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TMI Blog2020 (4) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... , we hold that reasons recorded were sufficient to clothe the Assessing Officer to acquire the jurisdiction, to reopen the assessment. The ground that, Assessing Officer had not obtained the satisfaction u/s.151 before issuance of notice is also not correct because Assessing Officer has specifically stated that satisfaction was obtained from the Addl. CIT wherein he has stated that he is satisfied with the reasons recorded by the Assessing Officer. Thus, this ground is also not tenable. Thus, the reopening of the assessment u/s.147 r.w.s. 148 is valid and the order of the Ld. CIT (A) on this count is upheld. Addition on account of gift - A Donor cannot have natural love and affection to hundreds of people where gifts were given without any occasion and that to be in several lakhs. Another important factor is that the donor has stated to have gifted huge amount of gifts to various persons and Assessing Officer has even noted 9 such persons also on the basis of information. Once, he has confirmed that he is actually an entry provider and admitted that he has given bogus gifts in lieu of cash, then mere filing of memorandum of gift and affidavit of the donor cannot lead to a conclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 were not attracted and could not be applied; And the learned Commissioner Of Income Tax appeal XXIV New Delhi has erred in dismissing all the reasoning and confirming the action of the assessing authority. 2. That assessing authority has grossly erred in law and facts of the case in passing order u/s 147 of the Act without giving the copy of the material in his possession for reopening the case and without giving the opportunity of cross examination of the donor and the learned CIT appeal XXIV New Delhi has erred in dismissing these grounds. 3. The assessing authority has erred in law and facts of the case in making an addition of Rs,5,00,000/- (Rs. Five Lacs Only) u/s 68 of the Income Tax Act, 1961 and learned Commissioner of Income Tax appeals XXIV New Delhi has erred in confirming the addition u/s 68of the Act. 4. The learned CIT appeals XXIV New Delhi has stated that the addition should have been made u/s 69 A of the Act instead of section 68 of the Income Tax Act, 1961 and thus the addition has been wrongly made. 5. That the assessing proceeding were time barred, the learned Commissioner of Income Tax has erred in not passing any order in this respect." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT is satisfied on the reasons Recorded By The ITO/AC/that it is fit case for the issue of a notice u/s 148. ' Yes. I am satisfied Sd/- Addl. CIT, Range 25 New Delhi." 3. In response to the notice u/s.148 issued on 29.03.2007, the assessee after filing the return of income has raised objection against initiation of proceedings on 10.09.2007 which has been disposed of by the AO vide separate order dated 19.09.2007. On merits, the ld. Assessing Officer has given a very categorical finding that; * Firstly, the donor was not related to the assessee, and therefore, gift given out of love and affection was beyond the human probability. * Secondly, assessee was unable to furnish any evidence or explanation why such a gift was given by the donor. * Thirdly, assessee could not prove the creditworthiness and genuineness of the transaction and mere furnishing of particulars and payment by account payee cheque cannot be the sole ground for proving the creditworthiness and genuineness of the transaction. He also analyzed the balance-sheet of Shri Sanjay Mohan Agarwal and found that the net capital stood invested in the business and no such fund was available in cash, to be distributed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High Court in the case of AGR Investment Ltd. vs. Addl. CIT, (2011) 333 ITR 146 (Del). On the issue of cross-examination also he held that nowhere assessee had produced any material to prove that assessee has requested the Assessing Officer for cross-examination or asked for the reasons recorded. On merits, after detailed discussion and relying upon the various judgments he has confirmed the addition. However, he held that the said addition can be made u/s.69A. 9. Before us, ld. counsel for the assessee had challenged the validity of reopening on various counts. First of all, he submitted that, any information which is received by the Assessing Officer cannot automatically qualify as material for arriving at the satisfaction of escapement of income. Here, in this case, material as received was in respect of Shri Sanjay Mohan Agarwal who was a third party and it was incumbent upon the Assessing Officer to have confronted that material as received from Investigation Wing to the verification and comments. Further, the statement of Shri Sanjay Mohan Agarwal should have also been provided to the assessee for examination including cross-examination. Further, in the report, Inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also corresponds with credit entries with the bank account of the assessee. Any prudent person on these material and information will definitely have 'reason to believe' that a gift received from an entry provider who himself has admitted that he is providing bogus accommodation entry as gift to various persons, then at that stage, Assessing Officer is neither required to provide any cross-examination of the donor nor establish the factum of escapement of income. What is required in terms of Section 147 is that Assessing Officer should have prima facie reason to believe based on tangible material/information coming on record which is specific to the assessee and on that stage it is not required to established the factum of escapement of income. If during the course of assessment proceedings, Assessing Officer on the basis of explanation or evidences furnished by the assessee which controverts such material, then Assessing Officer may drop the proceedings of reopening u/s.147. Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) have laid down that the expression 'reason to believe' does not mean that Assessing Officer should have finally ascertained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en concocted that the donor and the father of the wife of Karta were close friends. However, no such averments have been made in the affidavit or the memorandum of gift. The donor has merely stated that gift is being given out of affection to the donee. The gift out of natural love and affection to stranger needs to be established and it cannot be said that any gift received from the stranger out of affection is on account of natural love infinity unless something is brought on record that what was the relationship between the assessee and the stranger. Such kind of a gift is definitely against human probability, specifically in such cases if there are certain indications that the donor was actually found to be providing bogus accommodation entries to numerous persons. A Donor cannot have natural love and affection to hundreds of people where gifts were given without any occasion and that to be in several lakhs. Another important factor is that the donor has stated to have gifted huge amount of gifts to various persons and Assessing Officer has even noted 9 such persons also on the basis of information. Once, he has confirmed that he is actually an entry provider and admitted that ..... 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