M/S ASHOKA PORTFOLIO MANAGEMENT PVT. LTD.,JAIPUR V. ITO, WARD-1(1), JAIPUR, JAIPUR

ITA 690/JPR/2025

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The case involves M/s. Ashok Portfolio Management Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)/NFAC, Delhi, concerning the Assessment Year 2010-11. The primary issues in the appeal were the validity of the reassessment proceedings under section 147 of the Income Tax Act and the addition of Rs. 20,00,000 under section 68 as unexplained cash credit. The reassessment was based on information from the Investigation Wing suggesting that the assessee had received accommodation entries in the form of share capital. However, the Tribunal found that the ITO did not conduct any independent inquiry and relied solely on the information provided by the Investigation Wing, which was deemed insufficient to justify the reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717534 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2025
• Other Referred Cases: Arvind Sahdeo Gupta vs. ITO, Mumtaz Haji Mohamad Memom vs. ITO, Satish Kumar Khandelwal vs. ITO, Dr. Ajit Gupta vs. ACIT, Bhaijee Commodities (P) Ltd. vs. ACIT, Smt. Anshita Vimal Jain vs. ITO, Future Tech IT Systems (P) Ltd. vs. ITO, Kantibhai Dharamshibhai Narola vs. ACIT, S.N. Arora/Sapra vs. ITO, Andaman Timber Industries vs. CCE
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: P.C. PARWAL
• Keywords: Reassessment proceedings; Search and seizure; Accommodation entries; Reason to believe; Tangible material; Borrowed satisfaction; Bogus
• Section: 148; 143(3); 132

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR “SMC” BENCH : JAIPUR BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A.No.690/JPR/2025 (Assessment Year : 2008-09) M/s. Ashok Portfolio Management Pvt. Ltd., Kalani & Co., CAs, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur. PAN : AABCA 3267 D vs. ITO, Ward-1(1), Jaipur. (Appellant) (Respondent) For Assessee : Shri P.C. Parwal, CA For Revenue : Shri Gautam Singh Choudhary, JCIT-DR Date of Hearing : 03.07.2025 Date of Pronouncement : .08.2025 ORDER This appeal at the instance of the assessee for the Assessment Year 2010-11 (A.Y.) is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”], dated 13/02/2025 framed u/s. 250 of the Income Tax Act, 1961 (for short, 'the Act') is arising out of assessment order passed u/s. 143(3) r.w.s. 147 of the Act dated 19/02/2016. 2. The grievance of the assessee is two fold; firstly, raising a legal issue challenging the validity of the order passed u/s. 147 of the Act; and secondly, against the addition of Rs. 20,00,000/- made u/s. 68 of the Act. Since the legal ground goes to the root Printed from counselvise.com 2 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) cause of the impugned proceedings, I first take up the legal issue challenging the validity of re-assessment proceedings. 3. Learned counsel for the assessee, referring to the written submissions, submitted that reassessment proceedings carried out by issuing notice u/s. 148 of the Act is solely on the basis of information received from Investigation Wing, Bombay and without conducting any further enquiry and Ld.AO based on the borrowed satisfaction has issued notice u/s. 148 of the Act. It is submitted that the reason for reopening was that the income of Rs. 20,00,000/- has escaped assessment as the assessee is found to be one of the beneficiaries of obtaining accommodation entry in the form of share capital of Rs. 20,00,000/- from M/s. Vanguard Jewels & Yash V. Jewels Ltd. He submitted that the assessee has furnished the regular return of income on 28/09/2008 along with audited financial statement during the year under consideration. There is no increase in the share capital and the alleged sum of Rs. 20,00,000/- is sale proceeds from sale of equity shares held as stock-in-trade. Reliance placed on the following judgments:- (i) Arvind Sahdeo Gupta vs. ITO (2023) 229 DTR (Bom. HC) (ii) Mumtaz Haji Mohamad Memom vs. ITO (2018) 408 ITR 268 (Guj. – HC) (iii) Satish Kumar Khandelwal vs. ITO (2021) 189 ITD 118 (Jaipur – Trib.) (iv) Dr. Ajit Gupta vs. ACIT (2016) 383 ITR 361 (Del. – HC) (v) Bhaijee Commodities (P) Ltd. vs. ACIT (2023) 202 ITD 757 (Del. – Trib.) (vi) Smt. Anshita Vimal Jain vs. ITO (2023) 199 ITD 168 (Surat – Trib.) (vii) Future Tech IT Systems (P) Ltd. vs. ITO (2021) 190 ITD 52 (Chd. – Trib.) Printed from counselvise.com 3 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) (viii) Kantibhai Dharamshibhai Narola vs. ACIT (2021) 203 DTR 356 (Guj. – HC) (ix) S.N. Arora/Sapra vs. ITO (2020) 187 DTR 121 (Del. – Trib.) (x) Andaman Timber Industries vs. CCE (2015) 127 DTR 241 (SC) 4. On the other hand, ld.DR vehemently argued supporting the order of the Ld.CIT(A). 5. I have heard rival contentions and perused the material on record. 6. Through ground No.1, validity of the reassessment proceedings u/s. 147 of the Act has been challenged. Ld.AO issued notice u/s. 148 of the Act dated 10/07/2015 recording the following reasons:- \"In this case assessee had filed its return of income on 28.09.2008 declaring total income 63,810/- and processed on 08.03.2010 u/s 143(1) of the I.T. Act. As per information available with this office it was noticed that during the course of search and seizure operation u/s. 132 of the Act, 1961 conducted in the case of Shri Praveen Kumar Jain it was observed that the assessee M/s. Ashok Portfolio Management Pvt. Ltd. is one of the beneficiaries and has obtained accommodation entries in the form of shares capital of Rs. 20,00,000/- from M/s.Vanguard Jewels ltd. and Yash V Jewels Ltd., bogus concern of Praveen Kumar Jain. Looking to the facts mentioned above, I have reason to believe that the income to the extent of Rs. 20,00,000/- has escaped assessment within the meaning of section 147 of the I.T. Act 1961. 1, therefore, hereby issue notice u/s. 148 of the IT Act, 1961 for the Α.Υ. 2008-09.” 7. Learned counsel for the assessee referring to the details filed in the paper book has demonstrated that there is no increase in share capital and that the alleged sum is received against the sale of equity shares held stock-in-trade. It has been contended before me that Ld.AO has issued notice u/s. 148 of the Act merely on the Printed from counselvise.com 4 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) basis of borrowed satisfaction and has not conducted any independent enquiry. I have perused the records and observe that assessee is a private limited company and return u/s. 139(1) of the Act stood filed on 28/09/2008 for A.Y. 2008-09 declaring income of Rs.63,810/- along with current loss of Rs.17,50,000/-. In the reasons recorded for reopening the assessment Ld.AO has observed that assessee has received accommodation entry in the form of share capital of Rs.20,00,000/- during the year. I have gone through the audited balance sheet which was also available with the Ld.AO prior to issuance of notice u/s. 148 of the Act. On going through Schedule-I of the balance sheet as on 31/03/2008 placed at paper book page No.8, I observe that issued, subscribed & paid up capital as on 31/03/2007 is Rs. 1,99,77,000/- and as on 31/03/2008 the figure is the same i.e. Rs. 1,99,77,000/- It shows that there is no increase in the share capital and, therefore, the first allegation of against the assessee that assessee has received share capital during the year, is not correct. The second allegation in the reasons recorded by the Ld.AO is that there is escapement of income to the extent of Rs. 20,00,000/- for the amount received from M/s. Vanguard Jewels & Yash V. Jewels Ltd. For that assessee has filed ledger accounts of both these parties and also copy of shares purchase and sale account placed at page No.51-73 of the paper book. Perusal of the same indicates that the assessee was holding the equity shares of Sachin Water Supply Company Pvt. Ltd. and Atul Capital Finance Pvt. Ltd. These equity shares are held as stock-in-trade and verifiable from Schedule-5 of the balance sheet. The assessee has sold the equity shares of Sachin Water Printed from counselvise.com 5 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) Supply Company Pvt. Ltd. to M/s. Vanguard Jewels for Rs.10,00,000/- and the equity shares of Atul Capital Finance Pvt. Ltd. to Yash V. Jewels Ltd. for Rs. 10,00,000/- and received sale consideration through banking channel. Therefore, the transaction referred in the reasons recorded is also duly accounted in the books. 