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TMI Blog2019 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed u/s 143(1) on 26.07.2012 on the same income. On verification of the ITR for the year under consideration it is seen that the Assessee has claimed interest on housing loan to Rs. 2223930/- and claimed as business expenses in the P&L a/c under the head Business or Profession. As per ITR I no business activities carried out by the assessee during the year. Only income from Rent and other sources has been shown. Further, the Id. CIT (A) vide her order no. 234/2010-1 l_dated 30.01.2013 for A.Y 2008-09 has confirmed the addition of Rs. 3220478/- made: by the AO on account of interest on housing loan, which was claimed by the Assessee as business expenses in her ITR. Therefore, it is established that the Assessee. has wrongly adjusted the interest on housing loan against the business profit, In view of the above facts, I have reasons to believe that income of Rs. 2223930/'- was remain to be taxed and has escaped assessment. It is a fit case for reopening the assessment u/s 147 of the IT Act, 1961 for A.Y 2011-12." 3. In response to the notice issued u/s. 148 the assessee vide letter dated 08.01.2014 submitted that return filed u/s. 139 be considered as return filed in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,28,430/-. Similarly in absence of filing of the bank statement of Sh. Jaswinder Singh, the AO made addition of Rs. 2,64,14,000/- being loan obtained from the said person doubting the genuineness of the loan and creditworthiness of the lender. The AO also made addition of Rs. 2,40,000/- on account of low withdrawals on the ground that the assessee has not shown any drawing from the capital account and the assessee is paying 61,000/- for insurance premium and 13,665/- for mediclaim policy. The AO, therefore, estimated the house hold expenses at Rs. 20,000 per month and accordingly made addition of Rs. 2,40,000/- as the income from undisclosed sources. 8. Before CIT(A) the assessee apart from challenging the various additions on merit also challenged the reopening of the assessment. It was argued that the reopening was made by the AO without calling for any information u/s. 142 (1) and it is not very clear from the reasons that no believe or disclosure has been made by the AO before reopening of the case u/s. 148 and he merely reopened the case on the basis of comments of the CIT(A). Relying in various decisions it was argued that the reopening is not proper. 9. So far as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on mere surmises and presumptions. It was accordingly argued that the addition so made by the AO be deleted. 12. So far as the ground relating to validity of reassessment proceedings are concerned the Ld. CIT(A) decided the issue against the assessee by holding that the AO has rightly reopened the assessment since there is tangible material to come to the conclusion that there is escapement of income. 13. So far as the addition of Rs. 22,28,430/- is concerned the Ld. CIT(A) deleted the addition by observing as under :- I have considered the submissions of the appellant as well as the findings of the appellant that the Ld. AO is not justified in making addition on account of disallowance of interest expenses incurred to generate the income of FDRs amounting to Rs. 21,07,080/- and other expenses of Rs. 1,21,350/-. i. On perusal of the documentary evidences filed by the Ld. AR during the course of assessment as well as appellate proceedings, it is evident that the loan of Rs. 2.50 crores taken from ICICI Bank is not home loan and is loan against the property. The words "Home Loan" mentioned over the Loan Agreement is as per the Categorization System of the bank. This can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, which is available when such assets are shown under the head investment. So the Assessee has loose such benefit of indexation for conducting the business and this conduct clearly reveals the intension of Assessee to purchase such assets for business and profession. vi. It was held by Delhi High Court in the case of CIT vs Smt. Radhe Bhai (2005) 272 ITR 264 that the period for retaining of immovable property does not ; determine the nature but the intension of purchase of such property determined the status and nature of such property. It was further held by Punjab & Haryana High Court in the case of CIT vs Sushila Devi Jain (2001) 259 ITR 671 that it was necessary to determine the intension of Assessee at the time of purchase of land and property should be considered. Therefore, keeping in view, the ratio of judgements of various courts laws of higher authorities and Hon'ble Courts I incline to agree with the contention of Ld.AR and delete the additions of Rs. 22,28,430/- made on account of disallowance of interest and other expenses . Hence, the ground of appeal is allowed. 14. So far as the addition of Rs. 2,64,14,000/- is concerned the Ld. CIT(A) also deleted the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness, though there was not even a single transaction throughout the year, thus deleting the disallowance of Rs. 22,28,430/- made on account of business expenses. (ii) Holding that the unsecured loan was genuine even though it was not supported by bank statement of the creditor, thus deleting the addition of Rs. 2,64,14,000/- made on account of unsecured loan. (iii) Holding that the AO could not estimate the expenses on the basis of her living standards, thus deleting the addition of Rs. 2,40,000/- made on account of household expenses. (iv) The appellant craves the right to add, alter or amend any ground of appeal. 17. The assessee has raised the following grounds in the cross objection :- "1. (i) That Ld. CIT(A) erred in confirming the reopening action of Ld. AO u/s. 148, where reopening was made without fulfillment of mandatory jurisdictional condition stipulated under the Act. (ii) That Ld. CIT(A) erred in reopening action of Ld. AO which is based on mechanical and vague reasons to believe which cannot justify the reopening action made by the Ld. AO. 2. That the Ld. CIT(A) erred in upholding that the assessment order was not time-barred." 18. We have consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5 crores taken by Mr. Jaswinder Singh (husband of the assessee) out of loan from Standard Chartered Bank. He has given a finding that the payment was made directly by Standard Chartered Bank to ICICI Bank and, therefore, such entries cannot appear in the bank statement of Mr. Jaswinder Singh. In our opinion such entries cannot appear in the bank statement of the assessee as well as her husband since the amount has been paid directly by Standard Chartered Bank to ICICI Bank for taking over the loan. Since the deletion by the CIT(A) is based on facts and there is nothing on record to controvert the same by revenue, therefore, we do not find any infirmity in the order of the CIT(A) on this issue. Accordingly the ground No.2 raised by the revenue is dismissed. 20. So far as the deletion of Rs. 2,40,000/- on account of low house hold expenses is concerned we find the Ld. CIT(A) while deleting the disallowance has considered the size of the family, withdrawal by other members and has also given an observation that the same was based on surmises. Nothing contrary was brought to our notice against the reasons given by the CIT(A) on this issue. Accordingly the ground raised by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t initiated by the AO was in a mechanical manner and the AO was not satisfied with proper reason to believe and not drawn any information or conclusion outside the return of income filed, therefore, such reopening is bad in law. It is also his submission that the reopening was made without fulfillment of mandatory jurisdictional conditions stipulated under the Act. The Hon'ble Supreme Court in the case of Raymond Woolen Mills Ltd. Vs. ITO and others reported in 236 ITR 34 has held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could re-open the case. The sufficiency and correctness of the material is not a thing to be considered at this stage. Further, the assessment was earlier completed u/s. 143 (1) and bbbbb not u/s. 143 (3). Under these circumstances, we do not find any merit in the arguments advanced by the Ld. Counsel for the assessee that the re-opening of the assessment was not valid and not as per law. In our opinion the reassessment proceeding in the instant case has validly been initiated and, therefore, the Ld. CIT(A) was fully justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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