9911796707
TMI Blog2025 (3) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... is an individual, filed return of income for AY 2016-17 in question declaring total income of INR 7,59,350/-. The return was processed under s. 143(1) of the Act. Thereafter based on certain information received by AO from ADIT (Investigation)-II, Faridabad, as per letter dated 21.05.2020 the case of the assessee was re-opened by issuance of notice dated 31.03.2021 under s. 148 of the Act. In response to the notice issued under s. 148 of the Act, the assessee filed return of income on 14.04.2021. Notices under s. 143(2) & 142(1) of the Act were issued. As per letter dated 20.12.2021, the assessee asked for the reasons for re-opening the reassessment. 4. The AO vide letter dated 27.12.2021 communicated the reasons extracted hereunder:- "As per information from the Assistant Director of Income Tax (Inv.)-II, Faridabad vide letter dated 21-05-2020. It has been found that there are many investors who has invested in Piyush Group for purchase of flats. The assessee is one of the investors who has made investment of Rs. 3,30,00,000/- and in which he has received interest income to the tune of Rs. 34,50,830/- during the financial year 2014-15. During investigation, the ledgers of vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval memo under s. 151 and the so-called material gathered which prompted in formation of 'belief' towards escapement of income was not provided to the assessee. The AO placed reliance upon the judgement referred in the case of Raymond Woolen Mills vs ITO & Others (1999) 236 ITR 34 for the proposition that at the stage of initiation of the re-assessment proceedings, as long as the AO has prima-facie some material to justify the reopening, the sufficiency or correctness of the material is not to be seen. The AO thereafter proceeded to make re-assessment under s. 147 r.w.s 148 of the Act. The AO inter-alia observed that Police Commissioner, Faridabad has observed that the criminal cases alleging cheating of investor have been registered against the Piyush Group of Companies and also added that during the investigation, it has been found that there are many investors who have invested in Piyush Group for purchase of flats. The name of the assessee was among the investors who statedly made investment of INR 3,30,00,000/- for which the assessee has also received interest to the tune of INR 34,50,830/- during the year under consideration. During investigation, various ledgers were found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d statement of Mr. Rajeev Sharma, his identity etc. has not been given in the reasons to believe and assessment order. Only mentioning the identity that Mr. Rajeev Sharma, whose statement was recorded was as employee of the Piyush Group does not serve the purpose of law. The moot question remain unanswered are, whether Mr. Sharma was authorised by Piyush Group to give a statement on behalf of their company? Whether Mr. Sharma was working on capacity competent enough to give statement before Investigating Officer on behalf of the company? What was his official capacity? What was his personal details? What were the name of the Projects or Companies of the Piyush Group in which the appellant money were invested? Was Mr. Rajeev Sharma, an employee of those Companies? All these questions remain unanswered. Further, the AO has made no effort to seek answers to these questions by conducting independent enquiry. Further not providing the copy of so called materials used such as copy of alleged ledger account, and statement of Mr. Rajeev Sharma to appellant has made action of the AO more suspicious. Further more considering the law laid down by Hon'ble Delhi High Court in the case Pr.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying to have entered any such transactions with the Piyush Group. The appellant has every right to satisfy himself about veracity of the person who has given statement against him and the credibility and veracity of the material which is being used against him. The action of the AO is clearly contrary to the principle of natural justice and fair play. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE[2015] 62 taxmann.com 3 has contented that not allowing the assessee to cross-examine the witness and placing reliance on the statement of the witness will vitiate the order. The action of the AO in not providing the documents has vitiated the initiation of reassessment proceedings as per the decision of Hon'ble Delhi High Court in the case of Sabh Infrastructure Ltd. V. ACIT [2017] 3981TR198 (Delhi). So the addition of the AO does not sustain on the principle of natural justice and fair play. Hence, in view of the judgment of the Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3, where it has been held that not allowing the assessee to cross examine the witness and placing reliance on the statement of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not in a position to understand the nuances of allegation against the assessee of enormous nature and suitably defend its case. The Ld. Counsel referred to the judgement of the Co-ordinate Bench of the Tribunal in the case of Marut Nandan & Company vs ITO in ITA No.4751/Del/2024 order dated 19.02.2025 to buttress the view expressed by the CIT(A). The Ld. Counsel also submitted that, without prejudice to the serious objection that approval memo under s. 151 of the Act has not been provided to the assessee despite repeated requests, from the facts discernible from records, the approval was obtained from Pr.CIT whereas the Competent Authority to grant approval under s. 151 of the Act in the instant case was 'JCIT' in view of the judgement rendered in the case of UOI vs Rajiv Bansal 469 ITR 46 (SC). The Ld. Counsel thus submitted that the action of the CIT(A) both on point of jurisdiction as well as on merits of additions against the Revenue cannot be faulted. He thus submitted that no interference with the order of the CIT(A) is called for. 13. On being inquired by the Bench, the Ld. Counsel specifically denied to have made any such investment towards pursuance of property in Piy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermissible to the Revenue without observing the principles of natural justice and confronting the relevant material to the assessee in this regard with a view to shift the burden on the assessee. 16. The legal propriety of re-assessment framed under s. 147 of the Act in gross non-compliance of mandatory legal formality was under challenge before the CIT(A). The assessee contended before the CIT(A) that despite specific and repeated requests seeking exact copy of reasons recorded under s. 148(2), copy of sanction accorded under s. 151, copy of material collected to demonstrate alleged investment in Piyush Group of Companies, the AO has proceeded on merits without providing such basic documents. The objection of the assessee has not been dealt with on such vital points which resulted in disposal of objection an empty formalty. As per the landmark judgement in the case of GKN Driveshafts (India) Ltd. vs ITO 259 ITR 19 (SC) the AO is mandatorily required to provide the copy of reasons recorded. The Hon'ble Delhi High Court in the case of Tia Enterprises P.Ltd. vs ITO (2024) 468 ITR 5 (Delhi) inter-alia observed that approval granted by statutory authority under the provision of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assumption of jurisdiction is nothing but 'reason to suspect' as rightly held by the CIT(A). The reasons recorded apparently smacks of pedantic belief without disclosing any live link or close nexus between material, if any and formation of belief. The threshold for meeting pre-requisites for re-opening the assessment are sorely missing in the instant case. We thus see no difficulty in endorsing the conclusion drawn by the CIT(A) that the re-opening action was without jurisdiction and thus impugned re-assessment order framed is outside the legal sanction and is bad in law. 19. We also find merit in the plea raised on behalf of the assessee that in the absence of even basic material in possession of AO and confronted to the assessee, the onus continues to be on the Revenue to demonstrate the alleged presence of unexplained investment which was not discharged at all. The CIT(A) in our view has also addressed the issue on merits correctly in accordance with law. Without reiterating the process of reasoning, we are of the view that no interference with the order of CIT(A) is called for. 20. Having regard to the view expressed, we do not consider it necessary to look into other face ..... X X X X Extracts X X X X X X X X Extracts X X X X
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