2024 (2) TMI 1608

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.... unexplained cash credit u/s. 68 of the Act. 3. Briefly stated the facts of the case are that the AO came to know that the assessee has received Rs. 29.85 crores as advance from customers namely Queen Commercial Private Limited Group Company which in turn received money from Kolkata based company. The case was reopened u/s. 147 of the Act after recording the reasons and notices u/s. 148 of the Act was accordingly issued and served upon the assessee. 4. During the course of the scrutiny assessment proceedings the assessee was asked to explain the transaction of the Queen Commercial Private Limited Group with supporting evidences. Assessee filed detailed reply alongwith documentary evidence explaining the source of funds of Queen Commercial....

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....ome was generated from real estate and the same was introduced as share premium in QCPL in spite of the fact that the bank statement of QCPL submitted to the AO indicates that the amounts deposited in the account of QCPL is through cheques/RTGS received from different persons and not from the appellant's account nor in cash. The satisfaction of the AO is thus based on mere surmises and conjectures as has been alleged by the appellant. It is well settled law that the satisfaction of the AO has to be based on material evidence brought on record and the AO has to examine the information or evidence available with him/her, make necessary enquiries relevant to the matter and apply his mind before arriving at the satisfaction, which is absent....

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....that income escaped assessment is not maintainable in law. Further, in Lupin Ltd. v. Assistant Commissioner of Income-tax (LTU), Mumbai [2014] 46 taxmann.com 396 (Bombay) it has been held that .... the reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons are the manifestation of the mind of the Assessing Officer and therefore, should be self- explanatory and should not keep the Assessee guessing for the reasons........ the AO must disclose in the reasons as to which fact or material was not disclosed by the Assessee fully and truly necessary for assessment for that assessment year, so as to establish the vital link between the reasons and the evidence, and that this vital link is the safegua....