TaxTMI 
TaxTMI 
2018 (2) TMI 861
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....e amount of Rs. 18,00,100/- as unexplained investment under section 69, the CIT(A) erroneously confirmed the same as 'unexplained cash credit' considering it as an addition under section 68; and without appreciating the fact that the assessee discharged the onus cast under section 68. 5. Crave Leave to urge/raise any ground that might be necessary at the time hearing". 3. Briefly stated facts are that assessee had filed her return of income on 21-10-1999 declaring a total income of Rs. 91,990/-. This return was processed u/s 143(1). However, a notice u/s. 148 of the Income Tax Act [Act] has been issued dt. 11-03- 2005 on the reason that the income has escaped assessment. The Assessing Officer (AO) has completed the assessment u/s. 143(3) r.w.s. 147 vide order dt. 24-03-2006 by making the addition of unexplained investment of Rs. 18,00,100/-. AO noted that assessee has invested an amount of Rs. 21,50,100/- in M/s. Sankhya Infotech Ltd., and the source of investment was Rs. 3,50,000/- out of savings and Rs. 18,00,000/- from the loans raised. AO also acknowledges that assessee while fining the return of income has enclosed confirmation letters and all of them were obtained from a....
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....peals are separately dealt with) has invested in a company (M/s Sankhya Infotech Ltd, Bhubaneswar) promoted by them and the investment by assessee was to the tune of Rs. 21,50,100/-. The sources of the amounts were disclosed in the original return filed and the same were as under: "Note: During the year I have invested in Sankhya Infotech Limited Some are Out of Savings 3,50,000 Loans raised 18,00,100 21,50,100 6.1. It was submitted that assessee has borrowed from the following persons: Sl.No. Name of the Creditor Amount (Rs) 1 Bala Raju 82,000 2 Bapuji 90,000 3 Bhoji 50,000 4 Chandraiah 82,000 5 Chinnappa 50,000 6 Chittemma 92,000 7 Eeswara Rao 50,000 8 50,000 9 Jaya Raju 90,000 10 Jayamma 95,000 11 Jaya Raju 90,000 12 Kanakayya 50,000 13 Koteswara Rao 50,000 14 Krishna Murthy 40,000 15 Mahalakshmi 50,000 16 Mangamma 42,000 17 Mangatayaru 83,000 18 Munindrarao 95,000 19 Nagaraju 92,000 20 Nageswara Rao 50,000 21 Nallaiah 90,000 22 Naresh 50,000 23 Ramalingeswara Rao 68,000 24 Satyavathi 61,000 25 Thota Peddi Raju 18,000 26 Veera Babu 40,000 27 Venkanna 50....
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....of CIT Vs. Atul Kumar Swami where reference to notes filed along with original return of income are made. The entire reasons recorded for reopening of assessment is "BORROWED SATISFACTION" and not that of the Assessing Officer. Reasons for re-opening not communicated in any of the cases - Fatal to re-assessment - Not furnishing of reasons or its non-communication is fatal to reassessment proceedings. Pls. see case law relied upon as under - Sr. No. Case Law ITR Page Court i. CIT Vs. Tecumseh Product 361 429 AP & Telangana ii. CIT Vs. Trend Electronics 379 456 Mumbai iii. CIT Vs. Vijaya Talkies & Distributors 398 13 Delhi iv. CIT Vs. Kothari Mills 377 581 Karnataka 7. Ld.DR, however, defended the order of the AO/CIT(A) vehemently. Regarding the satisfaction, Ld.DR informed that the same was extracted in the order of the CIT(A) and so, the argument that the same were not communicated is not correct. It was submitted that the enquiries were conducted and assessee is aware of all the proceedings and there was non-co-operation from assessee. He referred to various orders- that of Ld.CIT(A), Bhubaneswar, the orde....
