Rajvi Shah Vs ITO (ITAT Ahmedabad)
The assessee appealed against the order of the Commissioner of Income-tax (Appeals) for AY 2015-16. In addition to challenging an addition of ₹69,84,821, the assessee raised an additional legal ground contesting the validity of reopening of assessment under Section 147 of the Income-tax Act, 1961. Since the issue went to the root of the assessment proceedings, the Tribunal admitted the additional ground for adjudication.
The assessee had originally filed a return of income on 30.09.2015 declaring total income of ₹5,64,040, and the assessment was completed under Section 143(3). Subsequently, information was received through the Insight Portal alleging that the assessee had entered into fictitious profit/loss transactions in equity and derivative trading amounting to ₹69,84,821 involving the scrips of Looks Healthcare Services Ltd. and Wagend Infra Venture Ltd. Based on this information, the Assessing Officer issued a notice under Section 148 on 31.03.2021 and reopened the assessment. Thereafter, an assessment under Sections 147 read with 144 was completed on 29.03.2022, treating the transactions as fictitious profit/loss transactions and making an addition of ₹69,84,821.
The Commissioner (Appeals) upheld the action of the Assessing Officer. Before the Tribunal, the assessee contended that the reopening was invalid because it was based solely on information received from the Investigation Wing/Insight Portal without any independent verification or enquiry by the Assessing Officer. It was argued that the reasons recorded merely reproduced the information received and did not demonstrate any independent application of mind or formation of belief regarding escapement of income.
