TMI Blog2021 (10) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... . As in reasons, the AO held that outstanding unsecured loans of ₹ 23.40 crores was believed to be escapement of income chargeable to income tax, whereas in the assessment order the AO found that unsecured loans accepted during the year was only ₹ 9,14,37,645/-. Thus, the AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. Without even ascertaining the unsecured loans accepted during the year in the reasons recorded, the AO viewed that the entire sum of ₹ 23.40 crores outstanding as per the balance sheet was suspicious and escaped from the assessment chargeable to tax. Thus, the above facts clearly show that the AO reopened the assessment only with a suspicion without having sufficient reasons to form the belief for escapement of income - CIT(A) has rightly quashed the notice Unsecured loans outstanding in year under consideration need not be suspected merely because the assessee had admitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income escapement of income. The Assessee submitted before the ld. CIT(A) that the notice u/sec. 148 was issued in the case of the Assessee on suspicion and there was no material to believe that the income had escaped from assessment. The Assessee further submitted that as per the reasons recorded for issuing of notice, it was stated that the Assessee has shown unsecured loans of ₹ 23,40,50,450/- which appears to be suspicious and disproportionate to the gross receipts of the Assessee. Thus, the ld.AR argued that there was no specific issue with regard to escapement of income and the AO has taken the entire outstanding unsecured loans in the balance sheet as suspicious and disproportionate for forming the basis for issue of notice u/sec. 148 without any basis, therefore, argued before the ld. CIT(A) that on suspicion there is no case for reopening the assessment. The AO must have a reasonable belief to form opinion that income chargeable to tax had escaped assessment. In the instant case, there was no such reason exists and only a suspicion, therefore, reopening of the assessment is bad in law. The ld.AR also relied on the decision of this Tribunal in the case of DCIT Vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above and also the fact that the return was filed belatedly and only after the survey operation, I have reason to belief that income of ₹ 23,40,50,450/- chargeable to income tax has escaped assessment within the meaning of the explanation to section 147 of the Income Tax Act, 1961. Hence, I am of the view that it is a fit case for reopening the assessment u/s. 148 for Asst. Year 2016-17. 7. On perusal of the reasons recorded by the AO it shows that there was outstanding unsecured loans of ₹ 23,40,50,450/- in the balance sheet and the AO suspected the entire outstanding of unsecured loans on the basis of admission given by the assessee for earlier years i.e. 2009-10 to 2015-16. In the wording for reopening the assessment the AO used the words that unsecured loans appears to be suspicious and disproportionate to the turnover/gross receipts of the Assessee. The Assessee reported the turnover of ₹ 290 crores and excess of income over expenditure was ₹ 5.30 cores. How the AO landed in a conclusion that 23.40 crores unsecured loans were suspicious and disproportionate to the turnover was not mentioned. Further, in para 5 of the reasons, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the Assessing Officer himself should be confident that income escaped assessment. But in the case on hand, the position is different as while recording the reasons for issuance of notice u/s 148 of the Act, the Assessing Officer has used the terminology appears to be suspicious . Unless the Assessing Officer is satisfied himself that he has reason to believe that income escaped assessment, he cannot open the doors of the provisions of section 148 of the Act. It may be stated here that issuance of notice u/s 148 of the Act is not mechanical and the notice should be issued on the basis of concrete evidence and tangible material in his possession, which formed basis for issue of a notice u/s.148 of the I.T.Act. 10. The ITAT, Visakhapatnam Bench, Visakhapatnam in the case of Deputy Commissioner of Income Circle-2(1), Vijayawada Vs. Dr. K J. Naidu, [2017] 85 com 206, has held that mere suspicion or the surmises or merely because of survey is conducted, the assessing officer is not permitted to reopen the assessment. There should be strong belief based on material is required for reopening the assessment u/s 147. Suspicion or guess work is not sufficient to reopen the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Dr. M.J. Naidu (supra) and the tribunal held that on mere suspicion the notice u/sec. 148 cannot be issued and the same is held to be invalid. For the sake of clarity and convenience, the relevant part of this tribunal in para No. 6.1 which reads as under:- 6.1. On perusal of the reasons recorded it is evident that the assessing officer has recorded very vague and reasons which are general in nature. No specific material, which indicated the escapement of income was brought on record. Similarly defects if any in the books of accounts maintained by the assessee was also not mentioned. No specific items of income or the receipts which escaped from income was brought on record in reasons, leave alone the quantum. For both the assessment years, the reasons are identically worded, leaving the assessment year blank for guess work of the assessee. Surprisingly the same reasons were recorded in both the cases of M. Madhavi and Dr. M.J.Naidu. The assessing officer has not mentioned any material which was impounded in the case of the assessee indicating escapement of income. No finding was given by the assessing officer with regard to the overstatement of expenditure, underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making oral submissions. The reasons are made on the point of assessing officer and must be self explanatory and should not keep the assessee guessing. It cannot be justified on the basis of inferences or interpretations. Similarly in the case of Sambag Vs. ITO (74 taxman.com 16) held that where the assessing officer has no material to suggest that the assessee company had received accommodation entries against cash receipts, the notice for reopening the assessment based on such reasons was completely wrong and has to be set aside. The Hon ble ITAT Coordinate Bench, Ahmedabad in the case of ITO Vs. Vapi Vadva Vs. Amit Kesava has adjudicated the issue on similar facts and held that the important point is that even though the reasons recorded may not necessarily prove the escapement of income at the stage of recording the reasons, such reasons must point out to income escaping the assessment or not merely need any inquiry which may require adjudication of income escaping assessment. In the present case, at best the case of the assessing officer falls in the second category. Further [71 taxman.com 256] (Ahd), Hon ble Bombay High Court in the case of Kubuchandani Health Parks (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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