TaxTMI 
TaxTMI 
2019 (10) TMI 70
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....hereto, filed return of income declaring income at Rs.NIL. The assessee produced details which were examined by the assessing officer. The assessing officer noted that during the year, assessee firm is engaged in the process of establishing a manufacturing plant at Kotdwar. The assessee had made investment of Rs. 43,24,678/- in assessment year under appeal. The assessee had taken unsecured loans of Rs. 19,63,236/- from 13 different persons during the year, out of which, loan amounting to Rs. 17,84,000/- was received in cash from 12 different persons who were claimed to be either the family members or family friends of the assessee. Assessing officer asked to furnish complete address along with copy of account and confirmatory letters from all the creditors as well as to submit copy of the ITRs, copy of bank accounts of the lenders. The assessee filed confirmation of accounts from lenders regarding unsecured loans to the assessee during the year along with copy of PAN and copy of the ITRs for assessment year 2008-2009 of some of the lenders. The assessee further submitted that all the lenders were either relatives/friends or partners of the assessee firm. Some of them did not have a....
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....as started new unit for manufacturing of Corrugated Boxes at Kotdwar with the motto of Employment generation. The assessee being a new unit, could obtain loan amounting to Rs. 18,13,000/- from the Bank. Assessee purchased land for Factory at Kotdwar by paying an amount of Rs. 7,78,205/-. During the assessment year under appeal, construction of factory premises was going on and in case of need of funds to meet the expenses, loans from the relatives and friends have been taken. Family members started help and they being from rural background, therefore, they were not having bank accounts and they keep the cash at house. No business activity was conducted during assessment year under appeal, therefore, no income was earned. Since, the assessee was new to the business, therefore, he could not file the documents before assessing officer. The Learned CIT(A) call for the remand report from the assessing officer on additional evidences and additional ground of appeal. The assessing officer more or less repeated the same contents as were recorded in the assessment order. The assessee, in the rejoinder, reiterated the same facts and also submitted that assessee furnished copy of the PAN car....
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....he considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Our aforesaid view is fortified by the following decisions:- (A) Hon'ble Delhi High Court in the case of Pr. CIT vs. M/s NC Cables Ltd. in ITA No. 335/2015 has held as under :- 11. Section 151 of the Act clearly stipulates that the CIT(a), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer, For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." (B). Hon'ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. reported in (2015) 56 taxmann.com 390 (MP)....
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....have become academic and are therefore not adjudicated and accordingly, the assessee's appeal is allowed. 7. In the result, the Appeal filed by the Assessee stands allowed." 4.1. Similar Order of ITAT in the case of Shri Krishan Gopal 2017-(5)-TMI-836-Delhi was relied upon. 5. On the other hand, the Learned D.R. submitted that there is no Law as to how satisfaction have to be recorded by the JCIT. It is a Proforma provided by the Department which is correctly taken care by the JCIT. 6. After considering the rival submission, I am of the view that the issue is covered in favour of the assessee by the order of ITAT Delhi Bench in the case of Sunil Agarwal (supra). Facts of this case are similar to the case of the assessee. Therefore, following the same decision, I hold that initiation of reassessment proceedings under section 147 of the Income Tax Act, 1961, by the assessing officer and uphold by the Learned CIT(A) is non-est in Law and without jurisdiction. I, therefore, set aside the Orders of the authorities below and quash the reopening of the assessment. The appeal of assessee on this ground is allowed. 7. Learned Counsel for the Assessee further submitted that addition of....
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....see would earn undisclosed income in the same year of establishment of manufacturing plant ? A manufacturing firm would take some time to earn profit after setting-up its plant. Though the assessee may not be able to prove the creditworthiness of the creditors, but, the creditors have confirmed giving loans to the assessee for setting-up of the manufacturing unit. Hence, it could be reasonably assumed that cash credit entries represented the capital receipts. though, the assessee is not able to establish the creditworthiness of the creditors. I am fortified in my view by the Judgment of the Hon'ble Supreme Court in the case of CIT vs., Bharti Engineering & Construction Company [1972] 83 ITR 87 (SC) in which it was held as under : "The assessee, an engineering-construction company, commenced its business in May, 1943. In its accounts there were several cash credit entries in the first year of its business totalling Rs. 2,50,000. Though the explanation regarding the cash credit entries was found to be false, the Appellate Tribunal held that these cash credits could not represent the income or profits of the assessee as they were all made very soon after the company commenced its ....