to have been issued under section 148A of the Act, as amended, and further be treated as show cause notices in terms of section 148A(b). In consequence thereof, appears to have regarded the earlier reassessment order dated 25.02.2022 as having become infructuous and, accordingly, proceeded to issue a fresh notice under section 148A(b) of the Act on 25.05.2022. The assessee, in turn, filed his said notice on 07.06.2022. reproduced as under: “In the notice your goodself has alleged that Information was received from JCIT(OSD) received Loan from M/s A 12,63,011/- solely on the basis of statement of one Shri Rajesh G. Mehta. In the said statement he claimed that he was controlling the affairs of the company namely Mr. Aneri only paper company. On the basis of these allegations the loan taken by me was held as non Madam, I reject all the allegations made in the reasons for reopening. I do not know any Rajesh G the year A.Y. 2017 11,00,000/- which was repaid in the current year i.e. 2018 26-05-2017. The transaction of loan was done during regular course of business through proper banking channels. was taken in the earlier year i.e. in the AY 2017 consideration and that only repayment of an earlier loan had been Subsequently, the Hon’ble Supreme Court in Union of India v. [Civil Appeal No. 3005 of 2022, order dated 04.05.2022], while considering the effect of the Financ directed that all notices issued under section 148 of the unamended Act be deemed to have been issued under section 148A of the Act, as amended, and further be treated as show cause notices in terms of section 148A(b). In consequence thereof, the Assessing Officer appears to have regarded the earlier reassessment order dated 25.02.2022 as having become infructuous and, accordingly, proceeded to issue a fresh notice under section 148A(b) of the Act on 25.05.2022. The assessee, in turn, filed his objections to the said notice on 07.06.2022. The relevant part of his objection is reproduced as under: In the notice your goodself has alleged that Information was received from JCIT(OSD)- Central Circle-7(2), Mumbai that I have received Loan from M/s Aneri Fincap Ltd amounting to Rs. which is non-genuine. The allegations were made solely on the basis of statement of one Shri Rajesh G. Mehta. In the said statement he claimed that he was controlling the affairs of the company namely Mr. Aneri Fincap Ltd. and this company was only paper company. On the basis of these allegations the loan taken by me was held as non-genuine and my case was reopened. Madam, I reject all the allegations made in the reasons for reopening. I do not know any Rajesh G Mehta, I taken loan during the year A.Y. 2017-18 on 24-11-2016 amounting to Rs. which was repaid in the current year i.e. 2018 2017. The transaction of loan was done during regular course of business through proper banking channels. was taken in the earlier year i.e. in the AY 2017-18 and repaid in Jayantilal Rajmal Seth 3 ITA No. 3260/MUM/2025 consideration and that only repayment of an earlier loan had been Union of India v. [Civil Appeal No. 3005 of 2022, order dated 04.05.2022], while considering the effect of the Finance Act, 2021, directed that all notices issued under section 148 of the unamended Act be deemed to have been issued under section 148A of the Act, as amended, and further be treated as show cause notices in terms the Assessing Officer appears to have regarded the earlier reassessment order dated 25.02.2022 as having become infructuous and, accordingly, proceeded to issue a fresh notice under section 148A(b) of the Act objections to the The relevant part of his objection is In the notice your goodself has alleged that Information was 7(2), Mumbai that I have neri Fincap Ltd amounting to Rs. genuine. The allegations were made solely on the basis of statement of one Shri Rajesh G. Mehta. In the said statement he claimed that he was controlling the affairs of Fincap Ltd. and this company was only paper company. On the basis of these allegations the loan genuine and my case was reopened. Madam, I reject all the allegations made in the reasons for Mehta, I taken loan during 2016 amounting to Rs. which was repaid in the current year i.e. 2018-19 on 2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan 18 and repaid in Printed from counselvise.com current year i.e. AY 2018 the current year therefore there is no question of reopening in this year. This clearly shows that the information and reopening in this year is totally wrong therefore, should be dropped immediately. Further, the allegations were made on the basis of statement of one Shri Rajesh G Mehta who is neither Director nor Shareholder of the company. The a be made on the basis of statement of unrelated third party. He is not authorized to give statement on behalf of the company. His statement does not hold any value and cannot be relied. Further in the entire statement he hasn't specify as accommodation entries. The modus the statement. From reading of the statement it clearly appears that the person who has taken statement has put his words in the answers. I am not aware as to how Mr. M statement and under what circumstances he has given his statement. The allegations are baseless which were made without any supporting evidences and made arbitrarily. This makes the entire reopening proceedings void has not said even once that he has given accommodation entries in the nature of \"Loan\". Madam, your goodself shall appreciate that my transaction with M/s Aneri Fincap Ltd. is in the nature of repayment of Unsecured Loan this year and not in the Purchase/Sale/Capital Gain. Further, M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company (NBFC) who has been authorized by the Reserve Bank of India to do lending business. This strengthen my claim of genuineness of transaction. It is therefore submitted that, the reopening in this case is purely due to change of opinion and illegal. I therefore request your goodself to kindly drop the reopening proceedings and oblige. Madam, I have disclosed all details of my books of accounts return of income filed for the year under consideration. None of the facts/details remains undisclosed. Further the transaction mentioned in the notice is factually wrong and no such transaction was entered by the assessee during the year under cons From the above it is clear that the reopening in my case is totally based on assumptions and presumptions hence invalid and liable to be quashed. Your goodself has simply relied on the assumption drawn by other officer, which is totally wrong. As per the provision of Sec. 148A(a), the AO is mandated to conduct an inquiry with respect to the information which suggest that income chargeable to tax has escaped assessment and such inquiry shall be conducted only after obtaining the prior approval of the specified authority. The impugned notice issued u/s 148A(b) does not suggest of any inquiries conducted by your office and current year i.e. AY 2018-19. Since the loan was not received in the current year therefore there is no question of reopening in this year. This clearly shows that the information is vague and faulty and reopening in this year is totally wrong therefore, should be dropped immediately. Further, the allegations were made on the basis of statement of one Shri Rajesh G Mehta who is neither Director nor Shareholder of the company. The allegations cannot be made on the basis of statement of unrelated third party. He is not authorized to give statement on behalf of the company. His statement does not hold any value and cannot be relied. Further in the entire statement he hasn't specify as to how he used to provide accommodation entries. The modus-operandi wasn't explained in the statement. From reading of the statement it clearly appears that the person who has taken statement has put his words in the answers. I am not aware as to how Mr. Mehta has made this statement and under what circumstances he has given his statement. The allegations are baseless which were made without any supporting evidences and made arbitrarily. This makes the entire reopening proceedings void-ab-initio. In the sta has not said even once that he has given accommodation entries in the nature of \"Loan\". Madam, your goodself shall appreciate that my transaction with M/s Aneri Fincap Ltd. is in the nature of repayment of Unsecured Loan this year and not in the Purchase/Sale/Capital Gain. Further, M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company (NBFC) who has been authorized by the Reserve Bank of India to do lending business. This strengthen my claim of genuineness of transaction. It is therefore submitted that, the reopening in this case is purely due to change of opinion and illegal. I therefore request your goodself to kindly drop the reopening proceedings and oblige. Madam, I have disclosed all details of my books of accounts return of income filed for the year under consideration. None of the facts/details remains undisclosed. Further the transaction mentioned in the notice is factually wrong and no such transaction was entered by the assessee during the year under cons From the above it is clear that the reopening in my case is totally based on assumptions and presumptions hence invalid and liable to be quashed. Your goodself has simply relied on the assumption drawn by other officer, which is totally wrong. s per the provision of Sec. 148A(a), the AO is mandated to conduct an inquiry with respect to the information which suggest that income chargeable to tax has escaped assessment and such inquiry shall be conducted only after obtaining the prior approval the specified authority. The impugned notice issued u/s 148A(b) does not suggest of any inquiries conducted by your office and Jayantilal Rajmal Seth 4 ITA No. 3260/MUM/2025 19. Since the loan was not received in the current year therefore there is no question of reopening in this is vague and faulty and reopening in this year is totally wrong therefore, should be dropped immediately. Further, the allegations were made on the basis of statement of one Shri Rajesh G Mehta who is neither llegations cannot be made on the basis of statement of unrelated third party. He is not authorized to give statement on behalf of the company. His statement does not hold any value and cannot be relied. Further in to how he used to provide operandi wasn't explained in the statement. From reading of the statement it clearly appears that the person who has taken statement has put his words in the ehta has made this statement and under what circumstances he has given his statement. The allegations are baseless which were made without any supporting evidences and made arbitrarily. This makes the initio. In the statement he has not said even once that he has given accommodation entries in the nature of \"Loan\". Madam, your goodself shall appreciate that my transaction with M/s Aneri Fincap Ltd. is in the nature of repayment of Unsecured Loan this year and not in the nature of Purchase/Sale/Capital Gain. Further, M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company (NBFC) who has been authorized by the Reserve Bank of India to do lending business. This strengthen my claim of genuineness of transaction. It is therefore submitted that, the reopening in this case is purely due to change of opinion and illegal. I therefore request your goodself to kindly drop the reopening proceedings and oblige. Madam, I have disclosed all details of my books of accounts in the return of income filed for the year under consideration. None of the facts/details remains undisclosed. Further the transaction mentioned in the notice is factually wrong and no such transaction was entered by the assessee during the year under consideration. From the above it is clear that the reopening in my case is totally based on assumptions and presumptions hence invalid and liable to be quashed. Your goodself has simply relied on the assumption s per the provision of Sec. 148A(a), the AO is mandated to conduct an