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2017 (3) TMI 1477 - AT - Income TaxReopening of assessment - amount of loan taken by M/s K. N. Parikh (firm) can be considered as income of assessee - Held that - AO failed to appreciate the facts properly while reaching to the conclusion that there was any escapement of income on behalf of assessee. Since in the present case no amount was taken as loan by the assessee from M/s N.H. Securities. Therefore, in such circumstances, the very basis for reopening is not based on correct appreciation of facts. Hence, the orders of ACIT for reopening the assessment of the assessee on the basis of reasons recorded by him u/s 148(2) of the Income Tax Act is not sustainable in the eyes of law. In such circumstances, we allow this ground of appeal and set aside the order of CIT(A) sustaining the order of reopening. - Decided in favour of assessee.
Issues Involved:
1. Validity of notice issued under section 148 of the Income Tax Act. 2. Addition of undisclosed income due to difference in balances between the appellant and NH Securities Limited. 3. Charging of interest under sections 234A, 234B, and 234D of the Act. Issue 1: Validity of Notice under Section 148: The appellant challenged the validity of the notice issued under section 148 of the Income Tax Act. The ACIT initiated proceedings for reopening the assessment based on the belief that the appellant had taken a loan from NH Securities Limited but had not disclosed it in the statement of affairs. The Tribunal analyzed the reasons recorded by the ACIT and found that the loan was actually taken by a firm of which the appellant was a partner, not by the appellant personally. The Tribunal concluded that there was a mistaken identity by the revenue, and the basis for reopening the assessment was not valid. Therefore, the Tribunal set aside the order of the CIT(A) sustaining the reopening. Issue 2: Addition of Undisclosed Income: The Assessing Officer made an addition of Rs. 1,35,34,532 as undisclosed income due to the difference in balances between the appellant and NH Securities Limited. The CIT(A) confirmed this addition without fully appreciating the facts presented by the appellant. However, since the Tribunal quashed the reopening of the assessment in Issue 1, it did not delve into the merits of this addition, and consequently set aside the order of the CIT(A) regarding this addition. Issue 3: Charging of Interest under Sections 234A, 234B, and 234D: The appellant contested the charging of interest under sections 234A, 234B, and 234D, arguing that the Assessing Officer did not provide an opportunity to the appellant before levying the interest, and that the charging of interest was not in accordance with the law. However, since the Tribunal allowed the appeal based on Issue 1, it did not specifically address these grounds raised by the appellant, stating that they were general in nature and needed no specific adjudication. In conclusion, the Tribunal allowed the appeal filed by the appellant, setting aside the orders of the CIT(A) and the Assessing Officer. The Tribunal found that the basis for reopening the assessment was not valid, leading to the quashing of the subsequent additions and interest charges.
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