TMI Blog1980 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions were bogus. The examination of this creditor on 2nd Feb., 1970 and 16th Feb., 1971 was recorded in which he has given a list of bogus transaction. The ITO noted that the creditor had confessed on solemn affirmation that the said creditor had bogus havala transaction with the assessee and no loan was actually given by this party to the assessee, the party concerned had only lent his name and accommodated the assessee with bogus entries in his books thus allowing the assessee to bring in concealed profits in the form of loan from the party concerned. On receipt of such information through the departmental channel, the ITO wrote to the assessee intimating him that Ranga Beharilal Atmaram Goel carrying on business under the name and style of M/s Ramgopal Nand Kishore and various other names including M/s Lachminarayan Atmaram, had confessed that he had credited bogus loans in his books of account of various parties including the assessee firm and that on perusal of records he noticed the credit to the extent of Rs. 50,000 appeared in the name of M/s Lachminarayan Atmaram. Accordingly, before he took further action, the ITO sought for explanation on this point from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing a prima facie belief that income had escaped assessment owing to the failure of the assessee to disclose all material particulars at the time of the original assessment and that this decision was binding on him. The CIT (A) had also referred to the decision of the Hon'ble Calcutta High Court in the case of ITO Ors. vs. Mahadeo Lal Tulsian Ors. (1977) 110 ITR 786 (Cal) in which the action of the ITO in similar circumstances was upheld. The CIT (A) also referred to another decision of the Hon'ble Supreme Court in the case of CIT vs. Gillanders Arbuthonot 1973 CTR (SC) 136 : (1973) 87 ITR 407 (SC) in which the principle that the disclosure of all material facts at the time of the original assessment must not only be full but also be true, was affirmed. The CIT (A) having regard to the facts of the case as mentioned by him in the appellate order came to the conclusion that in the present case, on the basis of the facts stated by him, it was clear that the assessee's disclosure of all material facts at the time of the original assessment was not true, since he did not disclose that the transaction was bogus. Thus, the action of the ITO in reopening the assessment as mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the departmental channel like the CIT, the Asstt. Director of Inspection (Intelligence) to the present assessing ITO. It is submitted that the ITO has acted on the opinion of the higher authorities that action under s. 147(a) should be taken in the instant case. It is submitted that it was the higher authorities, who had formed the opinion and the belief for reopening of the assessment under s. 147(a) and not by the present ITO. It is also urged that there was no nexus at all between the confession of Rangabeharilal Atmaram Goel with the credits appearing in the books of account of the assessee and that even if there were any such nexus it was too remote. It is contended that in fact the ITO reopened the original assessment after making enquiries and after he was satisfied, the assessment was completed originally under s. 143(3), and that there was no new fact before the present assessing ITO for taking action under s. 147(a). It is pointed out that copies of accounts, confirmation letters etc. were furnished at the time of original assessment and at the material time, the credit was genuine. It is urged that the subsequent confession of Rangabeharilal Atmaram Goel some time in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure. In the instant case, it is urged that on receipt of the information through the departmental channel the ITO suspected the untruthful disclosure as made by the assessee during the original proceedings and that was why the ITO in the instant case asked the assessee to explain the alleged cash credits vide his letter dt. 24th April, 1972 before action was taken by him for initiation of proceeding under s. 147(a). It is claimed that action under s. 147(a) cannot be taken for launching an enquiry, relying on the decision of the Hon'ble Supreme Court in S.P. Chaliha's case (1971) 79 ITR 603 (SC). It is also the submission of the ld. counsel for the assessee that there was no rational connection or a direct nexus or live-link between the material coming to the notice of the ITO and the information or his belief that there has been escapement of income of the assessee on account of failure of the assessee to disclose fully and truly all the material facts. It is also admitted that there was nothing to show what the confession of Rangabeharilal Atma Ram Goel mentioned above was connected with the loan to the assessee. Under the circumstances it is urged therefore, that the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve finding as to whether the loans were genuine or not, he is merely to form a reasonable belief that they were not genuine. It is vehemently urged on behalf of the Revenue that the CIT(A) had considered the different aspects of the matter and has come to the correct and proper conclusion and as such his order in the present appeal may be sustained. 8. We have taken into account the contentions and submissions of both the sides for our careful consideration. Having regard to the facts and circumstances of the case we find that the present ITO has initiated the proceedings under s. 147(a) on receipt of information regarding the confession of Rangabeharilal Atmaram Goel made at Bombay copies of which were sent to him through the departmental channel. The present assessing ITO did not examine the creditor which in the present case is M/s Lachminarayan Atmaram of P-36, Indian Exchange Place, Calcutta-1. But the confession in question was made by one Shri Rangabeharilal Atmaram Goel of Bombay before the assessing ITO at Bombay in which, among other things, the name of M/s. Lachminarayan Atmaram, Calcutta featured. Copies of the deposits made by Shri Rangabeharilal Atmaram Goel on 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by 15th March, 1971. I shall also complete the list of genuine money transactions by that date." 9. It is also necessary to produce question No.7 and answer thereto as recorded in the deposition made at Bombay on 2nd Feb., 1970 as below: "Q.7. were all the business activities conducted by you at Bombay and Calcutta genuine or they were of a bogus and havala nature i.e. you have lent your name to accommodate other business? Answer: I had done genuine business and also I had lent names of my various firms of different parties to credit monies in my firm's name and I used to get I annas percent per month for this business. I had also received profits to allow the other parties to show losses in their own account books." On going through the whole deposition dt. 2nd Feb., 1970 and 16th Feb., 1971 we do not find any material or evidence or statement of facts to link up the loan as claimed by the assessee and the confession of Shri Rangabeharilal Atmaram Goel. Shri Goel has affirmed before the Bombay ITO that he had done genuine business also in addition to his name lending business to different parties, as could be seen from his replies to the ITO's enquiries as produced above. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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