inquiry with respect to the information which suggest that income chargeable to tax has escaped assessment and such inquiry shall be conducted only after obtaining the prior approval the specified authority. The impugned notice issued u/s 148A(b) does not suggest of any inquiries conducted by your office and Printed from counselvise.com that too after obtaining the prior approval of the specified authority prescribed u/s.151 of the Act. It is a trite law that the u/s.148A cannot be issued merely relying on the general information received from the investigation department. However, such information must necessarily be linked to the case of assessee and only thereafter, the notice u/s.148A(b) could be issued, if such inquiry, with respect to the information suggest that the income chargeable to tax has escaped the assessment. The words \"if required\" incorporated under section 148A(a) would not mean that the AO would not conduct any inquiry, however it clearly suggest that the AO shall necessarily conduct an inquiry to verify the information that suggest that the income chargeable to tax has escaped assessment. The non the prior approval of specified authority prior to issuance of show cause notice u/s.148A(b) would make the specified provision of sec.148A(b) redundant and such is not the intention of the legislation. As the show cause notice u/s.148A(b) does not disclose of any inquiry conducted by your office, thus the impugned notice The assessee submits that the impugned notice u/s.148A(b) had been issued merely relying on the information received from the JCIT(OSD)- Central Circle any material/ evidence which c chargeable to tax having escaped assessment. The mere receipt of the general information not supported with any material/evidence would not constitute as a reliable information which could lead to the escapement of income. Further t information is factually wrong, therefore the information cannot be relied. This proves that the allegations were made in prejudice manner and cannot be relied. The assessee had entered into bonafide and genuine transactions of Loan with M/s Aneri Fincap Ltd. (a registered NBFC) in preceeding which was repaid in the current year, However the Show Cause Notice alleges that the accommodation entries were made, which is completely incorrect and without proper application of mind, as the basis for issuance of the Show Cause Notice is misconceived. Sir, the allegations made in the notice are factually wrong, misleading and incorrect. The nature of transactions mentioned in the notice are purchase/sale/sharecapital/LTCG and no where mentioned that loan provided by the said concern are non Further in the said statement, Mr. Rajesh G Mehta has nowhere mentioned the name of the assessee specifically. This proves that that too after obtaining the prior approval of the specified authority prescribed u/s.151 of the Act. It is a trite law that the u/s.148A cannot be issued merely relying on the general information received from the investigation department. However, such information must necessarily be linked to the case of assessee and only thereafter, the notice u/s.148A(b) could be if such inquiry, with respect to the information suggest that the income chargeable to tax has escaped the assessment. The words \"if required\" incorporated under section 148A(a) would not mean that the AO would not conduct any inquiry, however it suggest that the AO shall necessarily conduct an inquiry to verify the information that suggest that the income chargeable to tax has escaped assessment. The non-conducting of inquiry with the prior approval of specified authority prior to issuance of show cause notice u/s.148A(b) would make the specified provision of sec.148A(b) redundant and such is not the intention of the legislation. As the show cause notice u/s.148A(b) does not disclose of any inquiry conducted by your office, thus the impugned notice u/s.148A(b) is not tenable in law. The assessee submits that the impugned notice u/s.148A(b) had been issued merely relying on the information received from the Central Circle-7(2), Mumbai and there does not exist any material/ evidence which could suggest the income chargeable to tax having escaped assessment. The mere receipt of the general information not supported with any material/evidence would not constitute as a reliable information which could lead to the escapement of income. Further the transaction reported in the information is factually wrong, therefore the information cannot be relied. This proves that the allegations were made in prejudice manner and cannot be relied. The assessee had entered into bonafide and genuine transactions of Loan with M/s Aneri Fincap Ltd. (a registered NBFC) in preceeding which was repaid in the current year, However the Show Cause Notice alleges that the accommodation entries were made, which is completely incorrect and without proper application as the basis for issuance of the Show Cause Notice is misconceived. Sir, the allegations made in the notice are factually wrong, misleading and incorrect. The nature of transactions mentioned in the notice are purchase/sale/sharecapital/LTCG and no where mentioned that loan provided by the said concern are non Further in the said statement, Mr. Rajesh G Mehta has nowhere mentioned the name of the assessee specifically. This proves that Jayantilal Rajmal Seth 5 ITA No. 3260/MUM/2025 that too after obtaining the prior approval of the specified authority prescribed u/s.151 of the Act. It is a trite law that the notice u/s.148A cannot be issued merely relying on the general information received from the investigation department. However, such information must necessarily be linked to the case of assessee and only thereafter, the notice u/s.148A(b) could be if such inquiry, with respect to the information suggest that the income chargeable to tax has escaped the assessment. The words \"if required\" incorporated under section 148A(a) would not mean that the AO would not conduct any inquiry, however it suggest that the AO shall necessarily conduct an inquiry to verify the information that suggest that the income chargeable to conducting of inquiry with the prior approval of specified authority prior to issuance of show cause notice u/s.148A(b) would make the specified provision of sec.148A(b) redundant and such is not the intention of the legislation. As the show cause notice u/s.148A(b) does not disclose of any inquiry conducted by your office, thus the The assessee submits that the impugned notice u/s.148A(b) had been issued merely relying on the information received from the 7(2), Mumbai and there does not exist ould suggest the income chargeable to tax having escaped assessment. The mere receipt of the general information not supported with any material/evidence would not constitute as a reliable information which could lead to he transaction reported in the information is factually wrong, therefore the information cannot be relied. This proves that the allegations were made in prejudice The assessee had entered into bonafide and genuine transactions of Loan with M/s Aneri Fincap Ltd. (a registered NBFC) in preceeding which was repaid in the current year, However the Show Cause Notice alleges that the accommodation entries were made, which is completely incorrect and without proper application as the basis for issuance of the Show Cause Notice is Sir, the allegations made in the notice are factually wrong, misleading and incorrect. The nature of transactions mentioned in the notice are purchase/sale/sharecapital/LTCG and no where mentioned that loan provided by the said concern are non-genuine. Further in the said statement, Mr. Rajesh G Mehta has nowhere mentioned the name of the assessee specifically. This proves that Printed from counselvise.com the allegations made by your goodself are wrong and misleading and information received by your goodself cannot be relied. The assessee to substantiate the genuineness of Loan repaid to Aneri Fincap Ltd., relies on understated documents (copies enclosed) as under : a) Name, address and PAN of loan party. b) Confirmation of account; c) Bank statements of party and assessee evidencing the loan receipt and subsequent repayment by A/c payee cheques/RTGS; d) NOC from party that loan taken in preceeding year was repaid. e) NBFC certificate of Aneri Fincap Ltd. issued by t Bank of India. f) Affidavit by assessee with regard to his transaction with M/s Aneri Fincap Ltd. The assessee on furnishing the above stated documents hereby discharges its onus to prove the genuineness of the disputed loan, which has been alle Cause Notice. There is no falsity in the above stated documents which proves the genuineness of the transactions and thus information received by your office not supported with any material/evidence and contrary constitute as a reliable information which could lead to the escapement of income. The assessee submits that the bonafide loan transaction of the assessee cannot be held as non information receive which is alleged to be accommodation entries. The Investigating authority had provided the incorrect information only on the basis of general statements of 3rd parties recorded at back of the assessee. Assess the statements of 3rd parties specify the name of the assessee or any sort of assessee's involvement in non The assessee submits that the department cannot pick and choose as per its whi genuine, the other cannot be alleged to be mere accommodation entire. The assessee hereby makes a prayer to provide the opportunity of cross examination of Mr. Rajesh G Mehta on the basis of whose statement no the allegations made by your goodself are wrong and misleading and information received by your goodself cannot be relied. The assessee to substantiate the genuineness of Loan repaid to Aneri Fincap Ltd., relies on understated documents (copies enclosed) as under :- a) Name, address and PAN of loan party. tion of account; Bank statements of party and assessee evidencing the loan receipt and subsequent repayment by A/c payee cheques/RTGS; d) NOC from party that loan taken in preceeding year was repaid. e) NBFC certificate of Aneri Fincap Ltd. issued by t Bank of India. f) Affidavit by assessee with regard to his transaction with M/s Aneri Fincap Ltd. The assessee on furnishing the above stated documents hereby discharges its onus to prove the genuineness of the disputed loan, which has been alleged to be accommodation entries in the Show Cause Notice. There is no falsity in the above stated documents which proves the genuineness of the transactions and thus information received by your office not supported with any material/evidence and contrary to the actual fact, would not constitute as a reliable information which could lead to the escapement of income. The assessee submits that the bonafide loan transaction of the assessee cannot be held as non-genuine solely relying on the information received from JCIT(OSD)- Central Circle- 7(2), Mumbai, which is alleged to be accommodation entries. The Investigating authority had provided the incorrect information only on the basis of general statements of 3rd parties recorded at back of the assessee. Assessee also demand to provide details as to whether the statements of 3rd parties specify the name of the assessee or any sort of assessee's involvement in non-genuine transactions? The assessee submits that the department cannot pick and choose as per its whims and fancies, when one set of transaction is genuine, the other cannot be alleged to be mere accommodation entire. The assessee hereby makes a prayer to provide the opportunity of cross examination of Mr. Rajesh G Mehta on the basis of whose statement notice issued to the assessee. Jayantilal Rajmal Seth 6 ITA No. 3260/MUM/2025 the allegations made by your goodself are wrong and misleading and information received by your goodself cannot be relied. The assessee to substantiate the genuineness of Loan repaid to Aneri Fincap Ltd., relies on understated documents (copies