TMI Blog2017 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... edure followed by the AO. In this matter intimation was issued u/s.143(1)so,there is no question of formation of any opinion by the AO or change of opinion. The prima facie fact of income escaping assessment was there,so,in our opinion the FAA has rightly upheld the re-opening of the assessment.Juridictional issue raised by the assessee (GOA-1)is decided against it. FAA has given a categorical finding of fact that ₹ 15 lakhs(approximately)were deposited in the bank account of the lender before it issued cheques to the assessee.This fact cannot be brushed aside lightly especially when it is not brought on record that as to a how a Kolkata party agreed to advance loans to the assessee without help of any broker. It is not the case of the assessee that the creditor is also in the same line of business or that their business relationship is very old.Soundness of balance sheet of the lender only proves capacity of the lender but not the genuineness of the transaction. No authority is required to hold that bank transaction do not prove genuineness of the loans. No agreement was produced before the departmental authorities or us that could justify non charging of interest by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in respect of the source of fund was not found satisfactory . 3 . Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA) and argued that it had received genuine loan from Basant.After considering the available material,he held that Basant was found indulged in paper transaction and providing hawala enteries,that the onus was heavy on the assessee as it had taken loan from an entity that was engaged in providing accommodation entries,that the assessee had no business dealing with Basant, that Basant advanced a loan of ₹ 15 lakhs without charging any interest,that there appeared to be a well thought design by which the assessee had arranged the alleged loan to route its own money.He referred to the cases of Sumati Dayal(214 ITR 801)and P Mohankala((291ITR278) and held that the alleged loan received by the assessee from Bansant was not a genuine transaction. 4 . Before us,the Authorised Representative(AR)argued that the assessee had filed confirmation letter and copies of ledger account,that copy of assessment order of Basant was also furnished,that the transaction was through banking channels,that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have a live link with an objective fact in the form of information or materials on record to reopen an assessment. viii . Matters reopened without referring to tangible material are liable to be quashed. 5 . 1 . If the facts of the case under consideration are tested on the touchstone of the above referred principles,it becomes clear that the AO had prima facie case to believe that taxable income had escaped assessment.Considering the information received from Calcutta about Basant any prudent person will arrive at prima facie belief that the assessee had not disclosed its total income for the year under consideration.The reasons recorded by the AO clearly prove application of mind by him.Not only reasons were supplied to the assessee,the AO had also dealt with objections raised by it.Therefore,there is no lacunae in the procedure followed by the AO.In this matter intimation was issued u/s.143(1)of the Act,so,there is no question of formation of any opinion by the AO or change of opinion.The prima facie fact of income escaping assessment was there,so,in our opinion the FAA has rightly upheld the re-opening of the assessment.Juridictional issue raised by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, act unreasonably . In the matter of Durgaprasad More(82 ITR 540) the Hon ble Supreme Court has held that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self-serving recitals in documents, it was for that party to establish the truth of those recitals.It further held that the taxing authorities were entitled to look into the surrounding circumstances to find out the reality .In the matter of L.N.Dalmia the Hon ble Calcutta High Court (207 ITR 89) had decided the case after considering surrounding circumstances . 5 . 3 . Considering the above discussion,it can safely be held that generally,the taxation authorities consider that the apparent is real.But,in certain cases when it is found that there are reasons to believe that the apparent is not real then they can look into the surrounding circumstances to find out the reality.In other words,the principle-that the income-tax authorities are entitled to decide as to whether a transaction is illusory or a device or a ruse-has become a part of tax juris - prudence.It is also accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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