RAHILA SAEED MALIK,MUMBAI V. ITO, MUMBAI

ITA 390/MUM/2025

AI Insights

The case involves an appeal by Rahila Saeed Malik against the reassessment order for the assessment year 2012-13, which was passed by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The reassessment was initiated based on information that the assessee had received bogus accommodation entries amounting to Rs. 1,00,00,000 from a company involved in such activities. The primary contention of the assessee was that the reassessment and the subsequent orders were passed on incorrect facts, particularly the claim that the assessee had not filed a return, which was untrue. The Tribunal, after reviewing the facts and relevant judicial precedents, found in favor of the assessee, leading to the quashing of the notice and the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312400 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Other Referred Cases: Sagar Enterprises vs. ACIT, Mumtaz Haji Mohmad Memon vs. ITO, Deepak Wadhwa vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR AMBASTHA; DR
• Assessee Lawyers: NEERAJ MANGLA
• Keywords: Condonation of delay; Set aside; Reassessment proceedings; Unexplained cash credit; Sale consideration of property below Jantri Value; Reopening of assessment; Accommodation entries; Opportunity of cross examination; FORM 26AS; Bogus
• Section: 148; 143(3); 132; 68; 139; 50C

Judgement Text

"| आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 390/Mum/2025 Assessment Year: 2012-13 Rahila Saeed Malik 53, Meher House Church Road Kamani Sulman baa wacia Kurla (W) Mumbai - 400070 [PAN: AFFPM3762B] Vs ITO अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Neeraj Mangla, C.A. Revenue by : Shri Ashok Kumar Ambastha, Sr. D/R सुनवाई की तारीख/Date of Hearing : 30/04/2025 घोषणा की तारीख /Date of Pronouncement: /05/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 06/06/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2012-13. 2. The grievance of the assessee reads as under:- “1. That the reassessment order passed by Ld. AO as well as the appellate order passed by Ld CIT(A) are bad in law and have been passed in contravention of prevailing law as well as facts of the case, therefore liable to be annulled. 2. That the reassessment order passed by Ld. AO u/s 143(3) r.w.s. 147 of the Act is illegal and not tenable under the law because of mechanical initiation of reassessment proceedings on incorrect appreciation of facts of the case that the assessee has not filed the return of income. 3. That the approval, if any, granted by Ld. PCIT u/s 151 of the Act is not tenable under the law and facts of the case as the same has been granted in a mechanical manner. 4. That the reassessment order passed by Ld. AO u/s 143(3) r.w.s. 147 of the Act is further illegal and not tenable under the law as the original reasons recorded for reopening of assessment proceedings and approval obtained u/s 151 of the Act were never provided by Ld. AO to the assessee. 5. That the reassessment order passed by Ld. AO and upheld by Ld. CIT(A) is further illegal and not tenable under the law as the material relied upon for recording of reasons and making additions to the income of assessee were never communicated to the assessee. 6. That the Ld. AO grossly erred in law and in facts of the case in not allowing opportunity of cross examination of Sh. Shirish C. Shah. 7. That the Ld. AO grossly erred in law and facts of the case in making addition of Rs. 1,00,00,000/- to the income of assessee despite the fact that the assessee has duly discharged the onus cast upon him u/s 68 of the Act. 8. That the Ld. AO grossly erred in law and in facts of the case in assessing sale consideration of unquoted shares as unexplained cash credits u/s 68 of the Act leading to double taxation of said amount. 9. That the Ld. AO grossly erred in law and in facts of the case in assessee amounts of advances recovered as unexplained cash credits u/s 68 of the Act. 10. That the Ld. AO grossly erred in law and in facts of the case in levying excess interest u/s 234A of the Act on incorrect belief that the assessee has not furnished her return of income u/s 139 of the Act. 11. That the assessee company seeks leave to add, alter, modify or delete any ground of appeal during the course of appellate proceedings.” 3. There is a delay in filing the appeal. The assessee has filed a request for condonation of delay supported by an affidavit. Considering the contents of the affidavit, the delay is condoned. 4. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 5. Briefly stated the facts of the case are that the AO observed that the assessee has not filed the return of income for AY 2012-13 and the return was filed in response to notice u/s 148 of the Act. 6. The root cause for the issue of notice u/s 148 of the Act is the information received from the office of the DCIT-CC 2(2), Mumbai by which the AO came to know that on completion of search operation in various premises of Shri Shirish C Shah, the assessment of various companies controlled by Shri Shirish C Shah was completed wherein it had been held that the impugned companies were engaged in providing accommodation entries and the assessee had received payments to the tune of Rs. 1,00,00,000/- from one such company M/s. Acacio Tradelink P. Ltd., which is nothing but bogus accommodation entries. The reasons were recorded and noticed u/s 148 of the Act was issued and served upon the assessee. The reasons for reopening read as under:- 7. We have carefully perused the reasons recorded for reopening the assessment mentioned hereinabove. The reasons mentioned hereinabove are factually incorrect as the assessee has in fact filed return of income on 15/10/2012 as per the acknowledgement exhibited at page 302 of the paper book and has paid self-assessment tax of Rs.16,892/- on 04/10/2012 as per Form 26AS exhibited at page 303 of the paper book. Thus, the AO proceeded on wrong facts. 8. The Hon’ble High Court of Gujarat under similar circumstances in the case of Sagar Enterprises vs. ACIT [2002] 257 ITR 335 (Gujarat), held as under:- “3. On going through the reasons recorded and the documents which have been produced on affidavit, it is apparent that the reasons which are recorded are de hors the facts available on record. Mr. Mihir Joshi learned standing counsel appearing on behalf of the respondent stated that in para 2 of the reasons recorded, the respondent has also referred to action under section 132 of the Act which was carried out at the premises of one Shri G.D. Shah in February, 1992, and has submitted that at least that part of the reasons would survive vesting the respondent with jurisdiction to initiate and continue action under section 147 of the Act. 4. On going through the entire reasons recorded, it can be seen that in the penultimate paragraph, the respondent has further recorded as under : \"Further, the assessee was required to file the return of the income for assessment year 1991-92 which the assessee has failed. Moreover, it was the duty of the assessee to declare this transaction and to file the return of income for assessment year 1991-92. The assessee has failed on both these counts. Therefore, the escapement of assessment of income is solely attributable to the assessee.