Bank statements of party and assessee evidencing the loan receipt and subsequent repayment by A/c payee cheques/RTGS; d) NOC from party that loan taken in preceeding year was repaid. e) NBFC certificate of Aneri Fincap Ltd. issued by the Reserve f) Affidavit by assessee with regard to his transaction with M/s The assessee on furnishing the above stated documents hereby discharges its onus to prove the genuineness of the disputed loan, ged to be accommodation entries in the Show Cause Notice. There is no falsity in the above stated documents which proves the genuineness of the transactions and thus information received by your office not supported with any to the actual fact, would not constitute as a reliable information which could lead to the The assessee submits that the bonafide loan transaction of the genuine solely relying on the 7(2), Mumbai, which is alleged to be accommodation entries. The Investigating authority had provided the incorrect information only on the basis of general statements of 3rd parties recorded at back of the ee also demand to provide details as to whether the statements of 3rd parties specify the name of the assessee or genuine transactions? The assessee submits that the department cannot pick and choose ms and fancies, when one set of transaction is genuine, the other cannot be alleged to be mere accommodation entire. The assessee hereby makes a prayer to provide the opportunity of cross examination of Mr. Rajesh G Mehta on the tice issued to the assessee. Printed from counselvise.com The Hon'ble Apex Court and Jurisdictional High Court in the cases of Andaman Timber Industries v. Comm. of Central Excise (Civil Appeal No.4288/2006), H.R Mehta v. ACIT (Bom), Kishandchand Chellaram vs. CIT (125 ITR 713 (SC), C Pvt Ltd (320 ITR 17(St) (SC), R.W. Promotions Pvt Ltd vs. ACIT (Bom-HC), Sunil Aggarwal 64 taxmann.com 107 (Del decided that the statements of other parties cannot be relied unless an opportunity of cross examination is pr aggrieved party. Further, CBDT vide circular no no.286/2/2003 dated 10/3/2003 had directed the assessing authorities not to make the additions merely relying only on the statements recorded during search/survey actions. In any case, the presumption u/s 292C applies to the case of the person in whose custody the alleged books of accounts and/or documents are found in his possession and does not apply to other persons not covered u/s 132(1) or u/s 133A of the Act. Further, Sec. 292C is a rebuttable presumption. However, in instant case, there is no contrary documents found in custody of the assessee or anywhere as the notice is silent on that issue. Therefore, the information on the basis of which the income chargeable to tax is presumed to have escaped assessment is totally incorrect. The assessee had received/repaid the loan through banking channel by A/c payee cheques/RTGS from the said party. The name of the same is duly reflected in the bank statements (copies enclosed) of the assessee. A enclosed) of the said party discloses the payment of amount to the assessee and such fact proves that the assessee had received the loan and subsequently repaid. The assessee does not have any source of unaccounted funds, t genuine loan would not arise. The heavy onus is cast on the assessing authority to justify, with cogent documentary evidence, to prove the allegation made by them. In absence of contrary credible documentary evidence, acco assessee cannot be held as non information on the basis of which the income chargeable to tax is presumed to have escaped assessment in erroneous. As regards the transactions the show cause notice u/ does not disclose the manner and the amounts on the basis of which income chargeable to tax of the assessee has escaped assessment. The mere general remarks stated in different Para of annexure attached to notice u/s.148A(b) would not empower the authority to issue the notices u/s.148 and that too without conducting any enquiries and without establishing the live link and nexus of information with the income chargeable to tax having escaped assessment. The Hon'ble Apex Court and Jurisdictional High Court in the cases of Andaman Timber Industries v. Comm. of Central Excise (Civil Appeal No.4288/2006), H.R Mehta v. ACIT (Bom), Kishandchand Chellaram vs. CIT (125 ITR 713 (SC), CIT vs. JMD Communications Pvt Ltd (320 ITR 17(St) (SC), R.W. Promotions Pvt Ltd vs. ACIT HC), Sunil Aggarwal 64 taxmann.com 107 (Del decided that the statements of other parties cannot be relied unless an opportunity of cross examination is provided to the aggrieved party. Further, CBDT vide circular no no.286/2/2003 dated 10/3/2003 had directed the assessing authorities not to make the additions merely relying only on the statements recorded during search/survey actions. In any case, resumption u/s 292C applies to the case of the person in whose custody the alleged books of accounts and/or documents are found in his possession and does not apply to other persons not covered u/s 132(1) or u/s 133A of the Act. Further, Sec. 292C uttable presumption. However, in instant case, there is no contrary documents found in custody of the assessee or anywhere as the notice is silent on that issue. Therefore, the information on the basis of which the income chargeable to tax is presumed to ave escaped assessment is totally incorrect. The assessee had received/repaid the loan through banking channel by A/c payee cheques/RTGS from the said party. The name of the same is duly reflected in the bank statements (copies enclosed) of the assessee. Also, the bank statements (copies enclosed) of the said party discloses the payment of amount to the assessee and such fact proves that the assessee had received the loan and subsequently repaid. The assessee does not have any source of unaccounted funds, thus the possibility of taking non genuine loan would not arise. The heavy onus is cast on the assessing authority to justify, with cogent documentary evidence, to prove the allegation made by them. In absence of contrary credible documentary evidence, accordingly the Loan taken by the assessee cannot be held as non-genuine and therefore, the information on the basis of which the income chargeable to tax is presumed to have escaped assessment in erroneous. As regards the transactions the show cause notice u/ does not disclose the manner and the amounts on the basis of which income chargeable to tax of the assessee has escaped assessment. The mere general remarks stated in different Para of annexure attached to notice u/s.148A(b) would not empower the authority to issue the notices u/s.148 and that too without conducting any enquiries and without establishing the live link and nexus of information with the income chargeable to tax having escaped assessment. Jayantilal Rajmal Seth 7 ITA No. 3260/MUM/2025 The Hon'ble Apex Court and Jurisdictional High Court in the cases of Andaman Timber Industries v. Comm. of Central Excise (Civil Appeal No.4288/2006), H.R Mehta v. ACIT (Bom), Kishandchand IT vs. JMD Communications Pvt Ltd (320 ITR 17(St) (SC), R.W. Promotions Pvt Ltd vs. ACIT HC), Sunil Aggarwal 64 taxmann.com 107 (Del-HC) had decided that the statements of other parties cannot be relied ovided to the aggrieved party. Further, CBDT vide circular no- F. no.286/2/2003 dated 10/3/2003 had directed the assessing authorities not to make the additions merely relying only on the statements recorded during search/survey actions. In any case, resumption u/s 292C applies to the case of the person in whose custody the alleged books of accounts and/or documents are found in his possession and does not apply to other persons not covered u/s 132(1) or u/s 133A of the Act. Further, Sec. 292C uttable presumption. However, in instant case, there is no contrary documents found in custody of the assessee or anywhere as the notice is silent on that issue. Therefore, the information on the basis of which the income chargeable to tax is presumed to The assessee had received/repaid the loan through banking channel by A/c payee cheques/RTGS from the said party. The name of the same is duly reflected in the bank statements (copies lso, the bank statements (copies enclosed) of the said party discloses the payment of amount to the assessee and such fact proves that the assessee had received the loan and subsequently repaid. The assessee does not have any hus the possibility of taking non- genuine loan would not arise. The heavy onus is cast on the assessing authority to justify, with cogent documentary evidence, to prove the allegation made by them. In absence of contrary rdingly the Loan taken by the genuine and therefore, the information on the basis of which the income chargeable to tax is As regards the transactions the show cause notice u/s 148A(b) does not disclose the manner and the amounts on the basis of which income chargeable to tax of the assessee has escaped assessment. The mere general remarks stated in different Para of annexure attached to notice u/s.148A(b) would not empower the authority to issue the notices u/s.148 and that too without conducting any enquiries and without establishing the live link and nexus of information with the income chargeable to tax having Printed from counselvise.com The several High Courts and ITATs have decide highest degree cannot partake the direct documentary evidences filed on record. {P.K. Noorjahan 237 ITR 570 (SC) and Pooja Bhatt v. ACIT (73 ITD 205 Mum evidence available on record to disprove t assessee also request to provide an opportunity of cross examination of Shri Rajesh G Mehta having regard to the principal of natural justice. Prayer A humble and respectful prayer is made to positively consider the reply of the a u/s.148 for which the assessee shall ever remain grateful and oblige. The assessee has not taken any new loan from Aneri Fincap Ltd. during the year. There was only repayment of loan taken in preceding year the information. The assessee requests that a personal hearing in the above facts and circumstances will be expedient, for the purposes of effective adjudication of the issues, in the interest of justice. 2.3 However, the said object the Assessing Officer by way of order dated 29.07.2022 passed u/s 148A(d) of the Act. The relevant finding of the Assessing Officer is reproduced as under: “9.1 The assessee has submitted that th 148A(b) does not disclose of any inquiry, thus the impugned notice u/s.148A(b) is not tenable in law. In this regard, Hon'ble Supreme court in Civil Appeal No. 3005/2022, vide order dated 04.05.2022, has directed to dispensed with one-time measure (para 8 of Hon'ble Supreme Court order). 9.2 The assessee submits that the impugned notice u/s. 148A(b) had been issued merely relying on the information received from the JCIT(OSD) submitted that reassessment is valid if there is prima facie reason to believe that income has escaped assessment. AO is not required to conclusively prove escapement of income at the stage of issuance of notice under section law that at the stage of the reopening the assessment, the Assessing Officer must have conclusive evidence to establish The several High Courts and ITATs have decided that suspicion of highest degree cannot partake the direct documentary evidences filed on record. {P.K. Noorjahan 237 ITR 570 (SC) and Pooja Bhatt v. ACIT (73 ITD 205 Mum-ITAT)). There is no contrary documentary evidence available on record to disprove the loan transactions. The assessee also request to provide an opportunity of cross examination of Shri Rajesh G Mehta having regard to the principal of natural justice. A humble and respectful prayer is made to positively consider the reply of the assessee and drop the proposed issuance of notice u/s.148 for which the assessee shall ever remain grateful and oblige. The assessee has not taken any new loan from Aneri Fincap Ltd. during the year. There was only repayment of loan taken in preceding year and no fresh loan was taken as alleged in the information. The assessee requests that a personal hearing in the above facts and circumstances will be expedient, for the purposes of effective adjudication of the issues, in the justice.” However, the said objection for the assessee the Assessing Officer by way of order dated 29.07.2022 passed u/s 148A(d) of the Act. The relevant finding of the Assessing Officer is reproduced as under: 9.1 The assessee has submitted that the show cause notice u/s. 148A(b) does not disclose of any inquiry, thus the impugned notice u/s.148A(b) is not tenable in law. In this regard, Hon'ble Supreme court in Civil Appeal No. 3005/2022, vide order dated 04.05.2022, has directed to dispensed with enquiry u/s 148A(a) of the Act as a time measure (para 8 of Hon'ble Supreme Court order). 