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2024 (5) TMI 950 - ITAT AHMEDABADValidity of reassessment proceedings on borrowed satisfaction - allegation of non independent application of mind - As per AO assessee had entered into high value financial transactions facilitating bogus accommodation entries - Addition u/s 68 for unexplained cash credit - AO relied upon investigation report of Banka Group supplied by the Investigation Wing of the Income Tax Department - HELD THAT:- AO has failed to verify the transaction recorded by the Investigation Wing which are double entries made for the same transactions of Rs. 20,00,056/- and Rs. 30,00,056/-. Though the A.O. records the unsecured loan of Rs. 50,00,000/- received by the assessee from M/s. KCPL, however upheld the double entry addition of Rs. 1,00,00,224/ as the undisclosed income of the assessee. A.O. failed to consider the repayment of above loan by the assessee during the assessment year 2018-19 which was not disputed, while framing the assessment order for the assessment year 2018-19 by the very same AO. Thus in our considered view, A.O. has simply accepted the information given by DGIT which is reproduced in the reasons recorded, he has not formulated “his own reason to belief” that any income chargeable to tax has escaped assessment. A.O. ought to have seen the double entry of the loan transactions with bank entry details and then formulated “his own reason to belief” but simply followed the information given by DGIT, which is nothing but “borrowed satisfaction” and is against the provision of Section 147 of the Act. Therefore the same is liable to be quashed. As decided in Varshaben Sanatbhai Patgel [2015 (11) TMI 934 - GUJARAT HIGH COURT] held that in the absence of any details available on record, AO could not initiate assessment proceedings merely on the basis of information supplied by DGIT (Inv.) that assessee had made certain bogus purchases. Thus reopening of assessment itself is bad in law for having not recorded independent “reason to believe” that income has escaped assessment. Decided in favour of assessee.
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