RANI GOENKA ,KOLKATA vs. ITO, WARD 44(2), KOLKATA

The case of the assessee was simply dismissed on legal issue as well as on merit by the First Appellate Authority after taking into account the contention and submission of the assessee and hence the assessee is in before us.

During the course of hearing, the ld. counsel for the assessee took us through the reason recorded to reopen the assessment which were informed to the assessee vide letter dated 13.11.2019noting and stating therein that the assessee was maintaining a savings bank account No. 400710110002120 with Bank of India, Dharamtalla Street Branch during FY 2011-12 and has deposited/invested money to the tune of Rs. 1.37 crores which were not commensurate with the total income and Assessment Year: 2012-13 Rani Goenka the source of deposit to the total income and thus the concerned investment/ deposits remained unexplained. We note that the assessee has income from other source and also by way of short term and long term capital gain on sale of investments . We note that the assessee has been filing returns of income regularly and all these investments ,which were referred by DDIT(Inv), Unit-3(3), Kolkata in the letter sent to the AO, were duly shown in the balance sheet. We have also examined the bank account of the assessee with all debits and credits entries and find that all the credits/deposits were on account of maturity of investments and debits due to investments made in various schemes. Having observed so we find that the AO has not applied his mind independently to the report of the Investigation Wing and has recorded a fallacious conclusion that income of the assessee has escaped to the tune of Rs. 1.37 crores. We have also examined the details of statement showing short term and long term capital gain and found that the assessee has duly shown the taxable short term capital gain of Rs. 1,46,206.45/- with STT paid. Similarly we note that the assessee has short term capital gain [without STT amounting to Rs. 8,46,026.05] which were duly offered in the computation of income to tax. We have also examined the balance sheet of the assessee and noted that the balance in the capital account as on 31.03.2012 of Rs. 1,37,67,033/-. Therefore the observations of the AO that the assessee is a house wife and does not have income to invest is wrong and against the facts on records . Considering all these aspects we are of the view that the reopening by AO is purely on the basis of borrowed satisfaction without any application of mind.The case of the assessee finds supports from the decision of Hon'ble Delhi High Court in the case of ACIT vs Meenakshi Overseas Pvt. Ltd. [2017] 82 taxmann.com 300 (Del) and coordinate bench in the case of DCIT vs Great Wall Marketing Pvt. Ltd. in for AY 2002-03 order dated 03.02.2016. In the said decision, Hon'ble Delhi High Court has held that where the reasons to believe contain not the reasons but the conclusions of the AO one after the other and there was no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The Hon'ble High Court has held that the conclusions of the AO are at best a reproduction of the conclusion in the Assessment Year: 2012-13 Rani Goenka investigation report. Indeed it is a borrowed satisfaction. Accordingly we set aside the order of Ld. CIT(A) and hold the re-opening as bad in law.

Similarly on merit also both the authorities have failed to apply their mind to facts as available on record. Undisputedly the assessee had sufficient sources available to make investments in securities and found that all the debit and credit entries were nothing but a redemption and fresh investments made by the assessee. Therefore even on merit, the assessee’s case is full proof and open and shut case and no addition was warranted u/s 68 of the Act.