9.2 The assessee submits that the impugned notice u/s. 148A(b) had been issued merely relying on the information received from the JCIT(OSD)- Central Circle-7(2), Mumbai. In this regard, it is submitted that reassessment is valid if there is prima facie reason to believe that income has escaped assessment. AO is not required to conclusively prove escapement of income at the stage of issuance of notice under section 148. It is not the requirement of law that at the stage of the reopening the assessment, the Assessing Officer must have conclusive evidence to establish Jayantilal Rajmal Seth 8 ITA No. 3260/MUM/2025 d that suspicion of highest degree cannot partake the direct documentary evidences filed on record. {P.K. Noorjahan 237 ITR 570 (SC) and Pooja Bhatt ITAT)). There is no contrary documentary he loan transactions. The assessee also request to provide an opportunity of cross examination of Shri Rajesh G Mehta having regard to the principal A humble and respectful prayer is made to positively consider the ssessee and drop the proposed issuance of notice u/s.148 for which the assessee shall ever remain grateful and oblige. The assessee has not taken any new loan from Aneri Fincap Ltd. during the year. There was only repayment of loan and no fresh loan was taken as alleged in the information. The assessee requests that a personal hearing in the above facts and circumstances will be expedient, for the purposes of effective adjudication of the issues, in the for the assessee was rejected by the Assessing Officer by way of order dated 29.07.2022 passed u/s 148A(d) of the Act. The relevant finding of the Assessing Officer is e show cause notice u/s. 148A(b) does not disclose of any inquiry, thus the impugned notice u/s.148A(b) is not tenable in law. In this regard, Hon'ble Supreme court in Civil Appeal No. 3005/2022, vide order dated 04.05.2022, enquiry u/s 148A(a) of the Act as a time measure (para 8 of Hon'ble Supreme Court order). 9.2 The assessee submits that the impugned notice u/s. 148A(b) had been issued merely relying on the information received from Mumbai. In this regard, it is submitted that reassessment is valid if there is prima facie reason to believe that income has escaped assessment. AO is not required to conclusively prove escapement of income at the stage of 148. It is not the requirement of law that at the stage of the reopening the assessment, the Assessing Officer must have conclusive evidence to establish Printed from counselvise.com escapement of income. A bonafide reasonable belief for holding the belief that income has escaped ass reopening the assessment, and the law is well settled on that aspect. In the instant case, information was received by the AO and reasons were recorded that there was escapement. The assessment was reopened on the basis of reason Assessing Officer, which constituted reasonable basis for coming to the conclusion that income has escaped assessment, and that it did not suffer from any legal infirmity. In the case of ACIT Vs Rajesh Jhaveri Stock Brokers Pvt Ltd [(2007 Hon'ble Supreme Court has, inter alia, observed as follows: ......... If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income ha The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the publ idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is \"reason to believe\", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfactionITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC). What essentially follows is that the Assessing Officer easonable cause or justification to \"know or suppose that income has escaped assessment. As long as the Assessing Officer has that justification, he is legally permitted to reopen the assessment. Hon'ble Supreme Court in the case of Calcutta Discount Co. Ltd. ((1961) 41 ITR 191 (SC)] has observed that \"It is for him (i.e. the Assessing Officer) to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn.\" It is not for somebody else to tell the assessing authority what inferences, whether of facts or law, should be drawn. The question, therefore, that is required to be examined whether on the escapement of income. A bonafide reasonable belief for holding the belief that income has escaped assessment is good enough for reopening the assessment, and the law is well settled on that aspect. In the instant case, information was received by the AO and reasons were recorded that there was escapement. The assessment was reopened on the basis of reasons recorded by the Assessing Officer, which constituted reasonable basis for coming to the conclusion that income has escaped assessment, and that it did not suffer from any legal infirmity. In the case of ACIT Vs Rajesh Jhaveri Stock Brokers Pvt Ltd [(2007) 291 ITR 500 (SC)], Hon'ble Supreme Court has, inter alia, observed as follows: ......... If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is \"reason to believe\", but not the established fact capement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the n at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfactionITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 What essentially follows is that the Assessing Officer easonable cause or justification to \"know or suppose that income has escaped assessment. As long as the Assessing Officer has that justification, he is legally permitted to reopen the assessment. on'ble Supreme Court in the case of Calcutta Discount Co. Ltd. ((1961) 41 ITR 191 (SC)] has observed that \"It is for him (i.e. the Assessing Officer) to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn.\" It is not for somebody else to tell the assessing authority what inferences, whether of facts or law, should be drawn. The question, therefore, that is required to be examined whether on the Jayantilal Rajmal Seth 9 ITA No. 3260/MUM/2025 escapement of income. A bonafide reasonable belief for holding the essment is good enough for reopening the assessment, and the law is well settled on that aspect. In the instant case, information was received by the AO and reasons were recorded that there was escapement. The s recorded by the Assessing Officer, which constituted reasonable basis for coming to the conclusion that income has escaped assessment, and that it did not suffer from any legal infirmity. In the case of ACIT Vs ) 291 ITR 500 (SC)], Hon'ble Supreme Court has, inter alia, observed as follows: ......... If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to d escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer ic exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is \"reason to believe\", but not the established fact capement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the n at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfactionITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 What essentially follows is that the Assessing Officer easonable cause or justification to \"know or suppose that income has escaped assessment. As long as the Assessing Officer has that justification, he is legally permitted to reopen the assessment. on'ble Supreme Court in the case of Calcutta Discount Co. Ltd. ((1961) 41 ITR 191 (SC)] has observed that \"It is for him (i.e. the Assessing Officer) to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn.\" It is not for somebody else to tell the assessing authority what inferences, whether of facts or law, should be drawn. The question, therefore, that is required to be examined whether on the Printed from counselvise.com basis of material available at the time of forming, or a opinion that income has escaped assessment, a reasonable person would come to that conclusion. 9.3 The assessee in its submission has stated that M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company (NBFC). However, Shri Urvi Oneworld group of companies has admitted in his statement recorded on 08.02.2020, that various Oneworld group entities have made bogus purchase/bogus sale transactions with the various entities controlled and manage Shri Rajesh G. Mehta, in his statement has provided the details of the entities controlled and managed by him and the lender company- M/s. Aneri Fincap Ltd was one of the entities controlled andmanaged by Shri Rajesh G. Mehta.lt that the company not doing any genuine business activity, and is only engaged in providing bogus accommodation entries to various beneficiaries. 9.4 Further, the assessee has submitte during the year A.Y. 2017 was repaid in the current year i.e. A.Y.2018 assessee has not explained the source of such repayment. Further, the assessee has not commented 1,63,011/- (12,63,011 has escaped assessment. It may be mentioned here that re opening of cases is only the initiation of proceedings for re assessment based on the information a indicates that the assessee's income for the relevant year has escaped assessment. However, the decision on whether or not income has actually escaped assessment will be taken only at the conclusion of re submissions made by the assessee and after affording the assessee reasonable opportunity of being heard. 10. In view of the above, the case is fit for further proceeding by issuing the notice u/s 2.4 Thereafter, the Assessing Officer issued notice u/s 148 of the Act on 30.07.2022. In response, the assessee filed return of income on 18.08.2022. Thereafter along with query letter was issued on 10.01.2023 which was responded by the assessee by way of reply dated 11.01.2023. basis of material available at the time of forming, or approving, the opinion that income has escaped assessment, a reasonable person would come to that conclusion. 9.3 The assessee in its submission has stated that M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company (NBFC). However, Shri Urvil A. Jani, one of the key persons of the Oneworld group of companies has admitted in his statement recorded on 08.02.2020, that various Oneworld group entities have made bogus purchase/bogus sale transactions with the various entities controlled and managed by Shri Rajesh G. Mehta. Shri Rajesh G. Mehta, in his statement has provided the details of the entities controlled and managed by him and the lender M/s. Aneri Fincap Ltd was one of the entities controlled andmanaged by Shri Rajesh G. Mehta.lt is evident from the above that the company - M/s. AneriFincap Ltd. is a paper company and not doing any genuine business activity, and is only engaged in providing bogus accommodation entries to various beneficiaries. 9.4 Further, the assessee has submitted that the loan was taken during the year A.Y. 2017-18 amounting to Rs. 11,00,000/ was repaid in the current year i.e. A.Y.2018- 19.In this regard, the assessee has not explained the source of such repayment. Further, the assessee has not commented on the differential amount i.e. Rs. (12,63,011- 11,00,000). Hence, income to that extent has escaped assessment. It may be mentioned here that re opening of cases is only the initiation of proceedings for re assessment based on the information available/collected, which indicates that the assessee's income for the relevant year has escaped assessment. However, the decision on whether or not income has actually escaped assessment will be taken only at the conclusion of re-assessment proceedings after duly considering all submissions made by the assessee and after affording the assessee reasonable opportunity of being heard. 