TMI Blog2019 (11) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... the first proviso to Section 147 of there having to be a failure on the part of the Assessee to disclose fully and truly all material facts does not at all apply where the initial return has been processed under Section 143(1) The reasons recorded by the AO is on the basis of verification of the return of income filed by the Assessee alongwith with the enclosures. According to the AO it shows that assessee has given loan to Shri Gajanan Koli for investment in Adasrsh CHS, the genuineness of the source of investments is not proved and thus he has reason to believe that income chargeable to the extent of loan given has escaped assessment. AO was not justified in taking recourse to the provisions of Sec. 147 of the Act and it stuck down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 AO in the present case was not justified in taking recourse to the provisions of s. 147 of the Act and therefore the initiation of reassessment proceedings are not in accordance with law. Therefore set aside the initiation of reassessment proceedings and the consequential assessment order. - ITA Nos.302 to 304/PUN/2019 - - - Dated:- 1-11-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal and has raised the following grounds : 1. Learned A.O. has erred in fact and in law in upholding the reopening of the assessment without appraising that there is no valid satisfaction / approval for reopening and reason recorded are arbitrary. 2. Learned CIT (A) has erred in fact and in law in confirming addition u/s.68 of ₹ 350000/- in respect of loan given by the appellant to Gajanan Koli in spite of the fact that the loan is given out of tax paid Income and disclosed income and addition amounts to double' taxation. 3. Learned CIT (A) has erred in fact and in law in confirming the view of the AO in treating genuine business income of the appellant of ₹ 6,99,960 as income from other source without any contrary evidence. 4. Similar grounds have been raised by the assessee in ITA Nos.303 304/PUN/2019 for A.Ys. 2006-07 and 2007-08, respectively. 5. Before me, the Ld AR in the 1st ground of appeal is challenging the validity of the impugned reassessment order. 5.1. Ld.A.R. submits that the original return of income for AY 2005-06 was filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the reassessment be held to be invalid. He thereafter submitted that for identical reasons, the reopening was resorted by the Department in the case of the family members of the assessee, viz, Shri Kailash Gidwani, Shri Sunil Gidwani and Shri Amit Gidwani. When the matter in their cases was carried before the Tribunal, the Co-ordinate Bench of the Tribunal vide order dated 11.09.2019 struck down the initiation of re-assessments in their cases. In support of his aforesaid contentions, he pointed to the order of the Tribunal and also pointed to the relevant paras therein where the reasons for reopening in those cases are noted. He therefore submitted that since the facts circumstances of the present case are identical to that of his family members, then for this reason also following the order of the Co-ordinate Bench of the Tribunal, the reassessment in the case of the assessee for all the three years be held to be invalid. 6. Ld DR on the other hand submitted that in the present case assessee had filed the return of income for A.Y 2005-06 on 27.10.2005 declaring total income of ₹ 9,13,090/- and the same was processed u/s 143(1) of the Act without scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 143(1) of the Act. 8. In the present case it is required to be noted that by the impugned notice, the assessment for AY 2005-06 is sought to be reopened in exercise of power under Section 147 of the I.T Act. The reasons recorded to reopen the assessment are as under : According to information gathered from informed sources, local enquiries and media reports, it has come to be known that Shri Karihaiyalal Gidwani, owns three flats, one in his name and two in the names of his two sons - Kailash and Amit in .the Adarsha Housing Society. Again, one flat is learned to be booked in the name of Shri Gajanan S. Koli, where apparently it is believed that Shri Sunil K. Gidwani, son of Kanhiyalal Gidwani, has lent finance to purchase the same. All payments for the same were apparently made through Gidwani Family's various bank accounts in which apparently cash amounts were deposited and the same were transferred into the accounts of Gidwani's wife, son and daughter-in-law in HDFC Bank at Worli. Thereafter the said amounts were apparently transferred into the account of Ms. Jay Maharashtra CPL, HFDC Bank, Worli, in which Gidwariis sons are di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, as per the reasons noted hereinabove the reasons recorded by the AO is on the basis of verification of the return of income filed by the Assessee alongwith with the enclosures. According to the AO it shows that assessee has given loan to Shri Gajanan Koli for investment in Adasrsh CHS, the genuineness of the source of investments is not proved and thus he has reason to believe that income chargeable to the extent of loan given has escaped assessment. 9. So far as the proposition of the Ld DR to the effect that when a return of income is processed u/s 143(1) of the Act, the Revenue has greated latitude in reopening an assessment is concerned, I fully agree only to that extent with the aforesaid proposition but at the same time various high courts have held that, even in such cases, where return of income is processed u/s 143(1) of the Act, the reopening of an assessment can only be done if there is reason to believe that income chargeable to tax has escaped assessment. Here it would be relevant to refer to the observations of Hon ble Delhi High Court in the case of CIT Vs. Orient Craft Ltd reported in [2013] 29 taxmann.com 392 (Delhi) wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening was challenged before the Co-ordinate Bench of the Tribunal, in their cases, the Tribunal vide order dated 11.09.2019 (ITA No769/PUN/2014) held that the AO was not justified in taking recourse to the provisions of Sec. 147 of the Act and it stuck down the initiation of assessment proceedings and the consequential assessment order passed u/s 147 of the Act. 13. Considering the totality of the aforesaid facts, I am of the view that AO in the present case was not justified in taking recourse to the provisions of s. 147 of the Act and therefore the initiation of reassessment proceedings are not in accordance with law. I therefore set aside the initiation of reassessment proceedings and the consequential assessment order. Thus, the grounds of the assessee in ITA No.302/PUN/2019 for A.Y. 2005-06 is allowed. 14. As far as the issue involved in ITA Nos.303 and 304/PUN/2019 for A.Ys. 2006-07 and 2007-08 are concerned, before me since both the parties have submitted that the issue in all the three years are identical except for the assessment years and the amounts involved and in view of the aforesaid submission of both the parties and for the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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