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2022 (2) TMI 1297 - AT - Income TaxAddition u/s 68 - shares application money received - HELD THAT:- As the entire basis of allegation by the AO that the credit worthiness of the party i.e. share application money was not proved does not hold well in view of above discussion. As the assessee was able to establish the identity of the share applicant by furnishing PAN and company master data and proving the genuineness of transaction by adducing bank statements and also explained the sources of fund in the hands of the party, no addition is warranted. We do not find any reason to interfere in the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is dismissed. Reopening of assessment u/s 147 - Suspicion v/s reason to believe - Necessity of independent application of mind by AO - HELD THAT:- The proceedings under section 147 of the Act can be initiated if the assessing officer has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year. The law does not mandate that an Assessing Officer should act on the dictate of any other authority ipso facto for initiating the proceedings under section 148 of the Act. However, if it’s done so by the AO, then it would tantamount to "borrowed satisfaction" which cannot be the basis for issue of notice u/s 148 of the Act. Thus, it is the satisfaction of the AO having jurisdiction over the assessee for initiating the proceedings under section 148 of the Act after application of mind on the information received from outside, indicating about the escapement of income. In this case, the information has been received from the Investigation Wing Ahmedabad that the assessee has received credit in the Bank account from M/s. Rachna Finlease Pvt. Ltd. - M/s.Rachna Finlease Pvt. Ltd. is a non-filer of return of Income Tax and the enquiry conducted by the Investigation wing has made it clear that the creditworthiness of M/s. Rachna Finlease Pvt. Ltd. is not proved. Therefore the credit of Rs. 18,42,50,000/- received by M/s. Ambe Tradecorp Pvt. Ltd., is unexplained cash credits. From the above, it is revealed that the proceedings under section 147 of the Act have been initiated on the information received from the investigation wing Ahmedabad that the assessee has received credit in the bank account from M/s Rachna Finlease private Ltd which is not filing income tax return. Whether the proceedings under section 147 of the Act can be initiated merely on the basis of the information received from the investigation wing ? - To our understanding, merely transaction carried out through banking channel cannot give reasons to form believe that amount involved in such transaction represent income of the assessee which has escaped assessment in the circumstances when the payer is not filing return of income. That information can trigger to be used to initiate the proceedings in the case of the M/s Rachna Finlease Private Ltd being non-filer of income tax return. On the contrary, the assessee has filed its return of income disclosing the transaction for receiving the amount from M/s Rachna Finlease Private Ltd in its books of accounts. Thus the mere information that certain amount received by assessee was not giving any rise to form believe that the income has escaped assessment. Furthermore, the AO has not carried out any investigation to reach to the prima facie conclusion that amount credited represent income which has escaped assessment. As such the AO, has reacted based on the information received from the investigation wing without the application of mind. We are of the opinion that proceedings under section 147 of the Act has been initiated by the AO without the application of mind and therefore the proceedings are void ab initio. Accordingly, we allow the technical ground raised by the assessee.
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