Lokesh Kumar Khabya Vs DCIT (ITAT Mumbai)
Reopening Quashed in 6 Cases for No Addition on Recorded Reasons; Commission Estimation Rationalised to 0.40% (Sales/Purchases) & 0.50% (Loans) with Group-Entity Exclusion
These 37 connected appeals were clubbed and disposed by a common order since all assessees belonged to the Lokesh Khabya / ARC-linked group, and issues in all years revolved around (i) validity of reassessment u/s 147 & (ii) estimation of commission income for alleged accommodation entries in sales, purchases & loans.
I. Six appeals fully allowed—Reopening quashed (Jet Airways / Lark Chemicals principle)
In the lead case Lokesh Kumar Khabya (AY 2016-17) and five other assessees, the AO opened reassessment alleging the assessees were beneficiaries of bogus entries. However, in the final assessment orders they were treated as entry-providers, and no addition was made on the basis of original recorded reasons.
Tribunal examined the reasons recorded placed in the paper book (pages 1–11 etc.) and noted:
- AO recorded escapement due to being a beneficiary,
- but made additions by treating assessee as entry-operator, estimating commission,
- thus no nexus existed with recorded reasons.
Applying Jet Airways (Bom HC), Lark Chemicals (Bom HC; SLP dismissed) & Mohmed Juned Dadani (Guj HC), the Tribunal held the reassessments were invalid because the AO did not make any addition on the reasons recorded.
