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2024 (3) TMI 1071 - AT - Income TaxReopening of assessment u/s 147 - AO initiated reassessment proceedings based on the information received from Investigation Wing that the Assessee was involved in making cash payment - HELD THAT:- Information on basis of which AO had initiated proceedings u/s 147 of the Act was certain and it could be construed to be sufficient and relevant material on basis of which a reasonable person could have formed a belief that income had escaped assessment. Thus, there was reason to believe that income of the assessee company to the extent of Rs. 6.61 Crores had escaped assessment on account of failure on the part of the assessee to disclose fully and truly all the material facts/particulars of its income necessary for its assessment. Therefore, the reassessment proceedings initiated by the Assessing Officer were within jurisdiction and valid in the eyes of law in as much as reasons recorded by the Assessing Officer satisfied the requirement of section 147 It is well settled law that, for an assessment to be re-opened what is required that the AO should have reason to believe that the income of assessee had escaped assessment and the said belief should be an honest and reasonable person based on reasonable grounds. The correctness of the materials/reason to believe is not a matter to be looked into at the initial state. Therefore, we find no merit in the ground No.1 of the assessee. Ground No.1 of the assessee is dismissed. Addition u/s 69 - addition based on the estimation of the cost of acquisition of the property - cash component of Rs. 5.41 Crores was paid over and above the registered value - addition based on statement of witness - HELD THAT:- In the present case, the addition has been made by the AO ignoring the documentary evidence in the form of registered sale deed which being a best evidence for finding the actual sale value and in the absence of any other material to show the transactions involved in cash outside the sale consideration mentioned in the sale deed and in the absence of any corroborative documentary or credible oral evidence, the AO should not have made addition. The entire addition made by the AO based on the statements of the witnesses which have been retracted thereafter and no opportunity of cross examination was granted by the AO and in the absence of any corroborative material on record, the AO could not have made any addition and the Ld. CIT(A) should have deleted the addition. Thus, in our considered opinion the CIT(A) committed error in upholding the addition made by the AO - Ground No. 2 of the Assessee allowed.
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