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TMI Blog2018 (2) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... time enquiries were conducted. Since so much time has lapsed and the affidavits furnished dt. 25- 10-2007 have not been disproved, the contentions of assessee in this regard has merit. Revenue wrongly relied on the reports in the case of company and on the order of CIT(A), Bhubaneswar and has not made any serious enquiry in assessee case to disprove the credits claimed. Thus direct the AO to accept the credits as such, as genuine. For reopening of assessment is to be placed on record that the contentions on the issue have merit. First of all, assessee has disclosed the investment and enclosed the confirmations to the original return which was accepted. There was a direction by Addl. CIT, Range-11 to reopen the assessment. Another offer (whose jurisdiction is not examined) has issued the notices, even though assessee was assessed earlier. The reasons for reopening were not communicated violating the directions of Hon'ble Supreme Court in the case of GKN Drive Shaft [2002 (11) TMI 7 - SUPREME Court] - Decided in favour of assessee - I.T.A. No. 830/HYD/2013 - - - Dated:- 20-1-2018 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri K.C. Devdas, AR For The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the receipt of notice as it was barred by limitation of time. Since the assessment was getting time barred, AO relied on the enquiries caused in the company s case and put the initial burden on the assessee and stated that loans received from the farmers cannot be accepted and treated the same as assessee s income. 4. Before the Ld.CIT(A), assessee raised two grounds mainly that the issuance of notice u/s. 148 and reopening of assessment is bad in law and other was the addition of ₹ 18,00,100/- on account of unexplained investment. It was the contention of assessee that the reopening was at the instance of report of JCIT, Bhubaneswar, that the reasons for reopening were not communicated, that the notices were not served properly. No enquiries were made and those reports of enquiry which were relied were not furnished to assessee and no cross-examination was provided. Further, reliance of enquiries conducted in the company s case does not establish the unaccounted nature of amounts involved and no fresh material was available. It was further contended that assessee had disclosed the investments and sources in the returns filed originally along with confirmations and these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jayamma 95,000 11 Jaya Raju 90,000 12 Kanakayya 50,000 13 Koteswara Rao 50,000 14 Krishna Murthy 40,000 15 Mahalakshmi 50,000 16 Mangamma 42,000 17 Mangatayaru 83,000 18 Munindrarao 95,000 19 Nagaraju 92,000 20 Nageswara Rao 50,000 21 Nallaiah 90,000 22 Naresh 50,000 23 Ramalingeswara Rao 68,000 24 Satyavathi 61,000 25 Thota Peddi Raju 18,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani, N. Sridhar and N. Gayatri. Except these notes, evidences and the letter received from Addln. CIT, Bhuvaneshwar, to take action u/s. 147 there is no tangible material that income has escaped assessment. Relied on judgment of Delhi High Court in the case of CIT Vs. Atul Kumar Swami where reference to notes filed along with original return of income are made. The entire reasons recorded for reopening of assessment is BORROWED SATISFACTION and not that of the Assessing Officer. Reasons for re-opening not communicated in any of the cases Fatal to re-assessment Not furnishing of reasons or its non-communication is fatal to reassessment proceedings. Pls. see case law relied upon as under Sr. No. Case Law ITR Page Court i. CIT Vs. Tecumseh Product 361 429 AP Telangana ii. CIT Vs. Trend Electronics 379 456 Mumbai iii. CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contend that Shri G. Kanakaiah together with his family members have given money to Shri Babu Rao, who has given the money to the appellant-company and that the farmer-creditors have Stated that they have signed the loan confirmation letters. The AO has relied upon the said report to question the creditworthiness of the farmers on the ground that, the land was drought prone area for the last five to six years and sufficient income was not generated. The appellant-company has quoted from the same report to assert that from 1986 to 1996, prawn was being cultivated in the land where the yield per acre was ₹ 1 lakh per annum. The AO has drawn attention to the discrepancies between