TaxTMI 
TaxTMI 
2025 (9) TMI 1869
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....e u/s. 148 of the Income Tax Act, 1961. b. The learned CIT(A) erred in upholding the reopening of assessment merely based on information received from DGIT(Investigation), without forming independent belief with regard to escapement of income. 2. Addition of Cash credit u/s. 68 a. The learned CIT(A) erred in in confirming the addition of 2,00,00,000/- made by the Assessing Officer under section 68 of the Income Tax Act, 1961, without properly appreciating the facts, evidences and submissions of the appellant b. The learned CIT(A) erred in upholding the action of the Assessing Officer in treating loans received from M/s Daksh Diamonds and M/s Rahul Exports as unexplained cash credits, ignoring the documentary evidences such as confirmations, PAN, ITR copies, bank statements and repayment of loans through banking channels. c. The learned CIT(A) erred in confirming the addition merely on the basis of third-party statements and investigation reports, without establishing any direct nexus between the appellant and the alleged accommodation entry operators. d. The learned CIT(A) erred in law in not providing the appellant copies of st....
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....copy of all the documents, information and statement relied upon by the ld. AO to arrive at the reasons to believe so recorded, leading to escapement of income from assessment of Rs. 2,00,00,000/-. Assessee also requested to provide opportunity for cross-examination of Shri Bhavarlal Jain and others whose statements have been relied upon by the ld. AO. The objections so filed by the assessee were disposed of by the ld. AO vide order dated 29.02.2016, rejecting the same by stating that independent opinion was formed based on the information made available to him by the DGIT (Investigation), Mumbai resulting from the conduct of search action in the case of Bhavarlal Jain Group. 3.2. In the course of reassessment proceedings, assessee submitted the required documentary evidence to discharge the onus casted u/s 68 of the Act to establish identity and creditworthiness of the lenders and genuineness of the transaction by furnishing - a) Loan Confirmations b) Bank Statements of the parties c) Copy of return of income of the lender parties d) Loan transactions are done by account payee cheques 3.3. Ld. AO considered the loan transaction of Rs. 2,00....
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....e by the ld. AO is not solely based on surmises but on the detailed report of Investigation Directorate and further analysis of the transaction inquired upon by the ld. AO to arrive at the conclusion reached by the Assessing Officer. 4.2. He then relied upon the decision of Hon'ble High Court of Calcutta in the case of PCIT v. Swati Bajaj & Ors, 446 ITR 56 (Cal) and several other judicial precedents. He categorically notes in para 6.7 that the Investigation Wing had conducted enquires which proved that assessee is one of the beneficiaries of the accommodation entries provided by Shri Bhanwarlal Jain and others through multiple layering of transaction and entries provided. He thus, concluded that the issue of availing accommodation entries for tax evasion is spread across the country and modus operandi is well established and therefore, case of assessee fits into the criteria of availing accommodation entries for tax evasion and thus, sustained the addition so made by ld. AO and dismissed the appeal. Aggrieved, assessee is in appeal before the Tribunal. 5. We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the submi....
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.... the assessee in response to notice u/s 148 is bad in law. It thus, quashed the said assessment and allowed the additional ground raised by the assessee. 6. Respectfully following the said judicial precedents in the present set of facts before us being identical, we hold that the impugned reassessment made by ld. AO for which no notice u/s 143(2) was issued, subsequent to filing of return of income in response to notice u/s 148, is bad in law and is accordingly, quashed as void ab initio. 6.1. Since we have quashed the impugned reassessment in terms of our above stated findings, other legal contentions raised by the ld. Counsel for the assessee are not dealt with and left open. 7. Even, on the merits of the case, we find that the reasons to believe recorded by the ld. AO mentions about accommodation "bills" issued to the assessee. In para 11 of the impugned reassessment order, in sub-para (i), ld. AO mentions that parties are issuing "bills without delivering any goods and services". However, in the subsequent sub-paras, ld. AO deals with unsecured loans taken by the assessee for which it is alleged that assessee could not provide any documentary evidences and thus, failed....
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....ut no such opportunity nor material was provided to it. 7.4. Furthermore, it is also a fact on record as evident from confirmation letters of the two lender parties and their bank statements that these loans have been repaid by the assessee within a short duration of 6 to 7 months in the year 2010 itself which is much prior to the date of search undertaken in the case of Shri Bhanwarlal Jain & Group i.e. on 03.10.2013. Assessee has explained that it had taken these loans for making its business purchases and once the sale undertook and the sale consideration was realized, the loans were repaid to the parties from the sale proceeds. 8. In these given set of facts and circumstances, we find that ld. AO has considered the said loan as accommodation entries merely on the basis of information received from the Directorate Investigation, Mumbai and statements recorded in the case of search of Shri Bhanwarlal Jain Group. Assessee has furnished all the required documentary evidences explaining the details of the transaction discharging its onus casted u/s 68. These loans have also been repaid, fact of which is not in dispute. Ld. AO has not brought on record any cogent corroborative ....