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2017 (8) TMI 370 - AT - Income TaxReopening of assessment - Addition u/s 68 - providing bogus entries - receipt of loan / advance - non charging of interest by the lender and cash deposit in the account of the lender immediately before the advancing the loan - Held that:- Necessity of proving the case to the hilt,as required in criminal proceedings,is not required to determine the tax liability of an assessee. AO's are entitled to take notice of human behavior and surrounding circumstances and draw reasonable inferences in matters where the transactions entered in to by an assessee reveal that course of events of such a transaction is not as per the prevailing market practice or as per that particular business Considering the information received from Calcutta about Basant any prudent person will arrive at prima facie belief that the assessee had not disclosed its total income for the year under consideration.The reasons recorded by the AO clearly prove application of mind by him. Not only reasons were supplied to the assessee,the AO had also dealt with objections raised by it. There is no lacunae in the procedure followed by the AO. In this matter intimation was issued u/s.143(1)so,there is no question of formation of any opinion by the AO or change of opinion. The prima facie fact of income escaping assessment was there,so,in our opinion the FAA has rightly upheld the re-opening of the assessment.Juridictional issue raised by the assessee (GOA-1)is decided against it. FAA has given a categorical finding of fact that ₹ 15 lakhs(approximately)were deposited in the bank account of the lender before it issued cheques to the assessee.This fact cannot be brushed aside lightly especially when it is not brought on record that as to a how a Kolkata party agreed to advance loans to the assessee without help of any broker. It is not the case of the assessee that the creditor is also in the same line of business or that their business relationship is very old.Soundness of balance sheet of the lender only proves capacity of the lender but not the genuineness of the transaction. No authority is required to hold that bank transaction do not prove genuineness of the loans. No agreement was produced before the departmental authorities or us that could justify non charging of interest by the lender. There is prima facie evidence against the assessee which it had failed to rebut and being un-rebutted the departmental authorities have used the evidences against the assessees by holding that genuineness of the transaction was not proved. Assessee is trying to convert no proof in to good proof and here is an inherent weakness in the explanation filed by the assessee. So,we hold that the explanation offered by the assessee is unconvincing and deserves to be rejected - Decide against assessee.
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