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2021 (10) TMI 519 - Income Tax
Reopening of assessment u/s 147 - eligibility of reasons to believe - no assessment order passed under Section 143(3) - disallowance u/s 40-A(3) - HELD THAT:- No assessment order came to be passed in the case of assessee under Section 143(3) - Thus, no opinion had been formed by the assessing authority with respect to the matters considered while recording the reasons to believe that income had escaped the assessment at the hands of the assessee. Those reasons dated 30.03.2005 are confined to cash expenditure contrary to the mandate of Section 40-A(3) - in absence of any opinion having been formed by the AO may not be right in asserting that reasons to believe could have been recorded only on the strength of any fresh material that may have come into existence or that may have come to the knowledge of the AO after the assessment order came to be passed. That principle would remain applicable only to cases where an opinion had been formed on the subject matter considered in the reassessment proceeding, in an assessment order passed under Section 143(3).
Addition u/s 40A(3) - Only a statutory presumption exists in favour of the revenue to disallow such expenditure as may have been made in cash by making payments in excess of ₹ 20,000/- during the previous year, to any persons. The presumption is rebuttal.
We find that the affidavits filed by the assessee during the assessment proceeding were not rebutted by the revenue. Those affidavits contain clear recital that the purchasers insisted for cash payment. Their identity is certainly not in doubt. There is no finding to that effect in any of the orders leading to this appeal. The sale deeds are also admitted to be registered documents and there is no other material as may be considered adverse to the claim set up by the assessee. In view of the undisputed facts of the present case we find no good ground to distinguish the law laid down by this Court in Commissioner of Income Tax Vs. Chaudhary And Co. [1995 (9) TMI 53 - ALLAHABAD HIGH COURT] that has held the field for more than 26 years now. - Decided in favour of assessee.