the plot/survey numbers and the extent of land area given by the cultivators and as appearing in the land records. This discrepancy has been attempted to be explained by the appellant-company by attributing the same to non-mutation of land and typographical and unintentional error etc., although the veracity of the allegation has been admitted in few cases. The difference regarding the extant of land area was attributed to causes like sale/gift or sharing of land subsequently. But, be that as it may, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,00,100/- from loans raised. While filing the return of income, the assessee enclosed confirmation letters for the loans raised. Almost all the confirmation letters were obtained from the agricultural lists and enclosed to the return of income. The assessee is one of the promotors of Sankhya Infotech Ltd., 12B, Metro Tower, Acharya Vihar Square, Bhuvaneshwar, which is being assessed by the DCIT, Circle-I, Bhuvaneshwar. During the course of pendency of the assessment proceedings in the case of Sankhya Infotech Ltd., for the Asst. Year 1998-99 the Assessing Officer noticed that cash credits found in the books of the company on account of introduction of share application money by the promotors do not have adequate means to introduce such money and also the alleged transactions of unsecured loans obtained by the promotors from various farmers of Krishna District of Andhra Pradesh were not found to be genuine. The Assessing Officer requested the DDIT (Inv.,) Vijayawada to conduct enquiries about the genuineness of the loans raised and report. The DDIT (Inv.,) Vijayawada conducted the enquiries which reveals that the transactions of loans from farmers are not genuine and they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardhini 7 Kankaiah G. Kaanuru N. Parvathavardhini 8 Kankaiah G. Kaanuru N. Indira Ramani 9 Kankaiah G. Kaanuru N. Gayatri 10 G. Chittimma, Kaanuru N. Indira Kumari 11 G. Chittimma, Kaanuru N. Parvathavardhini 12 V. Ankamma W/o. V. Vakalaiah, Tallapalem N. Gayatri 13 Vanka Pushpavathi W/O Ramudu, Tallapalem Vanka N. Gayatri 14 P. Gopi Tallapalem N. Gayatri 15 Y. Eswar Rao, Pedapatnam N. Indira Ramani 16 Y. Eswar Rao, Pedapatnam N. Gayatri 17 Y. Eswar Rao, Pedapatnam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 Munidra Rao, Janjeru N. Parvathavardhini 41 G. Veera Koteswara Rao, Kaanuru N. Parvathavardhini 42 G. Veera Koteswara Rao, Kaanuru N. Indira Ramani 2. I have obtained certificate of residence as proof of their stay in the village in the following cases at random: Sl.No. Name of the persons S/Sri/Smt. Name of the village 1 G. Venkateswara Rao Kaanuru 2 G. Kanakaiah -do- 3 G. Chittemma -do- 4 K. Ramalingeswara Rao -do- 5 Rajamohana Rao -do- 6 Subramanyeswara Rao -do- 7 S. Pandu Ranga Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kaanuru 5 G. Yesupadam Pedapatnam 6 Y. Venkateswara Rao Pedapatnam 7 M. David Pedapatnam 8 Y. Rambabu Pedapatnam 9 M. Baby Pedapatnam 10 G. Raju Pedapatnam 11 B. Venkateswara Rao Pedapatnam 12 P. Jayapal Pedapatnam 13 G. Yesobu Pedapatnam 14 Y. Eswara Rao Pedapatnam 15 Vura Chinnappa Pedapatnam 16 D. Sambasiva Rao Pedapatnam 17 V. Paidaiah Tallapalem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an conduct further enquiries and if it is found that the loans given by the farmers were neither credible nor genuine; the additions could be made in the hands of the shareholders who have subscribed to the shares of the appellant-company. The sources of funds in such cases can be tackled by the AO in the hands of the subscribers to the equity shares who have availed the loans. Therefore, the AO is free to conduct further enquiries in the case of individual shareholders as per the extant provisions of law and consider these amounts in their hands in view of the discussions in para 4.1 and 4.2 and the judicial decisions cited supra . Thus, the observation of CIT(A) indeed does not state that the sources are totally bogus and AO was in fact, asked to make further enquiries. Prima-facie the report of the Inspector does indicate that many of the people are existing and they have lands. Even though the Inspector seems to have issued summons to them to appear, the verification of the names of creditors with the names to whom summons were issued indicate that there are certain mismatches. For example, the first name Bunga Padma Pedapatnam was not shown as creditor in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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