10. In view of the above, the case is fit for further proceeding by issuing the notice u/s 148 of the Act.” e Assessing Officer issued notice u/s 148 of the Act on 30.07.2022. In response, the assessee filed return of income 22. Thereafter, statutory notice u/s 142(1) of the Act along with query letter was issued on 10.01.2023 which was the assessee by way of reply dated 11.01.2023. Jayantilal Rajmal Seth 10 ITA No. 3260/MUM/2025 pproving, the opinion that income has escaped assessment, a reasonable person 9.3 The assessee in its submission has stated that M/s Aneri Fincap Ltd. is RBI authorized Non Banking Financial Company l A. Jani, one of the key persons of the Oneworld group of companies has admitted in his statement recorded on 08.02.2020, that various Oneworld group entities have made bogus purchase/bogus sale transactions with the d by Shri Rajesh G. Mehta. Shri Rajesh G. Mehta, in his statement has provided the details of the entities controlled and managed by him and the lender M/s. Aneri Fincap Ltd was one of the entities controlled is evident from the above M/s. AneriFincap Ltd. is a paper company and not doing any genuine business activity, and is only engaged in providing bogus accommodation entries to various beneficiaries. d that the loan was taken 18 amounting to Rs. 11,00,000/- which 19.In this regard, the assessee has not explained the source of such repayment. Further, on the differential amount i.e. Rs. 11,00,000). Hence, income to that extent has escaped assessment. It may be mentioned here that re- opening of cases is only the initiation of proceedings for re- vailable/collected, which indicates that the assessee's income for the relevant year has escaped assessment. However, the decision on whether or not income has actually escaped assessment will be taken only at the ter duly considering all submissions made by the assessee and after affording the 10. In view of the above, the case is fit for further proceeding by e Assessing Officer issued notice u/s 148 of the Act on 30.07.2022. In response, the assessee filed return of income statutory notice u/s 142(1) of the Act along with query letter was issued on 10.01.2023 which was the assessee by way of reply dated 11.01.2023. Printed from counselvise.com Regarding, the accommodation entry from M/s Aneri Fincap Ltd., the assessee replied as under: “11. Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounti Rs. 12,63,011/ same, at the outset I oppose the allegation of your goodself regarding this loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had tak loan during the year A.Y. 2017 11,00,000/- which was repaid in the current year i.e. 2018 26-05-2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan was taken in the earlier year i.e. in the AY 2017 current year i.e. AY 2018 the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an aff cum indemnity bond which affirms that I have not taken any loan from M/s Aneri Fincap Ltd. during the year under consideration. I also submit No your goodself's kind perusal 2.5 Again on 17.01.2023 in response to which under: “12. Copy of confirmation of Loan repaid to M/s Aneri Fincap Ltd. alongwith copy of bank statement. I also submit that lend Non Banking Financial Company (NBFC), Copy of the NBFC Certificate is enclosed for your goodself's kind perusal and record. 13. In the notice your goodself has asked to explain as to how the loan taken by me from M/s Aneri Fincap Ltd. (Formerly kno Ferry Industries Ltd.) should not be treated as non genuine/unexplained and added to my total income. Your goodself made the allegation on the basis of statement of one Shri Rajesh G Mehta who stated that this company is engaged in the business of providing bogus purchases and sales bills. In response to the same at the outset I deny all the allegation made by your goodself and state that loan taken by me is genuine and I have not entered into any purchase/sale transaction with M/s Aneri Fincap Ltd. I further submit as under: Regarding, the accommodation entry from M/s Aneri Fincap Ltd., the assessee replied as under: 11. Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounti Rs. 12,63,011/- from M/s Anerifincap Ltd. In response to the same, at the outset I oppose the allegation of your goodself regarding this loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had tak loan during the year A.Y. 2017-18 on 24-11-2016 amounting to Rs. which was repaid in the current year i.e. 2018 2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan s taken in the earlier year i.e. in the AY 2017-18 and repaid in current year i.e. AY 2018-19. Since the loan was not received in the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an aff cum indemnity bond which affirms that I have not taken any loan from M/s Aneri Fincap Ltd. during the year under consideration. I also submit No- Dues Certificate from M/s Aneri Fincap Ltd. for your goodself's kind perusal and record.” Again on 17.01.2023 a fresh notice u/s 142(1) was issued and in response to which, the reply of the assessee is reproduced as 12. Copy of confirmation of Loan repaid to M/s Aneri Fincap Ltd. alongwith copy of bank statement. I also submit that lend Non Banking Financial Company (NBFC), Copy of the NBFC Certificate is enclosed for your goodself's kind perusal and record. 13. In the notice your goodself has asked to explain as to how the loan taken by me from M/s Aneri Fincap Ltd. (Formerly kno Ferry Industries Ltd.) should not be treated as non genuine/unexplained and added to my total income. Your goodself made the allegation on the basis of statement of one Shri Rajesh G Mehta who stated that this company is engaged in the business of oviding bogus purchases and sales bills. In response to the same at the outset I deny all the allegation made by your goodself and state that loan taken by me is genuine and I have not entered into any purchase/sale transaction with M/s Aneri Fincap Ltd. I further submit as under: Jayantilal Rajmal Seth 11 ITA No. 3260/MUM/2025 Regarding, the accommodation entry from M/s Aneri Fincap Ltd., 11. Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounting to from M/s Anerifincap Ltd. In response to the same, at the outset I oppose the allegation of your goodself regarding this loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had taken 2016 amounting to Rs. which was repaid in the current year i.e. 2018-19 on 2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan 18 and repaid in 19. Since the loan was not received in the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an affidavit cum indemnity bond which affirms that I have not taken any loan from M/s Aneri Fincap Ltd. during the year under consideration. I Dues Certificate from M/s Aneri Fincap Ltd. for fresh notice u/s 142(1) was issued and the reply of the assessee is reproduced as 12. Copy of confirmation of Loan repaid to M/s Aneri Fincap Ltd. alongwith copy of bank statement. I also submit that lender is a Non Banking Financial Company (NBFC), Copy of the NBFC Certificate is enclosed for your goodself's kind perusal and record. 13. In the notice your goodself has asked to explain as to how the loan taken by me from M/s Aneri Fincap Ltd. (Formerly known as Ferry Industries Ltd.) should not be treated as non- genuine/unexplained and added to my total income. Your goodself made the allegation on the basis of statement of one Shri Rajesh G Mehta who stated that this company is engaged in the business of oviding bogus purchases and sales bills. In response to the same at the outset I deny all the allegation made by your goodself and state that loan taken by me is genuine and I have not entered into any purchase/sale transaction with M/s Aneri Fincap Ltd. I Printed from counselvise.com Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounting to Rs. 12,63,011/- from M/s Anerifincap Ltd. In response to the same, at the outset I oppose the allegation of your g loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had taken loan during the year A.Y. 2017 11,00,000/- which was repaid in the current year i.e 26-05-2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan was taken in the earlier year i.e. in the AY 2017 current year i.e. AY 2018 the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an affidavit cum indemnity bond which affirms that I have not taken any loan from M/s Aneri Fincap Ltd. during the year under also submit No your goodself's kind perusal and record. Since there is no loan received during the year under consideration, question of making any addition in this regard does not 2.6 After considering the submission of the assessee, the reassessment order u/s 147 of the Act was passed by the Assessing Officer on 09.03.2023 assessee and no addition in respect of M/s Aneri Fincap Ltd. made. The relevant finding of the Assessing Officer is reproduced as under: “(a). In support of the submission assessee also submitted an Affidavit wherein he has affirmed that during the year no fresh loan was taken from M/s Aneri Fincap Ltd. During t consideration, assessee only repaid the loan, which was taken in the preceding year i.e. AY. 2017 in that year. Assessee also submitted No Dues Certificate from Aneri Fincap Ltd. and also submitted his bank sta year under consideration. (b). The reply of the assessee alongwith Affidavit and Certificate form Aneri Fincap Ltd. was carefully considered and after verification and assessee's submission/contention was found correct. The assessee has not Aneri Fincap Ltd. during the year under consideration. Only Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounting to Rs. from M/s Anerifincap Ltd. In response to the same, at the outset I oppose the allegation of your goodself regarding this loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had taken loan during the year A.Y. 2017-18 on 24-11-2016 amounting to Rs. which was repaid in the current year i.e. 2018 2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan was taken in the earlier year i.e. in the AY 2017-18 and repaid in current year i.e. AY 2018-19. Since the loan was not re the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an affidavit cum indemnity bond which affirms that I have not taken any loan from M/s Aneri Fincap Ltd. during the year under consideration. I also submit No- Dues Certificate from M/s Aneri Fincap Ltd. for your goodself's kind perusal and record. Since there is no loan received during the year under consideration, question of making any addition in this regard does not arise at all.” After considering the submission of the assessee, the reassessment order u/s 147 of the Act was passed by the Assessing Officer on 09.03.2023, wherein he accepted the contention of the assessee and no addition in respect of M/s Aneri Fincap Ltd. made. The relevant finding of the Assessing Officer is reproduced as (a). In support of the submission assessee also submitted an Affidavit wherein he has affirmed that during the year no fresh loan was taken from M/s Aneri Fincap Ltd. During the year under consideration, assessee only repaid the loan, which was taken in the preceding year i.e. AY. 2017-18, for which addition was made in that year. Assessee also submitted No Dues Certificate from Aneri Fincap Ltd. and also submitted his bank statements for the year under consideration. (b). The reply of the assessee alongwith Affidavit and Certificate form Aneri Fincap Ltd. was carefully considered and after verification and assessee's submission/contention was found correct. The assessee has not taken any unsecured loan from Aneri Fincap Ltd. during the year under consideration. Only Jayantilal Rajmal Seth 12 ITA No. 3260/MUM/2025 Madam, my case for the year under consideration was reopened for the allegation that I have taken Loan amounting to Rs. from M/s Anerifincap Ltd. In response to the same, at oodself regarding this loan. Madam, during the year under consideration I have not received any loan from M/s Anei Fincap Ltd. I had taken loan 2016 amounting to Rs. . 