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....of land area given by the cultivators and as appearing in the land records. This discrepancy has been attempted to be explained by the appellant-company by attributing the same to non-mutation of land and typographical and unintentional error etc., although the veracity of the allegation has been admitted in few cases. The difference regarding the extant of land area was attributed to causes like sale/gift or sharing of land subsequently. But, be that as it may, the enquiry report does not indicate that the sources of source, i.e., the loans advanced by the farmers to the Directors/shareholders; were totally bogus or that they completely lack creditworthiness. But, there appears to be some substance in the assertion of the AO/Jt.CIT that certain elements like the genuineness of the transactions and complete creditworthiness of the farmers was not conclusively established. These matters nevertheless require further enquiry as only sixteen out of seventy five farmer-creditors, who have advanced loans to the four share holders have been examined. No enquiry has been conducted in respect of loans availed by the two promoter-directors; namely Shri N. Srinivas and Shri N. Sridhar. Theref....
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....y and also the alleged transactions of unsecured loans obtained by the promotors from various farmers of Krishna District of Andhra Pradesh were not found to be genuine. The Assessing Officer requested the DDIT (Inv.,) Vijayawada to conduct enquiries about the genuineness of the loans raised and report. The DDIT (Inv.,) Vijayawada conducted the enquiries which reveals that the transactions of loans from farmers are not genuine and they are only paper transactions. In view of the above, the claim of the assessee that she has raised loans from the farmers is not genuine. The investment made by the assessee represents her income. I have reason to believe that income chargeable to tax for the Asst. Year 1998-99 has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961. I request the Addl. CIT, Range-11, Hyderabad to accord permission to issue notice u/s. 148 of the I.T. Act for the A.Y. 1998-99". F) Assessee was issued notice u/s. 148 dt. 18-03-2005, but the reasons recorded were not communicated either during assessment proceedings or during appeal proceedings, inspite of requesting the same. G) The Addl. CIT, Range-11, in remand proceedings did in fact c....
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.... Kaanuru N. Parvathavardhini 30 J. Mahalakshmi, Kaanuru N. Gayatri 31 Puppala Rambabu, Kaanuru N. Gayatri 32 Puppala Rambabu, Kaanuru N. Parvathavardhini 33 G. Vemlata Ramadevi, Vundrapudi N. Indira Ramani 34 G. Vemlata Ramadevi, Vundrapudi N. Gayatri 35 Divi Sambasiva Rao, Pedapatnam N. Gayatri 36 Divi Sambasiva Rao, Pedapatnam N. Indira Ramani 37 D. Mangathayaru, Kanuru N. Parvathavardhini 38 D. Mangathayaru, Kanuru N. Indira Ramani 39 Munidra Rao, Janjeru N. Indira Ramani 40 Munidra Rao, Janjeru N. Parvathavardhini 41 G. Veera Koteswara Rao, Kaanuru N. Parvathavardhini 42 G. Veera Koteswara Rao, Kaanuru N. Indira Ramani 2. I have obtained certificate of residence as proof of their stay in the village in the following cases at random: Sl.No. Name of the persons S/Sri/Smt. Name of the village 1 G. Venkateswara Rao Kaanuru 2 G. Kanakaiah -do- 3 G. Chittemma -do- 4 K. Ramalingeswara Rao -do- 5 Rajamohana Rao -do- 6 Subramanyeswara Rao -do- 7 S. Pandu Ranga Rao -do- 8 Rambabu -do- 9 G. Chandrayya -do- 10 Sri....
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.... may, the enquiry report does not indicate that the sources of source, i.e., the loans advanced by the farmers to the Directors/shareholders; were totally bogus or that they completely lack creditworthiness. But, there appears to be some substance in the assertion of the AO/Jt.CIT that certain elements like the genuineness of the transactions and complete creditworthiness of the farmers was not conclusively established. These matters nevertheless require further enquiry as only sixteen out of seventy five farmer-creditors, who have advanced loans to the four share holders have been examined. No enquiry has been conducted in respect of loans availed by the two promoterdirectors; namely Shri N. Srinivas and Shri N. Sridhar. Therefore, the AO or the concerned AOs can conduct further enquiries and if it is found that the loans given by the farmers were neither credible nor genuine; the additions could be made in the hands of the shareholders who have subscribed to the shares of the appellant-company. The sources of funds in such cases can be tackled by the AO in the hands of the subscribers to the equity shares who have availed the loans. Therefore, the AO is free to conduct further en....