TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1029
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....bers and accordingly the case of the assessee was also centralized. The case of the assessee was re-opened for the reason that the assessee has received a sum of INR 9.15 crores as credits from Orange Vyapaar Pvt.Ltd. ("OVPL"), a group company which in turn received money from Kolkata based Shell companies. After considering the submissions of the assessee and other documents and material relied upon by the AO, an addition of INR 9.15 crores was made in the hands of the assessee as unexplained cash credit u/s 68 of the Act. 3. Aggrieved against this order, the assessee preferred appeal before Ld.CIT(A) who vide impugned order dated 29.01.2016 has allowed the appeal of the assessee by holding the re-opening of the case as invalid and further deleted the additions on merits. 4. Against such order, the Revenue is in appeal before the Tribunal by taking following grounds of appeal:- 1. "The order of Ld. CIT(A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition Rs. 9,15,00,000/- made by AO on account of 'Unexplained cash Credit" u/s 68 of the Act, received from M/s. Orange Vyapaar Pvt. Ltd....
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....17. "As regards reopening of assessment u/s 147 of the Act and recording of reasons therefore, it is settled law as held by various Courts including the H'ble Supreme Court that the belief of the A.O. should not be a product or imagination or speculation; the belief must be of an honest and reasonable person based upon reasonable grounds; that the belief must not be based on mere suspicion; the belief must not be vague and there must be material, having live nexus with the belief of escapement of income; the belief entertained must not be arbitrary or irrational and it must be reasonable and be based on reasons which are relevant and material; there should be facts before the A.O. that reasonably give rise to such belief that income has escaped assessment and the formation of belief is possible only on the basis of certain material and if there was no such material, reason to believe cannot be entertained; certain facts, specific in nature and reliable in character, have to exist to show that assessment can be reopened and the existence of such reasons and a direct nexus between those reasons and the alleged evasion is a condition precedent for reopening of assessment; and in t....
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....bove, the reassessment order u/s 147 of the Act is not sustainable. I hold accordingly. This ground is therefore allowed." 9. As the Revenue has not controverted such findings, we find no infirmity in the order of Ld.CIT(A) in holding the re-opening of assessment as invalid which is solely based on the borrowed satisfaction. Accordingly, the additional ground taken by the Revenue is dismissed. 10. With regard to the grounds taken on merits of the addition of INR 9.15 crores, we find that Ld.CIT(A) in para 4.2 to 4.2.4 has dealt with this issue in detail while deleting the additions. The relevant observations are as under:- 4.2. "Even in respect of the merits of the addition of Rs. 9.15 crore, taken in ground no. 03, the AO has overlooked and ignored the reply dated 09.03.2015 of the assessee submitted to him during the assessment proceedings though referred by him at para-5.10 of the assessment order. In this reply the assessee had stated that the above amount was received through proper banking channel and had submitted the statement of account of OVPL in appellant's books, submitted that OVPL is a genuine company registered with Ministry of Company Affairs vide CIN U51909....
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....ooks of the appellant, with PAN of OVPL and duly signed by the director of OVPL, and other details relevant to OVPL submitted by the appellant during assessment proceedings on 09.03.2015 are available on AO's file. Besides, the bank statement of OVPL indicates that the immediate source of money transferred to the appellant are different companies which have been mentioned by the AO at pages 3-5 of the assessment order while the AO has himself observed in the satisfaction note that the source of the advances from OVPL are share premiums received in the preceding year, thus giving a finding contradictory to the conclusion arrived at in the Reasons recorded for reopening the assessment. The AO has failed to bring on record any material evidence that the moneys received from these companies/persons and credited in the accounts of OVPL, though deposited through proper banking channels, were not received from these companies/persons and the AO, or the Investigation Wing which conducted the initial and post-search investigations/enquiries which formed basis for reopening of assessment and reassessment, has not carried out any enquiry beyond issue of notices and spot enquiry by inspect....
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....and once the assessee points out a depositor from whom he has received money and if the depositor owns the advancement of money to the assessee, the further enquiry into the source of source or failure to explain source of source cannot result in invoking the provisions of section 68 and it will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make an advance of the money as a loan to the assessee, and once such identity is established and the creditors accepted that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and the entry still represented the income of the assessee from a suppressed source which has to be based on sufficient and adequate materials. 4.2.4 Furthermore, though the AO has observed that OVPL had meager income in the relevant year he has apparently ignored that decide the capital and reserve and surplus, the moneys received by OVPL appearing in its bank account were available with it for advancing the loans. The AO has not given any finding i....