2025 (2) TMI 1724

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....ered by the survey operation. Subsequent thereto, the AO reopened the assessment of both the years under consideration. The reasons recorded by the AO for reopening of the assessment of both the years are extracted below: "AY.2014-15 Brief details of the assessee: Shri Pushpendra Bansal and Smt. Sangita Bansal are Directors/promoters in M/s Lords Inn Hotels & Developers Limited and in some other companies (Lords Group). The Group is engaged into business of running hotels. Their main hotels are in Surat, Vadodara and Dahej etc. These hotels are owned by them and they also run many other hotels on lease basis. Brief details of the information: It was alleged that Shri Pushpendra Bansal (PAN- ABIPB2394M) and Smt Sangita Bansal (AGIPB1414D) have made huge expenses of 100 Cr on their daughter's marriage, introduced their unaccounted money in garb of unsecured loans and booked bogus expenses in some of their entities. Based on the information, survey action under section 133A of Income Tax Act, 1961(the Act) was conducted on 05.09.2019. The premises of M/s. SSSP Consultant and Techno Service Ltd. is also covered u/s. 133A of IT Act, 1961. Thereafter the ca....

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.....2015-16 Brief details of the assessee: Shri Pushpendra Bansal and Smt. Sangita Bansal are Directors/promoters in M/s Lords Inn Hotels & Developers Limited and in some other companies (Lords Group). The Group is engaged into business of running hotels. Their main hotels are in Surat, Vadodara and Dahej etc. These hotels are owned by them and they also run many other hotels on lease basis. Brief details of the information: It was alleged that Shri Pushpendra Bansal (PAN- ABIPB2394M) and Smt Sangita Bansal (AGIPB1414D) have made huge expenses of 100 Cr on their daughter's marriage, introduced their unaccounted money in garb of unsecured loans and booked bogus expenses in some of their entities. Based on the information, survey action under section 133A of Income Tax Act, 1961(the Act) was conducted on 05.09.2019. The premises of M/s. SSSP Consultant and Techno Service Ltd. is also covered u/s. 133A of IT Act, 1961. Thereafter the case is assigned to this charge and Survey report is forwarded to this office. Basis of forming reasons to believe and details of escapement of income. The undersigned have gone through the documents impounded during the survey....

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....th the years under consideration are bad in law. Explaining further, the Ld.AR submitted that the AO has referred to the loans taken from three parties in AY. 2014-15 and two parties in AY. 2015-16 and further observed these loans are outstanding for more than six years and no interest was paid to them in all the years. However, the fact would remain that these loans have been repaid by the assessee either in the same year or in the subsequent year. Hence the main reason for reopening of assessment is against the facts available on record. It also shows that the assessing officer did not have any tangible material to support his observations and further he did not apply his mind on the information supplied by the survey officials by examining the record. Hence, the AO could not have entertained the belief that there was escapement of income. In this regard, the Ld.AR placed reliance on the following case law:- a. Ankita A. Choksey vs. ITO, [2019] 411 ITR 207 (Bom); b. Paranjape Schemes (Construction) Limited vs. DCIT, 2024 (3) TMI 736 - Bombay High Court 4.1. The Ld.AR further submitted that the AO has taken the view that the above said loans may be accommodati....

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..... This basic condition precedent is applicable whether the return of income was processed under Section 143(1) of the Act by intimation or assessed by scrutiny under Section 143(3) of the Act. [See Asst. Commissioner of Income Tax v/s. Rajesh Jhaveri Stock Brokers (P) Ltd., (SC) 291 ITR 500 and PCIT v/s. M/s. Shodimen Investments (Bombay) 2018 (93)Taxman.Com 153]. Further, the reasons to believe that income chargeable to tax has escaped Assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points out the same in its objections, then the order on objection must deal with it and prima facie, establish that the facts stated by it in its reasons as recorded are correct. In the absence of the order of objections dealing with the assertion of the Assessee that the correct facts are not as recorded in the reason, it would be safe to draw an adverse inference against the Revenue. 7 Thus, we are of the view that even in cases where the return of income has been accepted by processing under Section 143(1) of the Act, reopening of an assessment can only be done when the Assessing Officer has reason to believe that income charge....

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....d persons is nothing to do with the assessee. (b) Further, the information pertains to the year 2019. It is not discernible as to how this information could lead to the belief of escapement of income in the hands of the assessee, which is limited company during the two years under consideration. It is also not established that how the impugned loans taken during the years under consideration were connected with the alleged claim made by the survey team. No material was brought on record to show that the funds received by way of loans have been used for personal purposes of the directors of the assessee company. (c) Now coming to the facts of the case, the AO has recorded that the loans taken from the parties in these two years remained outstanding for more than 6 years. However, but the facts prevailing in the instant case would show that the above-mentioned loans have been repaid either in the same year or in the succeeding year. Hence, the facts noted by the AO in the reasons for reopening of assessment is an incorrect fact in both the years. (d) We noticed earlier that the AO has mentioned in the reasons for reopening that these loans are outstanding f....