Revenue appeal dismissed due to invalid assessment re-opening, on-money payment deletion upheld.

The Tribunal dismissed the Revenue's appeal, declaring the re-opening of assessment invalid due to the lack of proper sanction and upheld the deletion of the addition of on-money payment to the assessee's income due to insufficient evidence.

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Issues Involved:
1. Validity of re-opening of assessment under section 147 of the Income-tax Act, 1961.
2. Addition of on-money payment to the income of the assessee.

Issue-wise Detailed Analysis:

1. Validity of Re-opening of Assessment under Section 147:

The assessee filed a return of income on 31st July 2007, declaring a total income of Rs. 7,75,521. The return was initially processed under section 143(1) of the Income-tax Act, 1961 (the Act). Subsequently, based on information from DIT (Inv.)-II, Mumbai, regarding on-money payment of Rs. 79,26,400 to M/s. Crescendo Associates for the purchase of flats, the Assessing Officer re-opened the assessment under section 147 by issuing a notice under section 148 on 30th March 2014.

The assessee challenged the re-opening on two grounds: lack of sanction from the competent authority as required under section 151 of the Act and the failure of the Assessing Officer to dispose of the assessee's objections independently before completing the assessment. The Tribunal found that the Assessing Officer obtained sanction from the CIT instead of the Joint CIT, which was mandatory under section 151(2) for the issuance of notice under section 148. The Tribunal held that the absence of the Joint CIT's approval invalidated the notice under section 148 and consequently, the assessment order.

2. Addition of On-money Payment to the Income of the Assessee:

During the assessment proceedings, the Assessing Officer added Rs. 79,26,400 to the assessee's income, alleging it as on-money payment for the purchase of a flat. The assessee contended that no on-money was paid other than the declared sale consideration of Rs. 1,75,45,800 and provided necessary details to support this claim. The Commissioner (Appeals) deleted the addition, noting that the Assessing Officer did not provide any adverse material or allow cross-examination of the concerned persons whose statements were relied upon.

The Tribunal upheld the Commissioner (Appeals)'s decision, stating that the Assessing Officer failed to provide the adverse material to the assessee and did not allow cross-examination of third parties. The Tribunal emphasized that the burden of proof lies with the Assessing Officer to substantiate the addition with cogent evidence, which was not done in this case.

Conclusion:

The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, declaring the re-opening of assessment invalid due to the lack of proper sanction and upholding the deletion of the addition of on-money payment due to insufficient evidence. The order was pronounced in the open court on 13.10.2017.

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