2018-19 on 2017. The transaction of loan was done during regular course of business through proper banking channels. The Loan 18 and repaid in 19. Since the loan was not received in the current year therefore there is no question of reopening of this assessment. In support of my claim I am submitting an affidavit cum indemnity bond which affirms that I have not taken any loan consideration. I Dues Certificate from M/s Aneri Fincap Ltd. for your goodself's kind perusal and record. Since there is no loan received during the year under consideration, question of making After considering the submission of the assessee, the reassessment order u/s 147 of the Act was passed by the Assessing wherein he accepted the contention of the assessee and no addition in respect of M/s Aneri Fincap Ltd. was made. The relevant finding of the Assessing Officer is reproduced as (a). In support of the submission assessee also submitted an Affidavit wherein he has affirmed that during the year no fresh he year under consideration, assessee only repaid the loan, which was taken in 18, for which addition was made in that year. Assessee also submitted No Dues Certificate from tements for the (b). The reply of the assessee alongwith Affidavit and Certificate form Aneri Fincap Ltd. was carefully considered and after verification and assessee's submission/contention was found taken any unsecured loan from Aneri Fincap Ltd. during the year under consideration. Only Printed from counselvise.com repayment of loan was made during the year. Also no Interest Expenses were claimed on the said loan. All the evidences submitted by assessee was carefully examined a no new loan taken was accepted. 8.In view of the above discussion, it is clear that the assessee has not taken any loan from Aneri Fincap Ltd. during the year under consideration, therefore no addition is warranted 2.7 Subsequent to the framing of the assessment order Principal Commissioner of Income examined the records of the assessee. Upon such examination, he formed the view that the information received from the Joint Commissioner of Income clearly indicated that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. However, according to him, the Assessing Officer had failed to conduct the requisite inquiry into the source of repayment of loan made to M/s Aneri Fincap Ltd. In particular, it was noticed that the assessee had received a sum of Rs. 31 lakhs from M/s Earth Star, out of which an amount of Rs. 11 lakhs was paid to M/s Aneri Fincap Ltd. The Assessing Officer, however, neither examined the relevant b account nor verified the source from which the funds were received and subsequently applied. 2.8 The Ld. PCIT, therefore, held that the Assessing Officer had omitted to carry out inquiries and verifications which were warranted in the circumstances of clause (a) of Explanation 2 to section 263 of the Act, wherein an repayment of loan was made during the year. Also no Interest Expenses were claimed on the said loan. All the evidences submitted by assessee was carefully examined and his claim of no new loan taken was accepted. 8.In view of the above discussion, it is clear that the assessee has not taken any loan from Aneri Fincap Ltd. during the year under consideration, therefore no addition is warranted in this uent to the framing of the assessment order Principal Commissioner of Income-tax (PCIT) called for and examined the records of the assessee. Upon such examination, he formed the view that the information received from the Joint Commissioner of Income-tax (OSD), Central Circle clearly indicated that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. However, according to him, the Assessing Officer had failed to conduct the requisite inquiry into the source of repayment of loan made to M/s eri Fincap Ltd. In particular, it was noticed that the assessee had received a sum of Rs. 31 lakhs from M/s Earth Star, out of which an amount of Rs. 11 lakhs was paid to M/s Aneri Fincap Ltd. The Assessing Officer, however, neither examined the relevant b account nor verified the source from which the funds were received and subsequently applied. The Ld. PCIT, therefore, held that the Assessing Officer had omitted to carry out inquiries and verifications which were warranted in the circumstances of the case. He accordingly invoked clause (a) of Explanation 2 to section 263 of the Act, wherein an Jayantilal Rajmal Seth 13 ITA No. 3260/MUM/2025 repayment of loan was made during the year. Also no Interest Expenses were claimed on the said loan. All the evidences nd his claim of 8.In view of the above discussion, it is clear that the assessee has not taken any loan from Aneri Fincap Ltd. during the year under this year.” uent to the framing of the assessment order, the Ld. tax (PCIT) called for and examined the records of the assessee. Upon such examination, he formed the view that the information received from the Joint tax (OSD), Central Circle–7(2), Mumbai, clearly indicated that the assessee was a beneficiary of a bogus accommodation entry from M/s Aneri Fincap Ltd. However, according to him, the Assessing Officer had failed to conduct the requisite inquiry into the source of repayment of loan made to M/s eri Fincap Ltd. In particular, it was noticed that the assessee had received a sum of Rs. 31 lakhs from M/s Earth Star, out of which an amount of Rs. 11 lakhs was paid to M/s Aneri Fincap Ltd. The Assessing Officer, however, neither examined the relevant bank account nor verified the source from which the funds were received The Ld. PCIT, therefore, held that the Assessing Officer had omitted to carry out inquiries and verifications which were the case. He accordingly invoked clause (a) of Explanation 2 to section 263 of the Act, wherein an Printed from counselvise.com assessment order is deemed to be erroneous and prejudicial to the interests of the Revenue if it has been passed without making inquiries or verifications wh 2.9 The assessee’s contention that during the relevant year no fresh unsecured loan had been taken from M/s Aneri Fincap Ltd. and that only repayment was made, and hence there was no occasion for the Assessing Officer to make any rejected by the Ld. PCIT. He held that the assessment order suffered from the vice of error, being prejudicial to the interests of the Revenue. Consequently, he set aside the assessment order with a direction to the Assessing Officer affording due opportunity of hearing to the assessee and after considering such submissions and evidence as may be placed on record. 3. Aggrieved, the assessee is in appeal before us by way of grounds raised as reproduced 4. Before us, the Ld. counsel for the assessee referred to the Ground No. 1 of the appeal and submitted that the Assessing Officer had carried out all the inquiries in respect of issue in dispute of repayment of the loan to therefore, the Ld. PCIT is not correct in holding that assessment order was erroneous in so far as prejudicial to the interest of the Revenue. assessment order is deemed to be erroneous and prejudicial to the interests of the Revenue if it has been passed without making inquiries or verifications which should have been made. The assessee’s contention that during the relevant year no fresh unsecured loan had been taken from M/s Aneri Fincap Ltd. and that only repayment was made, and hence there was no occasion for the Assessing Officer to make any further inquiry, was rejected by the Ld. PCIT. He held that the assessment order suffered from the vice of error, being prejudicial to the interests of the Revenue. Consequently, he set aside the assessment order with a direction to the Assessing Officer to frame a fresh assessment after affording due opportunity of hearing to the assessee and after considering such submissions and evidence as may be placed on Aggrieved, the assessee is in appeal before us by way of grounds raised as reproduced above. Before us, the Ld. counsel for the assessee referred to the Ground No. 1 of the appeal and submitted that the Assessing Officer had carried out all the inquiries in respect of issue in dispute of repayment of the loan to M/s Aneri Fincap Ltd. an therefore, the Ld. PCIT is not correct in holding that assessment order was erroneous in so far as prejudicial to the interest of the Jayantilal Rajmal Seth 14 ITA No. 3260/MUM/2025 assessment order is deemed to be erroneous and prejudicial to the interests of the Revenue if it has been passed without making ich should have been made. The assessee’s contention that during the relevant year no fresh unsecured loan had been taken from M/s Aneri Fincap Ltd. and that only repayment was made, and hence there was no further inquiry, was rejected by the Ld. PCIT. He held that the assessment order suffered from the vice of error, being prejudicial to the interests of the Revenue. Consequently, he set aside the assessment order with a to frame a fresh assessment after affording due opportunity of hearing to the assessee and after considering such submissions and evidence as may be placed on Aggrieved, the assessee is in appeal before us by way of Before us, the Ld. counsel for the assessee referred to the Ground No. 1 of the appeal and submitted that the Assessing Officer had carried out all the inquiries in respect of issue in M/s Aneri Fincap Ltd. and therefore, the Ld. PCIT is not correct in holding that assessment order was erroneous in so far as prejudicial to the interest of the Printed from counselvise.com 5. The Ld. Departmental Representative (DR) on the other hand submitted that no inquiry was made by the Assess particularly on the issue that sources of the repayment of the loan and hence, the Ld. PCIT is justified in invoking clause (a) of Explanation 2 to section 263 of the Act. 5.1 Before us, the Ld. counsel for the assessee relied on the following decisions: i. CIT v. Usha Martin Ventures Ltd. [2023] 150 taxmann.com 491 (Calcutta) ii. PCIT v. Naga Dhunseri Group Ltd. [2023] 146 taxmann.com 424 (Calcutta) iii. Incorp Advisory Services Pvt. Ltd. v. Pr. CIT (ITA No. 4864/Mum/2024 for assessment year 2020 6. We have carefully heard the rival submissions and perused the material placed on record. The admitted factual background is that the Assessing Officer received credible information from the Joint Commissioner of Income that the assessee was a beneficiary of accommodation entries routed through M/s Aneri Fincap Ltd., an entity admittedly controlled by one Shri Rajesh G. Mehta, who, during the course of search proceedings conducted by the Income confessed that the said concern was being utilised for the purpose of providing accommodation entries to various entities. 