TaxTMI 
TaxTMI 
2025 (11) TMI 1391
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is submitted that on the facts and circumstances of the case and in law the Ld. CIT(A) erred in law in upholding the proceeding u/s 147 without appreciating the fact entire reason to believe is based on the statement of Shri Rajendra Jain which was already retracted, hence notice issued u/s 148 on the basis of such incorrect reason to believe is bad in law and consequential assessment order is also bad in law and liable to be deleted. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the additions without appreciating the fact that the Ld. AO has passed the assessment order based on the retracted third-party statement of Shri Rajendra Jain, without providing an opportunity to cross examine the same, and thus the addition is made in violation of the principles of natural justice. 4. That on the facts and circumstances of the case and in law, La CIT(A) erred in confirming the reopening assessment ignoring the fact that Ld. AO has reopened the assessment without application of mind and entire reopening is based on borrowed satisfaction of information received from investigation wing, hence such order of assessment pass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not Rs. 56,00,000/- 10. The Ld. CITA) erred in facts and in law in confirming the disallowance of interest expense amounting to Rs. 13,54,427/- on account of loans being treated as non-genuine." 3. During the hearing, the learned Authorised Representative ("learned AR"), at the outset, pressed ground no.3, and submitted that the assessment order was passed without providing an opportunity to cross-examine the person whose statement was relied upon by the Assessing Officer ("AO") for making the impugned additions. 4. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is engaged in a financing business. For the year under consideration, the assessee filed its return of income on 29/03/2008, declaring a total income of INR 77,329. The return filed by the assessee was selected for scrutiny, and vide order dated 30/11/2009 passed under section 143(3) of the Act, the scrutiny proceedings were concluded accepting the returned income. Subsequently, on the basis of the information received from the office of DGIT (Investigation), Mumbai, pursuant to the search and seizure action carr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....current financial year 2006-07 relevant to A.Y.2007-08 in the books of accounts of the assessee, M/s. Sapphire Fintech Pvt. Ltd. is non-genuine and a bogus accommodation entry, which needs to be brought to tax. In view of the totality of the facts and the documents on records coupled with the information gathered during the course of search operation, it is clear that the assessee has failed to disclose fully all material facts necessary for completion of its assessment at the time of the original assessment and the income arising out of the said transactions made by the assessee has therefore escaped assessment for the reasons of failure on the part of the assessee company to disclose truly and correctly all material facts relevant for completion of the assessment. In view of the above, I have reason to believe that in the present case the income the income has escaped assessment by the reasons of failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment coming within the meaning of section 147 of the Income Tax Act 1961." 5. From the record, it is evident that during the course of reassessment proceedings, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the AO rejected a similar request on the basis that the assessee, on one hand, himself submitted the retraction affidavit of Shri Rajendra Jain and on the other hand sought crossexamination. 8. Having considered the submissions of both sides and perused the material available on record, it is pertinent to note that even though the assessee submitted the retraction affidavit of Shri Rajendra Jain during the reassessment proceedings, wherein Shri Rajendra Jain stated that the loan given to entities, including the assessee company, was not accommodation entry transaction, the AO did not accept the said affidavit and the same was treated merely as an afterthought. The AO also rejected the retraction affidavit on the basis that no evidence was furnished to support the contention in the retraction affidavit. Therefore, for treating both loans received by the assessee as non-genuine, the AO relied on the statement of Shri Rajendra Jain recorded during the search and seizure action. Thus, we are of the considered view that the fact that the assessee submitted the retraction affidavit cannot be the basis for rejecting the request of the assessee to crossexamine the person whose statemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....23 Assessee's appeal- A.Y. 2010-11 13. Vide its application dated 25/09/2023, the assessee raised the following revised grounds of appeal: - "1. That the Ld. CIT(A) erred in facts and in law in confirming the reopening u/s 148 of the Income Tax Act, 1961. 2. Without prejudice to other grounds of appeal it is submitted that on the facts and circumstances of the case and in law the Ld. CIT(A) erred in law in upholding the proceeding us 147 without appreciating the fact entire reason to believe is based on the statement of Shri Rajendra Jain which was already retracted, hence notice issued «/s 148 on the basis of such incorrect reason to believe is bad in law and consequential assessment order is also bad in law and liable to be deleted. 3. "That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the additions without appreciating the fact that the Ld. AO has passed the assessment order based on the retracted third-party statement of Shri Rajendra Jain, without providing an opportunity to cross examine the same, and thus the addition is made in violation of the principles of natural justice." 4. Tha....