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TMI Blog2025 (1) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... belief towards alleged escapement. Mere identification of transactions fueling in high risk transaction category ipso facto would not provide cause of action to invoke the drastic power of reopening of a concluded assessment. Requirement of main provision of section 147 is thus apparently not met. AO must have reason to believe that chargeable income has escaped assessment. The expression reason to believe is the most valuable safeguard available to prevent arbitrary exercise of jurisdiction. It is trite that the reason to suspect cannot be equated with expression reason to believe . The reasons recorded in the instant case, gives an infallible impression that it is a case of reason to suspect on so-called risk transactions categorised by the automated system of the Department. rather than reason to believe . It is well-settled that notice of re-opening can be supported by the Revenue within the confines of the reasons recorded by the AO alone. AO cannot supplement the reasons at a later stage. Other principle which is equally well-settled and which applies in the present case is that re-opening of assessment would not be permitted for a fishing or a roving inquiry as a part of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggregate addition of Rs. 3,80,00,000/- on account of unsecured loan by treating it as alleged unexplained credits u/s 68, is bad in law and against the facts and circumstances of the case. 5. That having regard to the facts and circumstances of the case. Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs. 1,50,00,000/- on account of investment in agricultural land by treating it as alleged unexplained investment u/s 69 and that too by recording incorrect facts and findings and without considering the submissions filed by the assessee and without following the principles of natural justice and without providing the entire adverse material on record and without providing the opportunity of cross examination. 6. That in any case and in any view of the matter, action of Ld.CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs. 1,50,00,000/- on account of investment in agricultural land by treating it as alleged unexplained investment u/s 69, is bad in law and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case. Ld. CIT(A) ought to have quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial transactions amounting to INR 50,00,000/-. It was also alleged in the purported reasons that the assessee has not truly and correctly disclosed the quantum of transaction done during the year under consideration. For coming to such conclusion, no reference of any material has been made. It is not known as to which financial transactions have not been disclosed and what is the nature of deficiency in the manner of disclosure. (ii) The AO for the purposes of formation of belief towards escapement states that the assessee has taken unsecured loans of INR 50,00,000/- during the previous year relevant to AY 2013-14 whereas documentary evidences substantiating creditworthiness of the lender(s) were not produced. For assailing such observations in the reasons recorded, the Ld. Counsel for the assessee pointed out that neither the name of the parties from whom the aforesaid unsecured loans of INR 50,00,000/- have been received nor the allegation of lack of substantiation of creditworthiness of the lender is based on any particulars or material set out in the reasons. (iii) The assessee has filed the return of income under s. 139(1) of the Act and the tax audit report showing the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntary evidences. 8.3. The Ld. Counsel for the assessee also assailed the additions under s. 69 of the Act towards unexplained investment in three pieces of land. It was submitted that the loans taken have been utilized for investment in agricultural land and the action of the Revenue to treat loan as well as corresponding investment, both as unexplained income, has apparently resulted in double jeopardy to the assessee. It was pointed out that the assessee jointly purchased the land parcels with other co-owners and the share of money from the assessee has been transferred to the persons named in the agreement as submitted in para 6 of the first appellate order. 8.4. The Ld. Counsel for the assessee further pointed out that the Ld.CIT(A) by a pedantic and non-speaking order discredited the version of the assessee and adjudicated the issue against the assessee on all counts. 9. Per contra, the Ld. Sr. DR for the Revenue relied upon the assessment order and the first appellate order. 10. We have heard both the sides at length and also perused the re-assessment order and first appellate order in question. The material referred to and relied upon and the case laws cited have also been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n analyzed and I have framed my opinion after due application of all the facts and mind. 5. Finding of the AO During the year under consideration, assessee had undertaken following financial transactions: Sr.No. Type of transactions Amount 1. The assessee has taken unsecured loans of Rs. 50,00,000/- during the previous year relevant to A.Y. 2013-14 whereas, documentary evidences substantiating creditworthiness of the lender were not produced. Rs.50,00,000/- Total income escaping assessment Rs.50,00,000/- Thus, on perusal of the details available on record, it is noticed that during the previous year relevant to the assessment year under consideration, the assessee has undertaken financial transactions much beyond the taxable limit. However, the source of entering such huge transactions is not conclusively proved from the details and data collected during the course of inquiry. I have verified all the details available on record and I am conclusively satisfied that the assessee has not disclosed truly and correctly all the relevant particulars of the above transactions and therefore the income to the above extent has escaped assessment. 6. Basis of forming reason to believe and deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the solitary cause for formation of belief is that the assessee has taken unsecured loans of INR 50,00,000/- whereas documentary evidences substantiating the creditworthiness of the lender(s) were not produced. The AO thus alleged that the assessee has understated income in its return of income to the extent of INR 50,00,000/-. 14. For an objective understanding, the body of reasons recorded has been divided by the AO in seven parts. 14.1. First part is general and introductory in nature. 14.2. In the second part of the reasons recorded, the AO made reference to the information received in category of high risk transactions whereby the AO noticed that the assessee has entered into financial transactions referred to in para 5 of the said reasons. 14.3. In the third part, the AO claims to have analysed the information collected/received and repeats that the assessee has entered into financial transactions exceeding the taxable limits. However, despite making these financial transactions, the assessee has not truly and correctly disclosed the quantum of transactions done during the year. 14.4. In the fourth part of reasons under challenge, the AO observed that certain verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s towards escapement. The exact name of party, date of transactions with reference to which, lack of substantiation of creditworthiness of the unsecured loans of INR 50,00,000/- is alleged, is entirely unknown. The particulars of unsecured loans under consideration itself are conspicuously absent. The nature of inquiry carried out for formation of belief if any, is also in totally unknown territory. The reasons on record do not indicate any specific material against the assessee to dislodge the bonafides set up by the assessee while making disclosures in the return of income as required. Needless to say, the assessee is not obliged to provide the requisite details towards creditworthiness of the lenders while filing the return of income. Thus, there was no occasion for the assessee to establish creditworthiness. Besides, it is impossible task for an assessee to respond to such allegations in the absence of basic detail of name of lenders and the date of transactions. Furthermore, the AO solely relied on some unspecified and unintelligible information in the category of high risk transactions of unsecured loans. The allegations towards escapement without giving specific particulars ..... 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