TaxTMI 
TaxTMI 
2024 (9) TMI 1836
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.... assessee in this appeal has agitated against the confirmation of addition of Rs.75,00,000/- made by the Assessing Officer on account of unsecured loans received from M/s Festive Deal Trade Pvt. Ltd. treating the same as bogus. 3. The brief facts of the case are that the assessment of the assessee was reopened u/s 147 of the Act on the basis of information received by the Assessing Officer from the Investigation Wing that one Sri Mahesh Sharma, through his proprietorship concern M/s D P Trading, was providing accommodation entries to various persons including bogus loans. That the assessee was also one such beneficiary as the assessee had transacted Rs.75,00,000/- through the said concern. The Assessing Officer further noted that the ass....
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....income of the assessee has escaped assessment. The transaction of Rs.75,00,000/- may be for any reason and it cannot be considered that every transaction would result into same income. That even the Assessing Officer has not mentioned the nature of the transaction and did not correlate the said information with the accounts of the assessee. The ld. counsel has further submitted that the assessee had received a loan of Rs.75,00,000/- from M/s Festive Deal Trade Pvt. Ltd. and not from M/s D P Trading. Therefore, the information available to the Assessing Officer was vague and not enough to form the belief that the income of the assessee has escaped assessment. 5. The ld. DR, on the other hand, has relied upon the findings of the lower auth....
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....ere must be a direct nexus or live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding escapement of income. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". Such an action of the Assessing Officer regarding formation of belief of escapement of assessment and thereby in starting proceedings u/s 147 is open to challenge in a court of law. The entire law as to what would constitute "reason to believe" has been summed up by the hon'ble Supreme Court in the case of "Income Tax Officer v Lakhmani Mewaldas" (1976) 103 ITR 437. Reliance in this respect can also be placed on th....
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....declined the said request of the assessee to provide the statement of Shri Mahesh Sharma and his cross-examination stating that the statement of Shri Mahesh Sharma was not primary evidence and that the said statement was concerned only with modus operandi of such scam. That the department in this case did not act on the statement of Shri Mahesh Sharma and that it was only one of the circumstantial evidences. He, therefore, declined to provide the statement of Shri Mahesh Sharma to the assessee. A perusal of the assessment order reveals that except the information received from Investigation Wing, which was based on the statement of Shri Mahesh Sharma that he was providing accommodation entries through his proprietorship concern i.e. M/s D P....
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....ross-examine the witnesses though the statements of those witnesses were made the basis of the order, was a serious flaw which nullified the order since it was a violation of the principle of natural justice. In the case of Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100, Hon'ble Supreme Court observed that "effective cross-examination could have been done as regards the correctness or otherwise of the report, if the contents of them were proved. The principles analogous to the provisions of the Indian Evidence Act as also the principles of natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or si....