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2022 (12) TMI 161 - AT - Income TaxReopening of assessment u/s 147 - Addition u/s 68 - bogus loan creditworthiness of creditors was not proved - DR argued that the assessee s instant application under Rule 27 is not maintainable since the CIT(A) has nowhere decided the reopening issue against him - HELD THAT - We find that hon ble jurisdictional high court s decision in Peter Vaz 2021 (4) TMI 605 - BOMBAY HIGH COURT has already rejected Revenue s identical pleas in para 38 thereof. We accordingly admit assessee s foregoing Rule 27 petition. Validity of the impugned reopening - A perusal of the Assessing Officer s reassessment herein suggest that he had initiated section 148/147 proceedings regarding the assessee s time deposits, cash deposit in bank accounts and interest income having figures respectively totaling to Rs.1,58,56,948 whereas he ended up in adding section 68 unexplained cash credits in the nature of unsecured loans/ land advances amounting to Rs.2,64,31,847/- only. The CIT(A) which has partly reversed the impugned additions in his lower appellate discussion. It is in view of forgoing admitted factual position that we hold that the Assessing Officer had not made any addition pertaining to his three folded reasons of reopening. That being the case, we quote CIT Vs. Jet Airways India Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY holding that such a reopening is not sustainable in law - Decided against revenue.
Issues Involved:
1. Validity of addition of Rs. 35,00,000/- under Section 68 of the Income Tax Act, 1961. 2. Deletion of addition of Rs. 35,00,000/- by CIT(A). 3. Deletion of addition of Rs. 1,47,28,143/- by CIT(A) without proving creditworthiness. 4. Validity of reassessment proceedings under Sections 143(3) and 147 of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of Addition of Rs. 35,00,000/- under Section 68 of the Income Tax Act, 1961: The Revenue contended that the CIT(A) erred in not upholding the addition of Rs. 35,00,000/- under Section 68 of the Income Tax Act, 1961, arguing that the loan from Shri Sanjay Damodar More to the creditor company was proven to be a bogus loan by the Assessing Officer (A.O.), thereby questioning the creditworthiness of the creditors. 2. Deletion of Addition of Rs. 35,00,000/- by CIT(A): The Revenue further argued that the CIT(A) contradicted the details furnished by the assessee company by deleting the addition of Rs. 35,00,000/-. The CIT(A) had upheld that the assessee company received the amount from More and Patel, despite the details showing that the loan was given to creditor companies, which then provided the loan to the assessee company. 3. Deletion of Addition of Rs. 1,47,28,143/- by CIT(A) Without Proving Creditworthiness: The Revenue also contested the deletion of an additional Rs. 1,47,28,143/- by the CIT(A), arguing that the assessee company failed to prove the creditworthiness of the creditor companies. The Revenue emphasized that the creditor companies were no longer operational, making it difficult to verify their creditworthiness. 4. Validity of Reassessment Proceedings Under Sections 143(3) and 147 of the Income Tax Act, 1961: The assessee filed an application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, to support the CIT(A)'s decision, arguing that no addition was made on the basis of the reason recorded for reopening, referencing the case of CIT V/s Jet Airways (I) Ltd. [2010] 195 taxmann 117 (Bom HC). The Tribunal admitted the assessee's Rule 27 petition, noting that the Assessing Officer did not make any addition pertaining to the reasons for reopening, which included time deposits, cash deposits in bank accounts, and interest income totaling Rs. 1,58,56,948. The Tribunal referenced the jurisdictional high court's decision in CIT Vs. Jet Airways India Ltd. (2010) 331 ITR 236 (Bom.), which held that if the income, the escapement of which was the basis of the formation of the reason to believe, is not assessed or reassessed, it would not be open to the A.O. to independently assess only the income that comes to his notice subsequently in the course of the proceedings. The Tribunal concluded that the reopening was not sustainable in law and quashed the impugned reopening. Conclusion: The Tribunal upheld the CIT(A)'s findings and dismissed the Revenue's appeal, confirming that the reassessment proceedings were invalid due to the lack of additions based on the original reasons for reopening. The Tribunal's decision was pronounced in the open court on August 8, 2022.
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