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2022 (12) TMI 495 - AT - Income TaxValidity of the reopening of the assessment u/s 147 - cash payment against the purchase of the flat -whether the reasons to believe formed by the AO are within the provisions of law or the AO without having proper reasons to believe is trying to reassess the income in the garb of income escaping assessment? - HELD THAT:- In the case on hand, the AO while recording the reasons has clearly recorded the fact that there was a search conducted at the premises of the builder “Dharmdev Infrastructure Ltd” wherefrom the information was received that such builder was found in receipt of on money from various customers. Therefore, such builder has also accepted to have received a sum of ₹85.45 crores as on money before the settlement commission. In the petition filed before the settlement commission, it was also disclosed a sum of Rs. 4 lakhs received from the assessee against the purchase of flat. Based on this information the proceedings under section 147 of the Act were initiated. In our considered view, such information was tangible material in the sense that it was received from the outside party and that too based on search and consequently disclosure was made before the settlement commission. Thus, to our mind there was sufficient material available with the AO to draw an inference that the income of the assessee has escaped assessment. At this juncture, the AO while initiating the proceedings under section 147 has to make a prima facie opinion about the escapement of income which must be based on some tangible material. As such the AO is not expected to draw a conclusion that the income of the assessee has escaped assessment while recording the reasons to believe. In holding so, we draw support and guidance from the judgement of Zaveri & Company (P.) Ltd.[2021 (7) TMI 312 - GUJARAT HIGH COURT] Thus we are of the view that there was no illegality in the initiation of the proceedings under section 147 of the Act and therefore the issue raised by the assessee on technical ground fails. Hence, the ground of appeal of the assessee is hereby dismissed. Addition of cash payment against the purchase of flat - Relevance of document found from the premises of 3rd party - whether document found from the premises of 3rd party and the disclosure made by such 3rd party before the settlement commission can be used against the assessee without affording the opportunity of cross-examination? - HELD THAT:- As revealed that the opportunity of cross-examination was sine quo non before making any addition to the total income of the assessee based on the 3rd party information especially in the circumstances when the assessee time and again has demanded for such cross examination opportunity. Thus, in the absence of such cross-examination opportunity, to our understanding the addition is not sustainable despite the fact that there are material evidence available before the AO which are against the assessee - we set aside 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 assessee is allowed.
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