TMI Blog2020 (1) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding, the same was liable to be added to the income of the petitioner-assessee. Applying the test of prima facie evaluation of reasons for determining whether the commencement of reassessment proceedings is valid or not, we have no hesitation to say that there is nothing on record to justify the reopening. We are also not impressed by the contention of the Revenue that reopening of assessment is justified and necessary as there are discrepancies in the return originally filed, and the return filed in response to the notice under Section 148 of the Act by the assessee. At this stage we are only concerned with the fact whether the reasons as recorded by the AO showcase due application of mind. The reasoning does not indicate the basis for coming to the conclusion that the petitioner s taxable income has escaped assessment and the reasons formulated by the AO are based on a fundamentally flawed approach. We do not find any such material or basis to justify the reopening of the assessment. Resultantly, the writ petition is allowed. The notice under Section 148 of the Act and the proceedings emanating therefrom are hereby quashed. - Decided in favour of assessee. - W.P.(C) 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 26.04.2010 48,00,00/- - (iii) 25.05.2010 2,00,000/- - (iv) 11.08.2010 - 60,00,0001- TOTAL 70,12,0001- 60,00,0001- 2. Ms.Vanita S. Anand submitted that she was received short term loan from Shri Anil Duggal proprietor of M/s.Duggal Associates and which was returned back. 3. Enquiries were conducted with Shri Anil Duggal in respect of above mentioned transactions, in response to queries, Shri Anil Duggal filed a reply dated 20/02/2018 confirming that he has given loan to Ms.Vanita S. Anand and the same has been including as loan and advances in his books of account. 4. Further Shri Anil Duggal filed a reply dated 01/03/2018 stating therein he he has given loan of ₹ 20,12,2000/- and ₹ 48,00,000/- to Ms. Vanita S. Anand @ 11% vide loan agreement dated 07/04/2010 and dated 26/04/2010 respectively. 5. On perusal of the loan agreement it was observed that the expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head profits and gains of business or profession ; 77[liv) income referred to in sub-clause (xi) of clause (24) of section 2, if such income is not chargeable to income-tax under the head profits and gains of business or profession or under the head salaries ;] 78(v) where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or hindu undivided family from any person on or after the 1st day of September 2004. 56(2)(vii)(a) where an individual or a hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October 2009:- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum I have carefully examined the report and material available on record and found that the amount of ₹ 17, 17,320/- has escaped assessment. 8. Under such a situation, I have reason to believe that income at least to the sum of ₹ 17,17,320/- for the A.Y.2011-12 has escaped assessment in the hands of assessee within the meaning of explanation 2(a) of section 147 and any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Associates, who in response thereto furnished a reply stating that he had given loans of ₹ 70,12,000/- to the Petitioner with interest @11% amounting to ₹ 7,05,320/-. Petitioner only made part payment to the tune of ₹ 60 lacs against the loan amount of ₹ 70,12,000/- and interest thereupon of ₹ 7,05,320/- and the remaining amount of ₹ 17,17,320/- (₹ 77,17,320/- minus ₹ 60,00,000/-) remained unpaid till date. Therefore, the aforesaid balance amount was liable to be added to the income of Petitioner in the AY 2011-12 as per Section 56(1) and 56(2)(vii)(a) of the Act. In view of the aforesaid facts, proceedings under Section 147 were initiated. He further argues that since at the first instance, the return of income of the Petitioner was processed under Section 143(1), it is not an assessment and therefore, the ground of change of opinion is not attracted. In support of his contention, he relies upon the judgement of the Supreme Court in Deputy Commissioner of Income Tax vs. Zuari Estate Development and Investment Company Limited (2015) 15 SCC 248 . He also argues that the petitioner has herself filed income-tax return on the web ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment. The High Courts which have interpreted Burlop Dealer case [(1971) 1 SCC 462 : (1971) 79 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,93,100/-; further another return of income in response to notice u/s 148 was filed under protest on 30/04/2018 and shown taxable income of ₹ 1,75,110/-. In its letter dated 02.05.208, filed on 07.05.2018 the petitioner has made as wrong statement stating that From the computation of income enclosed your goodself will observe that the assessee s taxable income of Asstt. Year 2011-12 was below taxable limit and therefore there was no obligation to file return of income. It is further submitted that while disposing of the objection against initiation of proceedings u/s 147, it is mentioned in para 2 that the assessee filed original return of income declaring income of ₹ 2,93,100/- on 15.07.2011 for AY 2011-12. Thus Department is aware that original return of income was passed on 15.07.2011 but due to clerical mistake it is mentioned in the Annexure that WHERE NO RETURN FILED BY THE ASESSEE . In the facts of the present case that assessee herself has filed two different returns, processing of assessment u/s 148 /147 is required. [Emphasis supplied] 8. On the basis of the explanation offered in the counter affidavit, Revenue has argued that they were awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that the expiry date of the loan agreement was 15.03.2011 and on the said date, the loan alongwith interest became due. Thereon, taking note of the fact that the Petitioner-assessee has made a payment of ₹ 60,00,000/- to Anil Duggal on 11.08.2011, against the loan amount of ₹ 70,12,000/-, he arrived at the aggregate liability due to Shri Anil Duggal from the Petitioner as ₹ 77,17,320/- after factoring the interest amount of ₹ 7,05,320/-. After adjusting the amount of ₹ 60,00,000/- against the aforesaid liability it was concluded that ₹ 17,17,320/- remain unpaid and the same has to be treated as income chargeable to Income-Tax under the head of Income from other sources in terms of Section 56(2) and 56(2)(vii)(a) of the Act. On this basis, it was assumed that the aforesaid income had escaped assessment in the hands of the assessee within the meaning of explanation 2(a) of the Section 147 of the Act. 10. The report of Investigation Wing could not ipso facto lead to the inference the income of the assesse has escaped assessment. In this case, there was no scrutiny assessment under Section 143(3) of the Act and the return of income was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head Income from other sources , if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head Income from other sources , namely :- XXXX [(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; [(b) any immovable property,- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons also do not spell out as to how there has been escapement of income by the assessee. The approach of the AO is fundamentally flawed, as he has assumed that just because certain loan amount is outstanding, the same was liable to be added to the income of the petitioner-assessee. Thus, applying the test of prima facie evaluation of reasons for determining whether the commencement of reassessment proceedings is valid or not, we have no hesitation to say that there is nothing on record to justify the reopening. We are also not impressed by the contention of the Revenue that reopening of assessment is justified and necessary as there are discrepancies in the return originally filed, and the return filed in response to the notice under Section 148 of the Act by the assessee. At this stage we are only concerned with the fact whether the reasons as recorded by the AO showcase due application of mind. The reasoning does not indicate the basis for coming to the conclusion that the petitioner s taxable income has escaped assessment and the reasons formulated by the AO are based on a fundamentally flawed approach. We do not find any such material or basis to justify the reopening of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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