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2023 (2) TMI 840 - AT - Income TaxReopening of assessment u/s 147 - ‘loan given” was believed to be undisclosed income of assessee - penalty u/s 271D and 271E - HELD THAT:- As both sides agrees that on the basis of “LPS-1, Page No. 21 to 23”, the authorities made an “original-conclusion” that the assessee had given loan to AIDPL, but at a later stage it was observed that AIDPL has given loan to the assessee. They further agree that the re-assessment proceedings as well penalty-proceedings u/s 271D / 271E were initiated on the basis of “original conclusion”. We observe that the “original-conclusion” was such that the assessee had given loan to AIDPL but the “reversed-conclusion” was just opposite i.e. AIDPL had given loan to assessee. Now, if we give weightage to “original- conclusion”, which could not be said to faulty as per understanding gained by authorities at that time, the result would be such that the order of reassessment would be valid but the penalty-proceeding would be invalid because penalty u/s 271D / 271E are not attracted in case of “loan given”. As against this, if we give weightage to “reversed-conclusion” i.e. the AIDPL has given loan to assessee, the consequences would be just opposite i.e. the re-assessment proceeding would be invalid but the penalty-proceeding shall be valid. Thus, if one proceeding is saved, other has to be quashed. Hence we have given our anxious thought in the matter. After a mindful consideration, we are of the view that the “original-conclusion” was not faulty at the time of initiating re-assessment / passing of order of reassessment / launching of penalty-proceedings. It is a subsequent matter that the dust was clear about the nature of transaction and “original-conclusion” was reversed. Hence, it would be apt to give preference to the “original-conclusion” which has set the proceedings in motion. Since the “original-conclusion” was to the effect that the assessee had given loan to AIDPL, the fate of present appeals / cross-objection, in our considered view, would be as under: (i) The order of re-assessment shall be valid for the reason that ‘loan given” was believed to be undisclosed income of assessee. Accordingly, we upheld the validity of reassessment and dismiss the Appeal of assessee. (ii) The order of penalty u/s 271D and 271E shall be invalid for the reason that “loan given” neither attracts section 271D nor section 271E. We, therefore, quash the penalty-order and allow the Cross- Objection of assessee.
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