9911796707
TMI Blog2024 (11) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the loan given to the assessee and the company has failed to substantiate the sources. Apart from that, this precise issue was raised during the course of the assessment proceedings u/s. 143(3) / 153A and also in response to the query raised on the basis of AIR information. Assessee had submitted all the details of the purchase of the property including the source of investments made and after examining these documents, the assessment was completed and no adverse inference was drawn. There is no tangible material coming on record post completion of assessment that investment has been made by the assessee from some undisclosed sources or the sources were not explained. Accordingly, we hold that the reasons recorded by the AO does not given jurisdiction, reopened the assessment completed u/s. 143(3) / 153A and same deserves to be quashed. Accordingly, the grounds raised by the assessee and cross objection filed by the assessee are allowed. Doubt the source of funds - Even on merits which has been challenged by the department in their grounds of appeal, it is seen that the entire addition in based on the reason that source of investment made in the purchase of property has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - despite the fact that M/s Sneha Ferromet Pvt. Ltd. is a group company of assessee concern which had provided loan to the assessee of Rs. 1,85,00,000/- while balance sheet of this group company has capital of Rs 24,41,033/- only? 3. Where as in the cross objection assessee has challenged the validity of reopening u/s. 147. 4. The brief facts are that the assessee has filed its return of income on 28/09/2011 declaring total income of Rs. 35,00,611/- The same was duly accepted u/s. 143(1). Earlier, a search and seizure action u/s. 132 was conducted on 12/10/2011 of M/s. Pipava Defence and Offshore Engineering Co. in which assessee was also included. Accordingly, assessment was passed u/s. 143(3) r.w.s. 153A vide order dated 26/03/2014 declaring total income at Rs. 49,06,660/- after making certain additions / disallowance. Later on, an information was received from Investigation Wing vide letter dated 16/03/2018 that assessee had purchased property for Rs. 3,44,27,000/- in F.Y.2010-11 and had shown gross total income of Rs. 29,15,842/- in his return of income. Further, there is no nexus between the income of the assessee with the amount of property purchased and the source of funds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at during the course of original assessment proceedings, all the details of immovable properties were filed and were examined. Assessee had submitted specific details which were called for re-conciliation of entries in light of AIR information alongwith return of income; copy of purchase agreement, bank statements highlighting the source of purchase of property made during the year. Assessee had already responded and filed the detailed reply vide letter dated 12/03/2014 wherein all the necessary purchase agreement alongwith ledger account, bank statement etc. were filed for the property (i.e. residential Flat Neel Kamal and land at Alibaug Zirad). Further, during the course of assessment proceedings u/s. 153A, ld. AO had again specifically examined the claim of the assessee for purchase of whole of property and the same was duly accepted after considering the explanations. Therefore, reopening the case once again u/s. 148A is bad in law and the amounts to change of opinion . Alongwith the said objection assessee had filed all the details filed earlier during the course of assessment proceedings and in response to various queries. However, ld. AO rejected the said objections after c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee about the nature and source thereof any sum credited in the books of accounts then the same is chargeable to tax as income of the assessee. Considering the above facts and circumstances of the case, it is held that the assessee failed to prove the creditworthiness of person from whom loan and advances was provided. Thus, the source of income of the property purchased amounting to Rs 3,44,00,000/- remains unexplained and found suspicious and the same is being added to the total income for the year under consideration. Penalty u/s 271(1)(c) of the Act, 1961 is being initiated for concealment of income. 7. Before the ld. CIT (A) assessee has challenged the reopening u/s. 147. However, the ld. CIT(A) dealt the issue on merits. In so far as addition made by the ld. AO, ld. CIT(A) after considering the entire material placed on record have deleted the addition after observing as under:- 7.3 In this regard, it is observed that the identity of the lender is proved by the ITR. Further, the genuineness of the transactions can also be safely concluded from the confirmations filed and the fact that the transactions have been done through the banking channels, duly recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding source from Sneha Ferromet Pvt. Ltd., he submitted that assessee is a Director of the said company and assessee has given the bank statement, confirmation of account and the balance sheet to prove the source of the funds for giving the loan. Thus, the source of purchase of the property could not have been disputed. Accordingly, the ld. CIT(A) has rightly deleted the said addition. 11. We have heard both the parties and also perused the relevant material placed on record. First of all it is seen that ld. AO has reopened the case completed u/s. 143(3)/153A solely based on information from the Investigation Wing which too was based on analysis of the value of the property, gross total income shown by the assessee and presumed incapacity of the company M/s. Sneha Ferromet Pvt. Ltd who has provided such loan on the premise that the income of such company was meager. There was neither any inquiry by the Investigation Wing nor by AO from the Company. There is no application of mind by the AO on the information received to verify the records whether assessee had shown the investment in this year or the earlier year and what was the actual investment made by the assessee because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebited in the books of accounts and not the market value of the property of which has been added i.e. Rs. 3,44,27,000/-. Apart from that, in one of the property, major investment was done in the earlier financial year and not in this year. AO has not even examined the records filed before him while making the addition, because once the major investment has been made in the earlier year then, how the same can be added in this year? In so far as source of funds are concerned, the assessee had explained that same was trough loan taken from a company, M/s. Sneha Ferromet Pvt. Ltd. And in support assessee filed the confirmation, bank statement and return of income of the company and from the perusal of the bank statement, it is seen that the funds have come from clearing and has been given on various dates to the assessee. No questions have been asked about the source of the funds from the company by the AO. Once company had shown the source of giving loan from various transactions reflected in the bank statement and has given the details, we do not find any reason to doubt the source of funds. Apart from that, in the balance sheet, the company had shown reserves and surplus of Rs. 224. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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