9911796707
TMI Blog2025 (3) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... asons and copy of approval made available to assessee in spite of specific requests, presumption would arise adverse to the Revenue on compliance of pre-requisites of sec 147 & 151. The re-assessment order thus framed is liable to be quashed on this ground alone. Jurisdictional issues - On perusal of the reasons recorded, it is apparent that the information referred to in the reasons recorded are generic, non-descript and unintelligible. No meaningful particulars of so-called information received are not mentioned at all. There is no reference to any material which may justify the bonafides of belief held by the AO. The basic particulars of property supposedly invested by the assessee are also not available. The date on which the transaction supposedly occurred for investment in property are also not recorded. In the absence of any basic particulars of specific nature and reliable in character emanating from extract of reasons, the 'reason to belief' claimed by the AO to justify the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. 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 various were found and these ledgers were confronted from Mr. Rajive Sharma who is employee responsible for collection of cash from various investors and he has identified the assessee. Further it is found that the assessee has made investment of Rs. 3,30,00,0000/- and in which he has received interest income of Rs. 34,50,830/-. The sources of the fund invested in Piyush Group is remains unaccounted and treated as income from unexplained sources and also the interest income on which received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and these ledgers were confronted to Shri Rajeev Sharma who was the employee of Piyush Group working for collection of cash from various investors and he has statedly identified the name of the assessee. The AO alleged that source of investment made by the assessee in Piyush Group of Companies remains unexplained and unaccounted together with interest income arose thereon to the assessee. The AO accordingly invoked the provision of s.69A and made additions of INR 3,30,00,000/- towards unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigating 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.CIT vs RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Delhi), I find merit in the ground raised by the appellant that the reasons recorded by AO are in the nature of reasons to suspect as there is no link between information and the escapement of income." 9. The CIT(A) also found that the action of the AO in making addition under s. 69A is also devoid of merits. The CIT(A) thus reversed the additions on merits as well. The relevant operative para dealing with the additions on merits are set out hereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 witness will vitiate the order and the principle laid down in the judgement of Hon'ble Delhi High Court in the case of PCIT Delhi-2 vs Best Infrastructure India Pvt. Ltd (2017) 397 ITR 82, Hon'ble Bombay High Court in the case of Tata Capital Financial Services Ltd. (Supra), I find the addition of Rs. 3,30,00,000/- and Rs. 33,50,830/- not sustainable in the eyes of law. Therefore, the addition of Rs. 3,30,00,000/- as unexplained investment u/s. 69 and Rs. 33,50,830/- as undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Piyush Group of Companies as alleged in the reasons recorded. The Ld. Counsel thus submitted that there is no question of having earned any interest on some non-existent investment. The Ld. Counsel yet again pointed out that so-called material which is allegedly the basis of additions has not been confronted to the assessee and also no cross-examination has been provided of the persons including Shri Rajiv Sharma who has purportedly identified the name of the assessee. The assessee under the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act has to be furnished to the assessee alongwith 'reason to belief'. The statutory scheme encapsulated in the Act provides that re-assessment proceedings cannot be triggered till the AO holds a 'reason to belief' that income which is otherwise chargeable to tax as escaped assessment and reasons recorded by him are placed before the specified authority for grant of approval to commence the process of re-assessment. The aforesaid observation of the Hon'ble High Court as noted in para 13 of the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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