2025 (11) TMI 1579

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....iction under section 147 of the Act by the Learned AO. The other grounds raised by the assessee are challenging the confirmation of addition made under section 68 of the Act in the sum of Rs 4.05 crores by the Learned CITA. 3. We have heard the rival submissions and perused the materials available on record. The original return of income for the assessment year 2012-13 was filed by the assessee company on 31-03-2013 declaring total income of Rs. 8,05,820/- which was duly processed under section 143(1) of the Act. This assessment was sought to be reopened by issuance of notice under section 148 of the Act on 27-03-2019 in response to which, the assessee filed the return on 12-06-2019 declaring the same income as was declared in the original return. The reasons recorded for reopening the assessment are as under:- "Reasons for reopening of the assessment in the case of M/s Basant Aerospace Pvt Ltd. for AV 2012-13 147 of the Income Tax Act, 1961 1. The assessee is a company and has income from business or profession and income from ether sources. The assessee filed return of income for A'Y 2012-13 declaring total income of Rs. 805820/-, The ITR was processed u/....

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.... amount credited in the books of the assessee needs to be charged to income tax as income of the assessee for AY 2012-13. 6. Therefore, based on the above analysis, I have reasons to believe that income, chargeable to tax has, escaped assessment for AY 2012-13. Such escaped income is likely to amount to be at least Rs. 4.05 crores/-. 7. In this case, a return of income was filed for the AY under consideration, but no scrutiny assessment u/s 143(3) of the Act was carried out. Accordingly, in this case, the only requirement to initiate proceedings u/s 147 of the Act is that the AO have "reasons to believe" that income chargeable to tax has escaped assessment, which has been duly recorded in Paras 1 to 6 above. Also it is pertinent to mention here that no assessment as stipulated u/s 2(40) of the act was made and the return of Income was only processed u/s 143(1) of the act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to the facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment." 4. The Learned AR submitted that Assessee had recei....

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....ns recorded ignoring all the documentary evidences placed on record.. The Assessee also duly brought on record that the permission accorded by the competent authority in terms of section 151 of the Act, though sought for, was not provided to the Assessee. Accordingly, the learned AR pleaded that the reassessment proceedings should be treated as void ab initio. 5. As regards the amount received in the sum of Rs 1.90 crores towards share capital from Sridhar Agencies Private Limited, the Assessee had filed confirmation from Sridhar Agencies Private Limited, copy of bank account of Sridhar Agencies Private Limited duly highlighting the transactions of investments made in the Assessee Company, copy of audited financial statements of Sridhar Agencies Private Limited for the year ended 31-03- 2012 along with the income tax return acknowledgement for assessment year 2012-13, copies of share certificates issued to Sridhar Agencies Private Limited, copies of the allotment letters issued by Assessee Company and the copy of share application money forms issued by Assessee Company to Sridhar Agencies Private Limited. We find that the Assessee had indeed received share capital in the sum of ....

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.... the Act for reopening the assessment based on this incorrect assumption of facts. This clearly proves that even the competent authority had not examined the basic facts from the evidences placed on record and had merely granted a mechanical approval under section 151 of the Act which becomes fatal to the entire reassessment proceedings. In the instant case, the Assessee Company had indeed sought for approval of the competent authority in terms of section 151 of the Act which was not granted by the learned AO. In this regard, the learned AR rightly placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of Sabh Infrastructure Limited vs ACIT reported in 2017-TIOL-2041-HC-DEL-IT. 8. In view of the aforesaid observations and respectively following the various judicial precedents relied upon herein above, we have no hesitation in quashing the reassessment proceedings framed for the assessment year 2012-13 as it is based on (a) incorrect assumption of facts; (b) based on borrowed satisfaction and (c) approval granted under section 151 of the Act by the competent authority in a mechanical manner. Accordingly, the entire reassessment proceedings are quashed. T....

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....ssessee company to Sridhar Agencies Pvt Ltd after due deduction of tax at source 14. We find that the Assessee had duly furnished the name and address of the lender together with its PAN which proves the identity of the lender. The transactions of the loan were duly routed through regular banking channels and the lender company had duly reflected in its balance sheet under the head 'loans and advances' duly reflecting the amounts advanced to the Assessee Company. This proves the genuineness of transaction. The lender company has sufficient bank balances in its kitty which is evident from the bank statements of the lender placed on record. This proves the credit worthiness of the lender to advance loan to the Assessee company. In this regard, we find that the Hon'ble Jurisdictional High Court in the case of CIT vs Kamadhenu Steel & Alloys Ltd reported in 361 ITR 220 (Del) had held that creditworthiness or financial strength of the investor could be proved by producing the bank statement of the investor showing that it had sufficient balance in its bank to make the investment. The Special Leave Petition (SLP) preferred by the revenue before the Hon'ble Supreme Court against this d....