6.1 It is an undisputed position that during the reassessment proceedings, the Assessing Officer issued notices under section The Ld. Departmental Representative (DR) on the other hand submitted that no inquiry was made by the Assess particularly on the issue that sources of the repayment of the loan and hence, the Ld. PCIT is justified in invoking clause (a) of Explanation 2 to section 263 of the Act. Before us, the Ld. counsel for the assessee relied on the CIT v. Usha Martin Ventures Ltd. [2023] 150 taxmann.com 491 (Calcutta) PCIT v. Naga Dhunseri Group Ltd. [2023] 146 taxmann.com 424 (Calcutta) Incorp Advisory Services Pvt. Ltd. v. Pr. CIT (ITA No. 4864/Mum/2024 for assessment year 2020- We have carefully heard the rival submissions and perused the material placed on record. The admitted factual background is that the Assessing Officer received credible information from the Joint Commissioner of Income-tax (OSD), Central Circle that the assessee was a beneficiary of accommodation entries routed through M/s Aneri Fincap Ltd., an entity admittedly controlled by one Shri Rajesh G. Mehta, who, during the course of search proceedings conducted by the Income-tax Department, ssed that the said concern was being utilised for the purpose of providing accommodation entries to various entities. It is an undisputed position that during the reassessment proceedings, the Assessing Officer issued notices under section Jayantilal Rajmal Seth 15 ITA No. 3260/MUM/2025 The Ld. Departmental Representative (DR) on the other hand submitted that no inquiry was made by the Assessing Officer particularly on the issue that sources of the repayment of the loan and hence, the Ld. PCIT is justified in invoking clause (a) of Before us, the Ld. counsel for the assessee relied on the CIT v. Usha Martin Ventures Ltd. [2023] 150 PCIT v. Naga Dhunseri Group Ltd. [2023] 146 Incorp Advisory Services Pvt. Ltd. v. Pr. CIT (ITA No. -21) We have carefully heard the rival submissions and perused the material placed on record. The admitted factual background is that the Assessing Officer received credible information from the Joint tax (OSD), Central Circle–7(2), Mumbai, that the assessee was a beneficiary of accommodation entries routed through M/s Aneri Fincap Ltd., an entity admittedly controlled by one Shri Rajesh G. Mehta, who, during the course of tax Department, ssed that the said concern was being utilised for the purpose of providing accommodation entries to various entities. It is an undisputed position that during the reassessment proceedings, the Assessing Officer issued notices under section Printed from counselvise.com 142(1) of the Act on 10.01.2023 and 17.01.2023, which were duly responded to by the assessee. However, the inquiry conducted by the Assessing Officer was confined only to the aspect of repayment of loan to M/s Aneri Fincap Ltd., and he failed to extend the inquiry to the crucial question of the source of such repayment. In fact, while disposing of the objections under section 148A(d), the Assessing Officer himself recorded that the assessee had not satisfactorily explained the source of repayment made to M/s Aneri Fincap Ltd. In such circumstances, the Assessing Officer was duty bound to conduct further verification and enquiry into the source of such repayment, which he failed to undertake. upon by the assessee are distinguishable on facts. 6.2 In view of the above factual position, we find that the assessment order suffers from a clear lack of inquiry into a matter which went to the root of the issue. Therefore, the invocation of the revisional jurisdiction by the Ld. PCIT under clause (a) of Explanation 2 to section 263 of the Act is fully justified. Accordingly, ground No. 1 raised by the assessee is dismissed. 7. In Ground Nos. 2 and 3 of the appeal, t its Ld. Counsel, has challenged the very validity of the reassessment proceedings undertaken under section 147 of the Act, contending that if the reassessment order itself is proceedings initiated under section 263 cannot survive. It was urged that the reasons recorded by the Assessing Officer wer e Act on 10.01.2023 and 17.01.2023, which were duly responded to by the assessee. However, the inquiry conducted by the Assessing Officer was confined only to the aspect of repayment of loan to M/s Aneri Fincap Ltd., and he failed to extend the inquiry the crucial question of the source of such repayment. In fact, while disposing of the objections under section 148A(d), the Assessing Officer himself recorded that the assessee had not satisfactorily explained the source of repayment made to M/s Aneri ap Ltd. In such circumstances, the Assessing Officer was duty bound to conduct further verification and enquiry into the source of such repayment, which he failed to undertake. The decisions relied upon by the assessee are distinguishable on facts. n view of the above factual position, we find that the assessment order suffers from a clear lack of inquiry into a matter which went to the root of the issue. Therefore, the invocation of the revisional jurisdiction by the Ld. PCIT under clause (a) of lanation 2 to section 263 of the Act is fully justified. Accordingly, ground No. 1 raised by the assessee is dismissed. Nos. 2 and 3 of the appeal, the assessee, through its Ld. Counsel, has challenged the very validity of the reassessment ceedings undertaken under section 147 of the Act, contending assessment order itself is void-ab-initio proceedings initiated under section 263 cannot survive. It was urged that the reasons recorded by the Assessing Officer wer Jayantilal Rajmal Seth 16 ITA No. 3260/MUM/2025 e Act on 10.01.2023 and 17.01.2023, which were duly responded to by the assessee. However, the inquiry conducted by the Assessing Officer was confined only to the aspect of repayment of loan to M/s Aneri Fincap Ltd., and he failed to extend the inquiry the crucial question of the source of such repayment. In fact, while disposing of the objections under section 148A(d), the Assessing Officer himself recorded that the assessee had not satisfactorily explained the source of repayment made to M/s Aneri ap Ltd. In such circumstances, the Assessing Officer was duty- bound to conduct further verification and enquiry into the source of The decisions relied n view of the above factual position, we find that the assessment order suffers from a clear lack of inquiry into a matter which went to the root of the issue. Therefore, the invocation of the revisional jurisdiction by the Ld. PCIT under clause (a) of lanation 2 to section 263 of the Act is fully justified. Accordingly, ground No. 1 raised by the assessee is dismissed. he assessee, through its Ld. Counsel, has challenged the very validity of the reassessment ceedings undertaken under section 147 of the Act, contending initio, the revisional proceedings initiated under section 263 cannot survive. It was urged that the reasons recorded by the Assessing Officer were Printed from counselvise.com founded on incorrect information, namely, that the assessee had received a loan from M/s Aneri Fincap Ltd., whereas, in fact, the assessee had only effected repayment of an existing loan during the relevant year. On this premise, it was argued that the r order was unsustainable in law, and consequently the order passed under section 263 of the Act also deserves to be quashed. 7.1 Per contra, the Ld. Departmental Representative submitted that at the stage of reopening, what is to be examined is the information received was relevant to the assessee and whether, on such information, a reasonable person could form the belief that income chargeable to tax had escaped assessment. She relied upon the authoritative pronouncements of the Hon’ble ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (SC)] and Raymond Woollen Mills Ltd. v. ITO (SC)], wherein it has been categorically held that sufficiency or correctness of the material cannot be gone reopening. 7.2 We have heard rival submissions of the parties and perused the relevant materials on record. The Ld. counsel for the assessee has assailed the order u/s 263 on the ground that reassessment order dated 09.03.20203 invalid as in the reasons recorded only allegation was of the receipt of accommodation entry from factual matrix of the case actually the assessee only repaid the loan founded on incorrect information, namely, that the assessee had received a loan from M/s Aneri Fincap Ltd., whereas, in fact, the assessee had only effected repayment of an existing loan during the relevant year. On this premise, it was argued that the r order was unsustainable in law, and consequently the order passed under section 263 of the Act also deserves to be quashed. Per contra, the Ld. Departmental Representative submitted that at the stage of reopening, what is to be examined is the information received was relevant to the assessee and whether, on such information, a reasonable person could form the belief that income chargeable to tax had escaped assessment. She relied upon the authoritative pronouncements of the Hon’ble Supreme Court in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [(2007) 291 ITR 500 Raymond Woollen Mills Ltd. v. ITO [(1999) 236 ITR 34 (SC)], wherein it has been categorically held that sufficiency or correctness of the material cannot be gone into at the stage of We have heard rival submissions of the parties and perused the relevant materials on record. The Ld. counsel for the assessee has assailed the order u/s 263 on the ground that reassessment 09.03.20203 passed under section 147 is the reasons recorded only allegation was of the receipt of accommodation entry from M/s Aneri Fincap Ltd. but in the factual matrix of the case actually the assessee only repaid the loan Jayantilal Rajmal Seth 17 ITA No. 3260/MUM/2025 founded on incorrect information, namely, that the assessee had received a loan from M/s Aneri Fincap Ltd., whereas, in fact, the assessee had only effected repayment of an existing loan during the relevant year. On this premise, it was argued that the reassessment order was unsustainable in law, and consequently the order passed under section 263 of the Act also deserves to be quashed. Per contra, the Ld. Departmental Representative submitted that at the stage of reopening, what is to be examined is whether the information received was relevant to the assessee and whether, on such information, a reasonable person could form the belief that income chargeable to tax had escaped assessment. She relied upon Supreme Court in [(2007) 291 ITR 500 [(1999) 236 ITR 34 (SC)], wherein it has been categorically held that sufficiency or into at the stage of We have heard rival submissions of the parties and perused the relevant materials on record. The Ld. counsel for the assessee has assailed the order u/s 263 on the ground that reassessment passed under section 147 is itself is the reasons recorded only allegation was of the receipt M/s Aneri Fincap Ltd. but in the factual matrix of the case actually the assessee only repaid the loan Printed from counselvise.com of Rs.11 lakhs during the year under consideration and no loan was received during the year under consideration, t reassessment proceedings are bad in law and liable to be quashed and hence the subsequent proceedings u/s 263 of the Act also bad in law. 7.3 However, we do not agree with the above arguments of the Ld. Counsel for the assessee for the reason that reassessment order made was under old provisions of section 148 has been rendered infructuous in view of the finding of Hn’ble Supreme court in the case of Ashish Agrawal (suprs) impugned assessment order has been passed under the amended provisions of section 147/148A of the Act. 7.4 In pre amended section 147 of the Act under section 148 of the Act, to believe on the basis of information or material received by him 7.5 But under the amended provisions of section related to reassessment, the section 147 now reads as under: “Section - 147, Income 85 [Income escaping assessment 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for ring the year under consideration and no loan was g the year under consideration, t reassessment proceedings are bad in law and liable to be quashed and hence the subsequent proceedings u/s 263 of the Act also bad wever, we do not agree with the above arguments of the Ld. for the assessee for the reason that reassessment order made was under old provisions of section 148 has been rendered infructuous in view of the finding of Hn’ble in the case of Ashish Agrawal (suprs) impugned assessment order has been passed under the amended provisions of section 147/148A of the Act. In pre amended section 147 of the Act, before issue of notice under section 148 of the Act, the AO was required to record reason to believe on the basis of information or material received by him But under the amended provisions of section related to reassessment, the section 147 now reads as under: 147, Income-tax Act, 1961 - FA, 2025 Income escaping assessment86. