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2020 (11) TMI 775 - AT - Income TaxReopening of assessment u/s 147 - Notice solely on the basis of the information received from the Investigation Department - non independent application of mind - HELD THAT:- The original return of income filed by the assessee on 17.10.2007 was processed u/s 143(1) of the Act. On the basis of information received from the Director General of Income Tax (Investigation) that the assessee had obtained accommodation entries controlled and managed by Shri Pravin Kumar Jain, whose statement was recorded u/s 132(4) during the course of search on 01.10.2013, wherein he admitted that he indulged in providing accommodation entries, the AO recorded the reasons and then issued notice u/s 148 of the Act. A perusal of para 6 of the assessment order clearly indicates “that the assessee invested ₹ 15,00,000/- in M/s Javda India Impex Ltd.” is a minor error in view of the fact that the original return was processed u/s 143(1) of the Act. The Hon’ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007 (5) TMI 197 - SUPREME COURT] analyzed the distinction between the acceptance of a return u/s 143(1) and an assessment which is framed u/s 143(3) of the Act. In the former case, the AO would have much wider latitude to reopen the assessment. Intimation u/s 143(1) is not an assessment. Thus in the instant case, the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1). Addition made on account of share application money u/s 68 - HELD THAT:- In the instant case, the onus clearly shifted to the AO. There was enough material before the AO in the shape of loan confirmation, ledger account, bank account statement to make further inquiry/verification in the above matter. In the instant case, the AO has not done even elementary/ preliminary inquiry to verify the genuineness of the transaction. The addition made by him is based on surmises and conjectures. The ratio laid down by the Hon’ble Bombay High Court in the case of Orchid Industries Pvt. Ltd. [2017 (7) TMI 613 - BOMBAY HIGH COURT] is squarely applicable here. Respectfully following the same, we delete the addition. Disallowance against cost of purchases and expenses - Addition from the purchase and other expenses - books of accounts were not rejected by the AO before making such ad-hoc disallowance - HELD THAT:- In the instant case, as the disallowance made by the AO is on ad-hoc basis without rejecting the books of accounts maintained by the assessee, we delete the addition of ₹ 5,00,000/- by following the ratio laid down in R.G. Buildwell Engineers Ltd. [2018 (10) TMI 252 - SC ORDER] - 3rd ground of appeal is allowed.
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