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TMI Blog2020 (11) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal is to be declared as bad-in-law and accordingly be quashed." 3. The Ld. counsel for the assessee submits that the CIT(A) at para 5.2 of his order dated 30.01.2017 has mentioned that : "5.2 It is noted that the AO had reopened the assessment on the basis of specific information in his possession that income of the assessee had escaped assessment. The AO has followed due procedure of law to initiate, conduct and conclude the assessment proceedings. Having regard to the facts of the case the action of the AO in reopening the assessment cannot be faulted with and the same is upheld. Accordingly, the grounds of appeal in this regard are dismissed." 4. In view of the above finding of the CIT(A), we admit the additional ground of appeal filed by the assessee for adjudication. This being the basic ground, we proceed to decide it first. 5. The Ld. counsel for the assessee draws our attention to the reasons recorded by the AO for reopening the assessment (para 5 of the assessment order dated 26.03.2015), which is reproduced below: "In this case, assessee filed its return of income on 17/10/2007 declaring total income of Rs. 18,28,410/-. The return was processed u/s. 143(1) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons recorded by the AO, the Ld. counsel argues that wrongly it is stated therein that the assessee has invested Rs. 15,00,000/- during the FY 2006-07 in M/s Javda India Impex Ltd. Also it is stated that the copy of statement recorded was not provided to the assessee. Thus it is stated that the notice u/s 148 issued by the AO, reopening the assessment is invalid. In this regard, reliance is placed on the decision in Pr. CIT v. G&G Pharma India Ltd. (2016) 384 ITR 147 (Delhi). 6. On the other hand, the Ld. Departmental Representative (DR) submits that the original return of income was processed u/s 143(1) of the Act and on the basis of information received from the Director General of Income Tax (Inv.), the AO has rightly reopened the assessment. 7. We have heard the rival submissions and perused the relevant materials on record. In the case of G&G Pharma India Ltd. (supra) relied on the by the Ld. counsel, the assessee filed returns for the AY 2003-04 which was processed u/s 143(3) of the Act. Based on information received from the Directorate of Investigation about four entries, stated to have been received by the assessee on a single date, i.e., February 10, 2003, from fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of para 6 of the assessment order dated 26.03.2015 clearly indicates "that the assessee invested Rs. 15,00,000/- in M/s Javda India Impex Ltd." is a minor error in view of the fact that the original return was processed u/s 143(1) of the Act. The Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC) analyzed the distinction between the acceptance of a return u/s 143(1) and an assessment which is framed u/s 143(3) of the Act. In the former case, the AO would have much wider latitude to reopen the assessment. Intimation u/s 143(1) is not an assessment. Further in Rajesh Jhaveri Stock Brokers P. Ltd. (supra), the Hon'ble Supreme Court held : "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1) of the Act. 8. In view of the above facts, the additional ground is dismissed. 9. The 1st ground of appeal 1.1 In the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the AO ought not to have assessed the loan obtained of Rs. 15 lacs from the lender as income for the year and accordingly ought to have directed the AO for deletion of the said amount assessed as income vide order dated 26thMarch, 2015 passed u/s. 143(3) r.w.s, 147 of the Act and for disallowance made of interest thereon of Rs. 44,795/-. Without prejudice to the above and in alternate 1.2 Keeping in view the content of the Reasons supplied for reopening of the assessment vide letter dated 28thOctober, 2014, wherein it is stated by the AO that the appellant has invested Rs. 15 lacs in the concern of M/s, Javda India Impex Ltd., the Ld. CIT(A) ought to have held that the AO ought not to have assessed the loans obtained of Rs. 15 lacs from the said party as income for the year. 10. The facts are that during the Financial Year (FY) 2006-07 relevant to the AY 2007-08, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount statement of the assessee with Canara Bank recording the receipt of loan ; loan confirmation of financial year 2007- 08 in which the said loan was repaid. On a query from the Bench, the Ld. counsel clarifies that the above documents had been filed before the AO as well as the CIT(A). Also reliance is placed by the Ld. counsel mainly on the decision by the Hon'ble Bombay High Court in CIT v. Orchid Industries Ltd. (2017) 397 ITR 136 (Bom) and the order of the Tribunal in Ambee Investment & Finance Pvt. Ltd. v. ITO (ITA No. 3899 & 3948/Mum/2017) (Mumbai ITAT) (08.02.2019), Diwali Capital & Finance Pvt. Ltd. v. DCIT (ITA No. 2091/Mum/2018 & 3986/Mum/2017) (Mumbai ITAT) (10.01.2019). 13. On the other hand, the Ld. DR relies on the order of the Ld. CIT(A) and submits that though the notice u/s 133(6) dated 16.02.2015 was served on M/s Javda Impex Ltd. on 20.02.2015, no compliance was made by the said concern to the AO. Further stating that the AO has rightly made the above additions, the Ld. DR relies on the order of the Ld. CIT(A). 14. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in Shankar Ind v. CIT 114 ITR 689; Prakash Textile v. CIT 121 ITR 890; CIT v. United 187 ITR 596; Rajshree v. CIT 256 ITR 331; Ashokpal v. CIT 220 ITR 452, 454; CIT v. Metachem 245 ITR 160; CIT v. Shree Gopal 204 ITR 285. In the instant case, the onus clearly shifted to the AO. There was enough material before the AO in the shape of loan confirmation, ledger account, bank account statement to make further inquiry/verification in the above matter. In the instant case, the AO has not done even elementary/ preliminary inquiry to verify the genuineness of the transaction. The addition made by him is based on surmises and conjectures. The ratio laid down by the Hon'ble Bombay High Court in the case of Orchid Industries Pvt. Ltd. (supra) is squarely applicable here. Respectfully following the same, we delete the addition of Rs. 15,00,000/- (unsecured loan) and Rs. 44,795/- (interest), made by the AO. Thus the 1st ground of appeal is allowed. 15. The 2nd ground of appeal In the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the addition made of Rs. 30,000/- representing expenditure assumed to have been incurred by the appellant for obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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