TMI Blog2017 (12) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... sary for assessment of that A.Y, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the AO cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the Court, on the strength of the affidavit or oral submissions advanced”. Thus, the re-assessment proceedings in the case before us are not sustainable. - Decided against revenue. - ITA Nos.1588 to 1590/Hyd/2016 - - - Dated:- 15-11-2017 - Smt . P . Madhavi Devi, Judicial Member And Shri S . Rifaur Rahman, Accountant Member For The Revenue : Shri Mohan Reddy, DR For The Assessee : Shri K . C . Devdas ORDER Per Smt . P . Madhavi Devi, J . M . These are all Revenue s appeals for the A.Ys 2007-08, 2009-10 2010-11 respectively. The Revenue is aggrieved by order of the CIT (A)-V Hyderabad dated 11.6.2014, holding that the assessment made u/s 147 is void and thereafter deleting the addition of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing order 8 ) The learned CIT ( A ) ought to have noticed that the confession made by Sri T . Ranga Rao to a judicial Magistrate is not an ordinary confession, but IS a judicial confession under Section 164 Cr . PC and to prove the judicial confession, the person to whom judicial confession is made need not be called as witness . The CIT ( A ) should have appreciated that when more persons than one are involved in an act of offence and are tried jointly, the confession made by one of them, admitted as evidence before the Magistrate, can be taken into consideration against all and not against the person who alone made it 9 ) The learned CIT ( A ) ought to have noticed that the judicial confession made by Sri 1 . Ranga Rao that on - money has been paid is a cogent evidence under Section 80 of the Indian Evidence Act and it is not a subordinate evidence, as it was made before a Magistrate and as such the judicial confession can be relied upon as proof of guilt and should have confirmed the order of the Assessing Officer . The CIT ( A ) should have appreciated that a confessional statement made before a Magistrate is a good and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g payment of ₹ 3.39 crores and that there is an escapement of income to such an extent. The AO rejected the objections of the assessee by observing that the assessment has been reopened based on the confession made by one Shri Tummala Ranga Rao, Director of M/s. Stylish Homes Real Estates Pvt. Ltd before the second Metropolitan Magistrate, Hyderabad u/s 146 of the Criminal Procedure Code (Cr.P.C) stating that the excess amount over and above the price mentioned in registered document was collected in cash by him from the buyers of the villa plots at Gachibowli in Emmar Hills Townships Pvt. Ltd Hyderabad. Therefore, the AO held that the proceedings initiated are based on sound footing and the material evidence available on record. 4. Thereafter, the AO proceeded to consider that the assessee has invested an amount of ₹ 3.39 crores for purchase of a villa from M/s. Emmar Hills Townships Pvt. Ltd and that this amount includes a cash of ₹ 2,54,25,000 paid by the assessee over and above the registered value of ₹ 84,75,000. He observed that the assessee had admitted payment of ₹ 80,51,250 on different dates but has failed to submit any details of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the AO and observing that there is no evidence on record that the sum of ₹ 3,39,00,000 has escaped the assessment, he deleted the addition. Against these findings of the CIT (A) for all the three A.Ys, the Revenue is in appeal before us. 6. The learned DR, while relying upon the order of the AO submitted that Mr. T. Ranga Rao, who is a Director of M/s. Stylish Homes Real Estates Pvt. Ltd, in his statement before the Court, had clearly stated that he has collected the amounts in cash over and above the registered sale consideration mentioned in the registered agreements of sale and that it was on the basis of these statements that the assessments have been reopened in the case of the assessee. In support of his contention that where there is material found during the course of search in the case of another person, on the basis of which the re-assessment proceedings are initiated, such proceedings are valid, he placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Bright Star Syntex (P) Ltd vs. ITO, reported in (2016) 71 Taxmann.com 64 (Bom). Further, he submitted that similar issue had arisen in the case of Mr. G. Mahesh Babu and the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence can at best be termed as borrowed satisfaction . Further, he also submitted that the AO has relied upon the statement of one Mr. Tummala Ranga Rao, to make addition without giving the assessee an opportunity to cross examine such a person. He placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. Vs. ACIT reported in 268 ITR 332, for the proposition that the AO of the assessee alone has to reach to the conclusion that there was escapement of income and also as to whether there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of his income for the relevant A.Y. He therefore, submitted that the order of the CIT (A) is to be upheld. 9. Having regard to the rival contentions and the material on record, we find that the AO has resorted to reopening of the assessment for all the three years solely on the basis of the letter received by him from ACIT, Circle 2(3), Hyderabad. In the reasons recorded, it mentioned that the assessee has made payment of ₹ 3.39 crores for purchase of a villa, but has not disclosed the said investment in his return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iguous and should not suffer from any vagueness as the reasons are the manifestations of the mind of the AO. The reasons recorded should be self-explanatory and should not keep the assessee guessing as the reasons provide the link between the conclusions and the evidence. The AO, in the event of challenge to the reasons, must be able to justify based on the material available on record and he must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that A.Y, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the AO cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the Court, on the strength of the affidavit or oral submissions advanced . Thus, the re-assessment proceedings in the case before us are not sustainable. Even on merits, there is no evidence brought on record to show that the assessee had the sources for such payments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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