8. Now, In the light of the above facts, it remains an undisputed fact that Ld.AO has issued notice u/s. 148 of the Act only on the basis of borrowed satisfaction and information of the Investigation Wing. The Ld.AO had made no independent enquiry even when the return of income along with audited balance sheet stood filed. 9. Now to examine these facts in the light of settled judicial precedents, I notice that the Hon'ble Gujarat High Court in the case of Kantibhai Dharmshibhai Narola (supra) has held that the third party information is only information and does not constitute reason to believe unless and until third party information is subjected to investigation and on the basis thereof independent reasons should be recorded by the Ld.AO before issuance of notice u/s. 148 of the Act. 10. Further, the Coordinate Delhi Bench in the case of Bhaijee Comodities (P.) Ltd. (supra) has held that “where assessee had sufficiently demonstrated that there was no relevant material to make wide ranging allegations towards accommodation entry in form of share capital and earning fictitious profits and so called belief formed by AO towards escapement of chargeable income was without availability of relevant or tangible material and merely Printed from counselvise.com 6 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) following opinion expressed by investigation wing, reassessment was bade in law and hence liable to be quashed”. 11. Further, the Hon'ble High Court of Bombay in the case of Arvind Sahdeo Gupta (supra) held that “if the AO has proceeded on fundamentally wrong facts to form reasonable belief that income chargeable to tax has escaped assessment and the AO while disposing of the objections, does not deal with the factual position asserted by the petitioner, it would be safe to conclude that the Revenue does not dispute the facts stated by the petitioner. On such facts, there could be no reason for the Ld.AO to believe that income chargeable to tax has escaped assessment.” 12. Respectfully following the ratio laid down by the Hon'ble Courts and coordinate Bench referred (supra), I am of the considered view that since Ld.AO failed to record proper reasons for issuance of notice u/s. 148 of the Act by conducting proper and independent enquiry and that the Ld.AO has merely proceeded on the borrowed satisfaction and even not verified the income tax return and audited balance sheet available with the Ld.AO where the alleged transaction is duly reported and there is no increase in share capital. Therefore, the notice issued u/s. 148 of the Act is illegal, bad in law as Ld.AO failed to assume jurisdiction and thus the reassessment proceedings carried out by the Ld.AO are illegal and void ab initio and are hereby quashed. The impugned addition stands deleted. Ground No.1 challenging the validity of the reassessment proceedings is allowed in favour of the assessee. Printed from counselvise.com 7 ITA.No.690/JPR/2025 (M/s. Ashoka Portfolio Management Pvt. Ltd.) 13. Ground No.2 raised on merits, needs no adjudication as I have already quashed the assessment order. 15. In the result, appeal of the Assessee is allowed as per the terms indicated hereinabove. Order pronounced in the open Court on 14.08.2025. Sd/- Sd/- [MANISH BORAD] ACCOUNTANT MEMBER Dated : 14th August, 2025 vr/- Copy to 1. The appellant 2. The respondent 3. The CIT(A), Jaipur concerned. 4. D.R. ITAT, SMC Bench, Jaipur. 5. Guard File. By Order //True Copy // Assistant Registrar, ITAT, Jaipur. Printed from counselvise.com "