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2020 (11) TMI 562 - AT - Income TaxReopening of assessment u/s 147 - Addition u/s 68 - whether there was “reason to believe” that income has escaped assessment? - HELD THAT:- AO was having definite information about the assessee that there is a transfer of a sum of ₹ 4 crores from the account of Mr. Parminder Rana in the bank account of the assessee. It was STR information. Such bank account from where the money has been transferred in the account of the assessee is also found in suspicious transaction report. Therefore it is apparent that information available with the AO was a specific, definite and correct. More so this information is also not denied by assessee himself. Whether this information has any live nexus with escapement of income by the assessee? - Merely receiving a credit in the bank account cannot per se lead to reason to believe of escapement of income. When AO has categorically stated in the reasons recorded for reopening of the assessment that assessee has not disclosed the long-term capital gain/loss incurred by the assessee on sale of those shares, but it is found that assessee has given categorically each item of sale of shares in his revised return of income it cannot be said that the assessee has not disclosed the capital gain in the revised return of income. Had this revised return been examined by the learned assessing officer, it could have been found that assessee has disclosed long-term capital loss on sale of 40 lakhs shares of Sudarshan oversees Ltd in the month of December, 2008 wherein assessee has shown the long-term capital loss of ₹ 1, 23,30,161. AO could have stated that the long-term capital loss shown by the assessee is bogus but that is not the fact coming out from the reasons recorded. In spite of having a material, AO failed to show live nexus with the escapement of income. Whether the AO has applied his mind to the material available or not? - Reason of escapement of income is based on the fact that assessee was director of Willey Agrotech Ltd (sudarshan Consolidated Ltd) up to December 2008 and thereafter its President is found to be incorrect. Another fact that assessee has not disclosed the transaction of the sale of those shares in its revised return of income is also found to be incorrect. The third presumption that assessee has not filed the balance sheet wherein the holding of the shares is not available is also not supported by the law as there was no requirement of preparing balance sheet by the assessee, but, the holding was shown to have been owned by the assessee from the annual return of the investee company and further with all the assertions made by the assessing officer for reopening of the assessment are not supported by any evidence. We hold that despite having information AO has failed to record a reason that there is an escapement of income and further failed to apply his mind on the facts available in the revised return as well as with respect to the directorship of the assessee in Willey Agrotech Ltd. - there is no ‘reason to believe’ is demonstrated by the learned assessing officer in the reasons recorded for reopening of the assessment - Decided in favour of asseessee. Assessee has explained the source of the source of funds available with buyer which is paid to the assessee, supported by the fact of the existence of the assets, its transfer to the buyer by assessee. In view of this the addition made by the learned assessing officer u/s 68 and sustained by the learned CIT – A is not tenable. - Decided in favour of assessee.
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