\" Therefore, it is apparent that the factor of non-filing of the return for the assessment year 1991-92 has overbearingly weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. On the basis of the same, even for the sake of argument, if the contention raised by Mr. Joshi is taken into consideration, the settled legal position is that in such circumstances, it would not be possible to say with certainty as to which factor would have weighed with the officer concerned and once it is shown that an irrelevant fact has been taken into consideration, to what extent the decision is vitiated would be difficult to say. On this count alone, the petition requires to be accepted. 5. However, there is one more aspect of the matter which requires to be taken into consideration. In the affidavit-in-reply, it is the say of the respondent himself that the said payment which is stated to be undisclosed income relevant for the assessment year 1991-92 could have been made during the financial year 1990-91 relevant to the assessment year 1991-92 and hence ‘to cover up that probability, protective addition was made in the assessment year 1992-93’. Thereafter, in the affidavit-in-reply, the respondent has further stated thus : \"Hence, in the relevant case, addition of Rs. 17,98,500 was made in the assessment year 1992-93 on protective basis and substantial addition was required to be made in the assessment year 1991-92 and for that reopening under section 147 of the IT Act was initiated after recording reasons which are annexed hereto and marked Annexure 1\". 6. From the facts that have come on record, protective assessment for the assessment year 1992-93 was carried in appeal by the assessee and on the assessee succeeding before the Commissioner (Appeals), the revenue has filed second appeal before the Tribunal which is stated to be pending. It is pertinent to note that the first appellate authority decided the appeal for the assessment year 1992-93 on 26-1-1996 (sic) and the reasons have been recorded thereafter on 18-8-1997. Therefore, taking into consideration the totality of the circumstances and the facts which have come on record, it is apparent that the respondent himself is not sure as to the year of taxability and whether the said item requires to be taxed in the assessment year 1991-92 or the assessment year 1992-93. In such a situation, it is not possible to agree with the stand of the revenue that any income could be stated to have escaped the assessment for the assessment year 1991-92 as a consequence of any failure or omission on the part of the assessee.” 9. Similar view was taken by the Hon’ble High Court of Gujarat in the case of Mumtaz Haji Mohmad Memon vs. ITO [2018] 408 ITR 268 (Bom)(HC). The relevant findings read as under:- “11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1, 18,95,000/- and two; that the assessee had not filed the return and that therefore his 1/3d share out of the sale proceeds was not offered to tax. Both these factual grounds are totally incorrect as is now virtually admitted by the Revenue. It is undisputed that the assessee had actually filed the return of income for the said assessment year and income also offered his share of the declared sale consideration to tax as capital gain. The Assessing Officer may have dispute with respect to computation of such capital gain, he cannot simply dispute the fact that the assessee did file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of Rs. 1, 18,95,000/- as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was Rs.50 lakhs. 12. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is Rs.50 lakhs but the registering authority has valued the property on the date of sale at Rs. 1, 18,95,000/- for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited are that the assessee filed no return and that 1/3d share of the assessee from the actual sale consideration of Rs. 1, 18,95,000/- therefore, was not brought to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage the impugned notice. Through the affidavit-in-reply a faint attempt has been made to entirely shift the center of the reasons to a completely new theory viz. the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was Rs.50 lakhs and that the assessee had by filing the return offered his share of such proceeds by way of capital gain. 13. In the result, impugned notice is quashed. Petition is disposed of.” 10. Similar view was taken by the Hon’ble High Court of Delhi in the case of Deepak Wadhwa vs. ACIT in W.P. (C) 12551/2018 judgment dt. 04/03/2021. The relevant findings read as under:- “5.2. As far as the other aspect is concerned, in our view, since the proof put in place by the petitioner-assessee with regard to the acknowledgement of return filed for AY 2011-2012 has not been disputed by the Revenue, as noticed above, the challenge to the impugned notice and the impugned order will have to be sustained. 6. Therefore, for the foregoing reasons, we are inclined to quash the impugned notice dated 27.03.2018 as also the impugned order dated 28.09.2018. It is ordered accordingly.” 11. Considering the facts of the case in light of the aforementioned judgments, we are inclined to quash the notice issued u/s 148 of the Act on erroneous facts and set aside the resultant assessment order. Since we have quashed the assessment order, we do not find it necessary to delve into the merits of the case. 12. In the result, appeal of the assessee is allowed. Order pronounced in the Court on May, 2025 at Mumbai. (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated /05/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0017ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0016 / The Appellant 2. \u0017 थ\u0016 / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0017ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड' फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Date Initial 1. Draft dictated on 30/04/2025 Sr.PS 2. Draft placed before author 01/05/2025 Sr.PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS /04/2025 Sr.PS/PS 6. File pronounced on /04/2025 Sr.PS 7. File sent to the Bench Clerk /04/2025 Sr.PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed Yes "