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 sess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for Jayantilal Rajmal Seth 18 ITA No. 3260/MUM/2025 ring the year under consideration and no loan was g the year under consideration, therefore, the reassessment proceedings are bad in law and liable to be quashed and hence the subsequent proceedings u/s 263 of the Act also bad wever, we do not agree with the above arguments of the Ld. for the assessee for the reason that the earlier reassessment order made was under old provisions of section 148 has been rendered infructuous in view of the finding of Hn’ble in the case of Ashish Agrawal (suprs), whereas, the impugned assessment order has been passed under the amended , before issue of notice the AO was required to record reason to believe on the basis of information or material received by him But under the amended provisions of section related to 2025 If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing 148 to 153, sess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for Printed from counselvise.com such assessment year (hereafter in this section and in sections to 153 referred to as the relevant assessment year). Explanation.-For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of with.]” 7.6 Under the amended scheme, the Assessing Officer is mandated to, firstly, conduct such enquiry as may be warranted under section 148A(a); secondly, issue notice under section 148A(b) providing opportunity to the assessee; thirdly, consider the reply under section 148A(c); and fourthly, pass a speaking order under section 148A(d) determining whether it is a fit case for issuance of notice under section 148. In the present case, the Assessing Officer, while disposing of the asse objections under section 148A(d), specifically noted the failure of the assessee to explain the sources of repayment of the loan to M/s Aneri Fincap Ltd., which was prima facie in the nature of an accommodation entry. Such order constitutes the “rea believe” contemplated under the amended law. 7.7 In this backdrop, the contention that reassessment was invalid merely because the information originally referred to “receipt” of loan rather than “repayment” is devoid of merit. What is material is that the assessee was found connected with M/s Aneri Fincap Ltd., an accommodation entry provider, and that the source such assessment year (hereafter in this section and in sections referred to as the relevant assessment year). For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped ment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied Under the amended scheme, before issuing notice u/s 148 , the Assessing Officer is mandated to, firstly, conduct such enquiry as may be warranted under section 148A(a); secondly, issue notice under section 148A(b) providing opportunity to the assessee; rdly, consider the reply under section 148A(c); and fourthly, pass a speaking order under section 148A(d) determining whether it is a fit case for issuance of notice under section 148. In the present case, the Assessing Officer, while disposing of the asse objections under section 148A(d), specifically noted the failure of the assessee to explain the sources of repayment of the loan to M/s Aneri Fincap Ltd., which was prima facie in the nature of an accommodation entry. Such order constitutes the “rea believe” contemplated under the amended law. In this backdrop, the contention that reassessment was invalid merely because the information originally referred to “receipt” of loan rather than “repayment” is devoid of merit. What is that the assessee was found connected with M/s Aneri Fincap Ltd., an accommodation entry provider, and that the source Jayantilal Rajmal Seth 19 ITA No. 3260/MUM/2025 such assessment year (hereafter in this section and in sections 148 For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped ment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the have not been complied before issuing notice u/s 148 , the Assessing Officer is mandated to, firstly, conduct such enquiry as may be warranted under section 148A(a); secondly, issue notice under section 148A(b) providing opportunity to the assessee; rdly, consider the reply under section 148A(c); and fourthly, pass a speaking order under section 148A(d) determining whether it is a fit case for issuance of notice under section 148. In the present case, the Assessing Officer, while disposing of the assessee’s objections under section 148A(d), specifically noted the failure of the assessee to explain the sources of repayment of the loan to M/s Aneri Fincap Ltd., which was prima facie in the nature of an accommodation entry. Such order constitutes the “reasons to In this backdrop, the contention that reassessment was invalid merely because the information originally referred to “receipt” of loan rather than “repayment” is devoid of merit. What is that the assessee was found connected with M/s Aneri Fincap Ltd., an accommodation entry provider, and that the source Printed from counselvise.com of repayment remained unexplained. Thus, the reassessment proceedings cannot be invalidated on such hyper In view of the aforesaid discussion, we reject the contention of the assessee that proceedings u/s 147 of the Act are bad in law. 7.8 Further, argument was made on the part of the assessee that one, the reassessment order dated 25.02.2022 was passed by the Assessing Officer, he was not justified in issuing a fresh notice u/s 148A(b) of the Act under procedure and passed a fresh assessment order on 09.03.20203 which has been subjected to revisional proceedings by the Ld. PCIT. He submitted that the Assessing Officer cannot continue proceedings. 7.9 We have carefully considered rival submissions and examined the material available on record. The argument of the Ld. Counsel proceeds on the footing that the earlier reassessm were invalid. However, such contention overlooks the fact that the initial reassessment order passed on 25.02.2022 under the unamended provisions of section 147/148 has been rendered infructuous by virtue of the judgment of the Hon’ble Supr in Union of India v. Ashish Agarwal dated 04.05.2022]. Pursuant to the ratio therein, all notices issued during the period 01.04.2021 to 30.06.2021 under the old regime stood transmuted into notices under section 1 requiring the Assessing Officer to follow the amended procedure of repayment remained unexplained. Thus, the reassessment proceedings cannot be invalidated on such hyper-technical ground. e aforesaid discussion, we reject the contention of the assessee that proceedings u/s 147 of the Act are bad in law. Further, argument was made on the part of the assessee that one, the reassessment order dated 25.02.2022 was passed by the he was not justified in issuing a fresh notice u/s under amended provisions of the reassessment procedure and passed a fresh assessment order on 09.03.20203 which has been subjected to revisional proceedings by the Ld. PCIT. ubmitted that the Assessing Officer cannot continue We have carefully considered rival submissions and examined the material available on record. The argument of the Ld. Counsel proceeds on the footing that the earlier reassessment proceedings were invalid. However, such contention overlooks the fact that the initial reassessment order passed on 25.02.2022 under the unamended provisions of section 147/148 has been rendered infructuous by virtue of the judgment of the Hon’ble Supr Union of India v. Ashish Agarwal [Civil Appeal No. 3005 of 2022, dated 04.05.2022]. Pursuant to the ratio therein, all notices issued during the period 01.04.2021 to 30.06.2021 under the old regime stood transmuted into notices under section 148A(b) of the Act, requiring the Assessing Officer to follow the amended procedure Jayantilal Rajmal Seth 20 ITA No. 3260/MUM/2025 of repayment remained unexplained. Thus, the reassessment technical ground. e aforesaid discussion, we reject the contention of the assessee that proceedings u/s 147 of the Act are bad in law. Further, argument was made on the part of the assessee that one, the reassessment order dated 25.02.2022 was passed by the he was not justified in issuing a fresh notice u/s provisions of the reassessment procedure and passed a fresh assessment order on 09.03.20203 which has been subjected to revisional proceedings by the Ld. PCIT. ubmitted that the Assessing Officer cannot continue with such We have carefully considered rival submissions and examined the material available on record. The argument of the Ld. Counsel ent proceedings were invalid. However, such contention overlooks the fact that the initial reassessment order passed on 25.02.2022 under the unamended provisions of section 147/148 has been rendered infructuous by virtue of the judgment of the Hon’ble Supreme Court [Civil Appeal No. 3005 of 2022, dated 04.05.2022]. Pursuant to the ratio therein, all notices issued during the period 01.04.2021 to 30.06.2021 under the old regime 48A(b) of the Act, requiring the Assessing Officer to follow the amended procedure Printed from counselvise.com under sections 147/148A. order dated 25.02.2022 was passed under the old provisions, the Assessing Officer could not have continued pr amended provisions, we are unable to accept the same. By operation of the law declared in order became infructuous, and the Assessing Officer was fully justified in continuing and completing proceedings under the amended framework, culminating in the reassessment order dated 09.03.2023. 7.11 For the foregoing reasons, we f that reassessment proceedings are invalid in law. Consequently, the challenge to the assumption of jurisdiction under section 263, being premised upon such plea, must also fail. Accordingly, Ground Nos. 2 and 3 raised by the as 7.12 The order of ld PCIT passed u/s 263 of the Act is accordingly upheld 8. The appeal of the assessee is accordingly dismissed. Order pronounced in the open Court on Sd/ (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 22/09/2025 Rahul Sharma, Sr. P.S. under sections 147/148A. As regards the contention that once an order dated 25.02.2022 was passed under the old provisions, the Assessing Officer could not have continued proceedings under the amended provisions, we are unable to accept the same. By operation of the law declared in Ashish Agarwal (supra), the earlier order became infructuous, and the Assessing Officer was fully justified in continuing and completing proceedings under the amended framework, culminating in the reassessment order dated For the foregoing reasons, we find no substance in the plea that reassessment proceedings are invalid in law. Consequently, the challenge to the assumption of jurisdiction under section 263, being premised upon such plea, must also fail. Accordingly, Ground Nos. 2 and 3 raised by the assessee are dismissed. The order of ld PCIT passed u/s 263 of the Act is accordingly The appeal of the assessee is accordingly dismissed. ounced in the open Court on 22/09/2025. Sd/- (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT MEMBER ACCOUNTANT MEMBER Jayantilal Rajmal Seth 21 ITA No. 3260/MUM/2025 As regards the contention that once an order dated 25.02.2022 was passed under the old provisions, the oceedings under the amended provisions, we are unable to accept the same. By (supra), the earlier order became infructuous, and the Assessing Officer was fully justified in continuing and completing proceedings under the amended framework, culminating in the reassessment order dated ind no substance in the plea that reassessment proceedings are invalid in law. Consequently, the challenge to the assumption of jurisdiction under section 263, being premised upon such plea, must also fail. Accordingly, Ground Nos. The order of ld PCIT passed u/s 263 of the Act is accordingly The appeal of the assessee is accordingly dismissed. /09/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Jayantilal Rajmal Seth 22 ITA No. 3260/MUM/2025 BY ORDER, Registrar) ITAT, Mumbai Printed from counselvise.com "
Other Referred Cases
Ashish Agarwal vs. Union of India, Andaman Timber Industries vs. Comm. of Central Excise, H.R Mehta vs. ACIT, Kishandchand Chellaram vs. CIT, CIT vs. JMD Communications Pvt Ltd, R.W. Promotions Pvt Ltd vs. ACIT, Sunil Aggarwal vs. ACIT, P.K. Noorjahan vs. CIT, Pooja Bhatt vs. ACIT
Laws Referred To
Income Tax Act
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