2015 (1) TMI 351 - AT - Income Tax

Tribunal upholds validity of assessment proceedings under section 144, deems reopening under section 147 valid based on undisclosed income.

Shri Arvind Kumar Chaudhary Versus ACIT., Circle, Gondia

The tribunal upheld the validity of the assessment proceedings under section 144, emphasizing that the Assessing Officer provided ample opportunities for ... Validity of initiation of proceedings u/s 147 r.w. 148 – Confirmation of loan not made – Information regarding purchase of new truck made to AO or not -Opportunity of being heard – Validity of assessment proceedings made by AO - Held that:- The assessment order that notice u/s 142(1) dated 19/08/2009 has been issued to the assessee fixing the case on 09/09/2009 - on this date, advocate appeared and requested for adjournment - He was asked to furnish Vakalatnama and the source of investment of loan of ₹ 10 lac given to Shri Satya Prakash Jaiswal along with the documentary evidence and show cause why the amount may not be treated as undisclosed investment and added to the total income of the assessee. The case was adjourned to 30/09/2009 - AO also noted that in the reply, the assessee has mentioned that he has not given any loan to Shri Satya Prakash Jaiswal in AY 2004-05 - The case was adjourned to 18/11/2009 but on this date, neither anybody appeared nor any application for adjournment was received - sufficient opportunity was provided by the AO but the same were not availed by the assessee and hence, the assessment proceedings completed by the AO is valid. Material for reopening present or not – Held that:- An information was received from Income Tax Officer, Basti that the assessee has given loan of ₹ 10 lac to Shri Satya Prakash Jaiswal during the AY 2004-05, which is not recorded in the books of account filed with the return of income and on this basis, the AO has stated that he has reason to believe that the assessee has given loan to Shri Satya Prakash Jaiswal out of undisclosed income which escaped the assessment and therefore, he issued notice u/s 148 of the Act - the reopening was valid because the AO had reason to believe regarding escapement of income - none of the judgments cited by the assessee is rendering any help to the assessee and the assessee could not give any explanation regarding the investments for which addition was made by the AO on the basis that the additions are not disclosed – the order of the CIT(A) is upheld – Decided against assessee. Issues:Assessment validity under section 144 of the Income Tax Act, 1961; Validity of reopening assessment under section 147; Consideration of judicial pronouncements in the assessment.Assessment Validity under Section 144:The appellant raised concerns regarding the initiation of proceedings under section 147 and the issue of notice under section 148, questioning the confirmation of a loan and the purchase of a new truck. The appellant argued that proper opportunity was not provided by the Assessing Officer before completing the assessment under section 144. However, the tribunal noted that the Assessing Officer had indeed provided sufficient opportunities for the appellant to present evidence and explanations, which were not availed. The tribunal found that the assessment proceedings were valid based on the opportunities provided by the Assessing Officer.Validity of Reopening Assessment under Section 147:The appellant contended that there was no material for the Assessing Officer to reopen the assessment. The tribunal observed that the Assessing Officer received information indicating undisclosed income related to a loan given by the appellant, leading to the reopening of the assessment. The tribunal concluded that the reopening was valid as the Assessing Officer had reasonable grounds to believe in the escapement of income. The tribunal dismissed the appellant's argument regarding the lack of material for reopening the assessment.Consideration of Judicial Pronouncements in the Assessment:The tribunal analyzed various judicial pronouncements cited by the appellant's representative. The tribunal discussed each judgment's applicability to the case, emphasizing that none of the judgments provided support to the appellant's arguments. The tribunal highlighted that the appellant failed to explain the investments in question, which were not recorded in the books of account. Consequently, the tribunal found no reason to interfere with the order of the Commissioner of Income Tax (Appeals) and dismissed the appellant's appeal.This detailed analysis of the judgment covers the issues related to the validity of assessment under sections 144 and 147 of the Income Tax Act, 1961, along with the consideration of judicial pronouncements in the assessment process.