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TMI Blog2024 (10) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... of income from assessment as envisaged under section 147; application of mind by the AO to such material; and an inference, based on reason drawn tentatively by the officer that income has escaped assessment. As is evident from the facts available on record, no new information was received by the AO at the time of initiation of reassessment proceedings, and it was merely a fresh application of mind to the same set of facts as were available at the time of original scrutiny assessment proceedings. Thus, reopening of assessment under section 147 in the present case, is bad in law and therefore is set aside. Decided in favour of assessee. - Shri Om Prakash Kant, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Subodh Ratnaparkhi For the Revenue : Shri Ashish Kumar, Sr. AR ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 13/03/2024, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ],for the assessment year 2009-10. 2. In its appeal, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the unsecured loans from M/s Zojwalla Housing and Properties Private Ltd to the tune of ₹ 29,80,340, wherein the assessee is a Director and has more than 10% voting share, proceedings under section 147 of the Act were initiated as the payment of ₹ 29,80,340 received by the assessee as an unsecured loan comes under the ambit of deemed dividend under section 2(22)(e) of the Act and the same has escaped assessment. Accordingly, notice under section 148 of the Act was issued on 31/03/2016. In response to the aforesaid notice, the assessee filed the copy of the return and tax audit report vide letter dated 09/08/2016 and requested that the same be treated as filed in response to the notice issued under section 148 of the Act. In response to the statutory notices issued under section 143(2) as well as section 142(1) of the Act, the assessee attended the proceedings and filed a copy of the bank account and names of the company/firm where the assessee is a Director/Partner. During the reassessment proceedings, the assessee was asked to show cause as to why the amount of ₹ 29,76,508 should not be added to the return income of the assessee as per the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 of the Act were rightly invoked by the AO. It was further submitted that substantial payment was made by M/s Zojwalla Housing and Properties Private Ltd. when no work was commenced by the proprietary concern of the assessee, thus the payment was made for the appropriation of profits and not as a business transaction. 8. We have considered the submissions of both sides and perused the material available on record. In the present case, the assessee is a proprietor of M/s Sab Reality and is also a Director of M/s Zojwalla Housing and Properties Private Ltd. having more than 10% voting shares. For the year under consideration, the assessee originally e-filed his return of income on 30/09/2009 declaring a total income of ₹ 36,55,460 comprising income from salary, income from house property and income from other sources. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) of the Act along with the questionnaire were issued and served on the assessee. It is evident from the record that during the assessment proceedings, the assessee also filed its Audit Report in Form no. 3CB and 3CD and also furnished profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, therefore the payment received by the assessee falls within the ambit of deemed dividend under section 2(22)(e) of the Act. Thus, it was alleged that the amount of ₹ 29,80,340 has escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. The AO further alleged that the issue of deemed dividend was not considered/discussed during the scrutiny assessment proceedings under section 143(3) of the Act which was completed on 29/12/2011. 10. During the hearing, the learned AR placed on record the written submission dated 23/12/2011 filed before the AO in response to the query pertaining to the applicability of the provisions of section 2(22)(e) of the Act to the advances received by the assessee fromM/s Zojwalla Housing and Properties Private Ltd.From the perusal of the aforesaid written submission, we find that the assessee submitted that the amount was received as part consideration towards the sale of commercial premises which was acquired by M/s Zojwalla Housing and Properties Private Ltd. for the proposed corporate office at Kalyan. The assessee further submitted that the amount received was on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only disclosed by the assessee in its financial statement but the written submission regarding the same were also made during the scrutiny assessment proceedings. 13. For initiating the proceeding under section 147 of the Act, the AO is required to have reason to believe that income chargeable to tax has escaped assessment. In the present case, reassessment proceedings are nothing but a mere change of opinion by the AO with regard to material already available on record and considered during the original scrutiny assessment proceedings. That it is settled law that reason to believe can never be the outcome of a change of opinion. It is essential that before any action is taken by the AO he should substantiate his satisfaction. Thus, where the reasons recorded by the AO disclose no more than a mere change of opinion, the reassessment proceedings and assessment order pursuant thereto are liable to be quashed. The existence of a valid reason to believe is a sine qua non to exercise the jurisdiction under Section 147 of the Act. The expression reason to believe imports the cumulative presence of the following four elements viz. some tangible material or materials to establish that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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