TaxTMI 
TaxTMI 
2025 (3) TMI 1773
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....e u/s 142(1) of the Act dated 03.11.09 and served on the assessee. It was noticed during the scrutiny assessment that assessee has debited net interest amounting to Rs. 1,50,51,522/- on secured loans and unsecured loans during the year. The submissions of the assessee were accepted and scrutiny assessment was completed vide assessment order dated 21.12.2009. A search and survey action was conducted in the case of Shri Bhanwarlal Jain and others on 3.10.2013 by DGIT (Inv.), Mumbai. During the search action it was revealed that the companies managed and controlled by Shri Bhanwarlal Jain were in the business of providing bogus accommodation entries through various benami concerns operated and managed by them. 3. Post search information was received from DGIT (Inv.) Mumbai about accommodation entries from the following parties from AY 2008-09:- Sr. No. Name of the hawala Parties Bill amount 1. Rahul Exports 81,05,475 2. Navkar Diamonds 26,99,507 3. Rajan Diamonds 1,13,47,665 4. Prime Star 26,99,507 5. Parvati Exports 55,97,675 Total 30,449,829 4. The case was reopened by issuance of notice u/s 148 of the Act d....
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....In view of the same appellant prays that reassessment proceeding initiated to reopen the concluded assessment u/s.143(3) by issue of impugned notice u/s.148 dated 16-03-2015 and consequent reassessment order passed u/s.143(3) r.w.s.147 on 28-03-2016 being bad in law and without jurisdiction therefore, may be quashed and set aside. 2. That on facts of the case and in law the ld. C.I.T. (Appeal), NFAC, Delhi has erred in sustaining the wrong disallowance made by the ld. Assessing Officer of interest paid at Rs. 22,50,000/- after deduction & deposit of due applicable TDS on old unsecured loans taken in earlier assessment years without bringing any contrary evidence on record and also, without appreciating that said old unsecured loans and interest paid thereon were accepted in scrutiny assessment after due verification in the assessment order passed u/s.143(3) for that earlier assessment years. Being the disallowance of legitimate interest claim which stands duly assessed as income and claim of TDS deducted and paid thereon stands allowed by Department in the hands of respective cash creditors, legally and factually unsustainable, hence may kindly be deleted. 3. That....
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....issions and examined the impugned order. The reopening of assessment and the objection raised by the assessee has been dealt by the Ld. CIT(A) in para no. 5 to 5.4 of the impugned order and extracted as under: 5.0. First ground of appeal relates to reopening of assessment. The appellant contends that the notice issued u/s 148 of the Act is bad in law as it is issued after four years from the end of the assessment year and there is no failure attributed to the assessee to disclose fully and truly any material fact relevant for assessment of income. 5.1. In this regard, the submission of the appellant is duly considered. n this case the assessment u/s 143(3) of the Act was completed on 29.12.2010 determining total income at Rs 35,00,003/-. A search and survey action were conducted in the case of Shri Bhanwarlal Jain and others on 03.10.2013 by DGIT (Inv.), Mumbai. The Investigation Wing, Mumbai, covered certain name sake/ dummy directors/partners/proprietors of various concerns that were being managed, controlled and operated by Bhanwarlal Jain & Family, under section 132 and 131 of the Income Tax Act, 1961. During search, it was found that all name sake/ dummy dire....
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....eceipt of the information, AO verified the record. Subsequently, reasons were recorded for reopening the assessment u/s 147 Of the Act and approval was sought from the appropriate authority. Thereafter, the notice U/s 148 was issued. Thereafter notices u/s 143(2) and 142(1) were issued on various dates. In response to these notices, the A/R of the appellant filed submission. The appellant has also cooperated in the assessment proceedings by filing various submissions from time to time. Similar view has been held in the case of Yogendrakumar Gupta, [2014] 46 taxmann.com 56 (Gujarat), in which the Hon'ble court has decided that the AO acquires jurisdiction u/s 147 r.w.s. 148 of the Act when specific and reliable information is received from investigating agencies. It was held in this case that where subsequent to the completion of original assessment, Assessing Officer, on basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceeding in case of assessee. Reopening....
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....ent year, no notice shall be issued under section 148 [by an Assessing Officer, who is below the rank of Assistant Commissioner [or Deputy Commissioner], unless the [Joint] Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice] : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of [Joint] Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the [Joint] Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] [Explanation.-For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfi....
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....f Rs. 3,04,49,829/-, or any other income chargeable to tax which comes to my notice subsequently in the course of proceedings for re-assessment, has escaped assessment for A.Υ. 2008-09 within the meaning of section 147 of the IT Act 1961. 12. From the above observation as well as the facts and circumstances of the case, we find that what is important at the time of formation of belief by the AO regarding the escapement or under assessment of income is sufficiency of the reasons for reopening of the assessment and not its accuracy that cannot be questioned at that time. Our above view gets strength from the judgment of Hon'ble Supreme Court in the case of S. T Narayappa Vrs. CIT (1967) 63 ITR 219 (SC). Hence in our view, the order of reopening is valid and needs no interference. Hence this ground raised by the assessee is dismissed. Ground no. 2 13. It is evident from the record that in response to the notice issued u/s 148 of the Act dated 16.03.2015, the assessee has filed his reply before the AO which are enumerated in para no. 5 of the order of AO stating that the authorized representative of the assessee attended from time to time and furnished the requisit....
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....nts. (iii) Assessee could not provide any documents to substantiate the creditworthiness of the above loan creditors and hence these loans remained unexplained. Even though the assessee had provided the details of the unsecured loans but it had failed to establish the creditworthiness& genuineness of the lender. (iv) The onus was upon the assessee to establish the genuineness of the loan taken by the assessee. (v) Mere filing of evidences such as copies of bank statement showing payment through account payee cheque cannot be conclusive in a case where genuineness of transaction is in doubt. Payment by account payee cheques are not sacrosanct. 12. The assessee vide letter dtd. 29.02.2016 stated that the above loans were taken in previous years and he has paid interest of Rs. 22,50,000/- on above loans. On verification of the audited balance sheet, the assessee's contention was found correct. Further, the assessee failed to provide the evidences whatsoever which would cumulatively prove all the three essential ingredients, such as, identity, creditworthiness, genuineness of the loan lenders, it is held that the said unsecured loan cannot be acc....
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....need not prove the source of the source or the creditor's creditor. 6.3. The Hon'ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 at pages 545-547 made a reference to the test of human probabilities in the following fact situation :- It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals. Otherwise it will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favor then the door will be left wide-open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while locking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.. ....
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....ve the identity, creditworthiness and genuineness of the parties and transactions. It is observed by Ld. CIT(A) in para no. 6.5 that "the AO has therefore necessarily to consider the surrounding circumstances, which he indeed has done in a very meticulous and careful manner. In view of the above discussion, I find no infirmity in the order of the Ld. AO, and I confirm the same." These observations of Ld. CIT(A) are not correct and as the AO has not considered the above mentioned materials placed at page no. 39 to 43 of the paper book. The AO has not meticulously or carefully examined the facts and material of the case and merely narrated in para no. 9 of its order that assessee is also one of the beneficiaries of these transactions as was documented with Mr. Bhanwarlal Jain. It is to be noticed that what has been documented with Mr. Bhanwarlal Jain and what documentation has been analyzed by AO are not mentioned in the assessment order or in the impugned order passed by Ld. CIT(A). No statement recorded u/s 133(4) of the Act or nothing on record brought to our notice during the course of hearing of this appeal so as to question the creditworthiness of the lenders and genuineness of....