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2018 (8) TMI 594 - AT - Income TaxReopening of an assessment - validity of notice issued u/s 148 - mechanical recording of satisfaction by the AO - reliance of the statement of the assessee which were retracted by them before the Court - Held that - The CIT(A) has after taking due diligence has come to the conclusion that the notice issued u/s 148 is not proper and is void ab initio. The case laws relied upon by the Ld. DR are distinguishable and not applicable to the facts of the present case as there is factual difference in each case. - Decided in favor of assessee. Addition of interest on financing of money - Held that - The CIT(A) has rightly deleted the addition on the ground that since the amount has not been financed by the assessee there is no question of making any addition of interest in this regard. - Decided against the revenue.
Issues Involved:
1. Quashing of notice issued under Section 148 of the Income-tax Act, 1961. 2. Deletion of addition of ?1 crore made by the Assessing Officer. 3. Deletion of addition of ?5,00,000/-. Issue-wise Detailed Analysis: 1. Quashing of Notice Issued under Section 148: The Revenue argued that the CIT(A) erred in quashing the notice issued under Section 148 based on information received from the Directorate of Revenue Intelligence (DRI), Mumbai. The assessee's original return declared an income of ?1,73,980/-. The Assessing Officer initiated proceedings under Section 147, issuing a notice under Section 148 based on information that the assessee financed ?1 crore in cash for imports made by a non-existent firm. The CIT(A) quashed the reassessment proceedings, stating that the belief formed by the Assessing Officer was not bonafide and based on vague, irrelevant, and non-specific information. The Tribunal upheld the CIT(A)'s decision, noting that the Assessing Officer did not have concrete evidence or attach relevant statements to support the reasons recorded for reopening the assessment. 2. Deletion of Addition of ?1 Crore: The Revenue contended that the CIT(A) erred in deleting the addition of ?1 crore made by the Assessing Officer based on the assessee's statements before the DRI. The Assessing Officer added ?1 crore to the assessee's income, citing the assessee's admission of financing the amount for imports. However, the assessee retracted his statement, and Mr. Shri Bhagwan Tulsian, the alleged recipient, also denied any financial dealings with the assessee. The CIT(A) found no independent evidence to corroborate the financing transaction and concluded that the addition was based on mere statements without supporting evidence. The Tribunal agreed with the CIT(A), emphasizing that the statements were retracted and lacked corroborative evidence. 3. Deletion of Addition of ?5,00,000/-: The Revenue argued that the CIT(A) erred in deleting the addition of ?5,00,000/- on account of profit earned from the alleged financing. The Assessing Officer had added this amount, assuming the assessee earned profit from the ?1 crore financing. The CIT(A) deleted the addition, reasoning that since the alleged financing transaction did not occur, there could be no profit. The Tribunal upheld this decision, noting that the addition was hypothetical and unsupported by evidence. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions to quash the notice under Section 148 and delete the additions of ?1 crore and ?5,00,000/-. The Tribunal emphasized the lack of concrete evidence and the retraction of statements by the assessee and the alleged recipient, Mr. Shri Bhagwan Tulsian. The Tribunal found no basis for the Assessing Officer's actions and concluded that the CIT(A) had rightly adjudicated the issues.
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