Tribunal upholds reopening of assessment for unexplained income from share purchase

The Appellate Tribunal ITAT Chennai upheld the Commissioner's decision to reopen the assessment under Sec.147/148 of the Act, allowing the Assessing Officer to add cash payments for share purchase as unexplained income. The Tribunal deemed the reasons for reopening valid based on information from a survey. However, discrepancies in evidence led to the matter of disallowance of unexplained income being remitted back to the Assessing Officer for further verification, directing the Assessee to cooperate with the Revenue authorities. The Assessee's appeal was allowed for statistical purposes.

---

---

Issues:
1. Reopening of assessment under Sec.147/148 of the Act.
2. Disallowance of unexplained income under the head "income from other sources".

Reopening of Assessment:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (A)-II, Chennai, challenging the reopening of assessment under Sec.147/148 of the Act. The Assessee had made cash payments to purchase shares, and the Assessing Officer added the amount as unexplained income. The Commissioner opined that the case was reopened within the permissible period of four years, and the Assessing Officer had the authority to reopen the assessment based on reasons to believe that income had escaped assessment. The Tribunal upheld the Commissioner's decision, stating that the Assessing Officer rightly invoked the provisions of Sec.147/148 based on information from a survey. The case laws cited by the Commissioner were deemed appropriate.

Disallowance of Unexplained Income:
Regarding the disallowance of unexplained income under the head "income from other sources," the Assessee submitted evidence to support the investment in shares during the relevant assessment year. However, the Tribunal found discrepancies in the records submitted by both the Assessee and the Revenue authorities. In the interest of justice, the matter was remitted back to the Assessing Officer to verify the authenticity of the accounts and pass an appropriate order. The Assessee was directed to cooperate with the Revenue in the proceedings. The Tribunal allowed the appeal of the Assessee for statistical purposes.

The judgment was pronounced on 13th November 2015 in Chennai by the Appellate Tribunal ITAT Chennai, with detailed analysis and decisions on the issues of reopening of assessment and disallowance of unexplained income.

---