2015 (7) TMI 1305 - AT - Income Tax

Tribunal upholds income reassessment under Section 148 of Income Tax Act.

The Tribunal upheld the validity of the reassessment proceedings under Section 148 of the Income Tax Act, 1961, and confirmed the addition of Rs. ... Reopening of the case u/s 148 - Undisclosed investment - non independent application of mind by the Assessing Officer - Held that:- Investigation Wing provided the information that during the financial year 2001-02 relevant to assessment year 2002-03, the assessee had received bogus accommodation entries - details were also submitted to the Assessing Officer. In my opinion, on the basis of above information, the AO was justified in forming a prima facie opinion or belief that income has escaped assessment in the hands of the assessee. The material before the Assessing Officer was relevant and afforded a live link or nexus to the formation of the belief. The information, so received by the AO, was credible and not a mere gossip. - Decided against assessee Addition u/s 68 - genuineness of the transactions and the creditworthiness of the creditors - Held that:- Neither any bank account statements of S/Shri Vipin Kumar and Ashok Kumar Vindal, nor any proof regarding identity of these persons was furnished. The assessee also failed to produce his bank account statement for assessment year 2002-03. Also in agreement with this observation of the learned CIT (Appeals) that although the assessee has submitted certain documents (not relevant to assessment year 2002-03), he has not been able to establish the genuineness of the transactions and creditworthiness of the creditors. CIT (Appeals) has correctly observed that by merely claiming that the credits were unsecured loans and by submitting confirmations from so called creditors, the genuineness of the transactions cannot be proved. In the instant case, the assessee has miserably failed to prove the creditworthiness of the alleged creditors as well as the genuineness of the transactions. There is no evidence on record to prove the above ingredients of cash credits - decided against assessee. Issues Involved:1. Validity of reopening the case under Section 148 of the Income Tax Act, 1961.2. Whether the reassessment proceedings were initiated without independent application of mind by the Assessing Officer.3. Confirmation of addition of Rs. 10,02,500 towards the income of the assessee.Detailed Analysis:1. Validity of Reopening the Case under Section 148:The assessee challenged the validity of reopening the assessment under Section 147/148 r.w.s. 143(3) of the Income Tax Act, 1961. The original return was processed under Section 143(1), and subsequently, based on information from the Director of Investigation, proceedings under Section 147 were initiated, and notice under Section 148 was issued. The Assessing Officer formed an opinion that the assessee's income to the extent of Rs. 10,02,500 had escaped assessment, leading to the issuance of the notice.The CIT (Appeals) upheld the reopening, stating that the AO had applied his mind to the information received and had reasons to believe that income had escaped assessment. The CIT (Appeals) cited various case laws, including the decision in Money Growth Investment & Consultants (P) Ltd. v. ITO, which supported the validity of the notice under Section 148 based on information received from the Investigation Wing.The Tribunal referenced the decision in Ms. Sushila Singla Vs. ACIT, where similar facts were present, and upheld the reopening of the assessment. The Tribunal reiterated that at the stage of issuing notice, the AO needs to have a prima facie reason to believe that income has escaped assessment, not conclusive proof. The Tribunal found that the information received by the AO provided a live link or nexus to the formation of the belief that income had escaped assessment.2. Independent Application of Mind by the Assessing Officer:The assessee argued that there was no independent application of mind by the AO, which is a requirement for reopening the case under Section 148. The CIT (Appeals) dismissed this contention, stating that the AO had compared the information received with the return of income and had reasons to believe that income had escaped assessment. The Tribunal upheld this view, citing that the AO had relevant material to form a prima facie belief, and the adequacy of the AO's satisfaction is not justiciable.3. Confirmation of Addition of Rs. 10,02,500:The assessee challenged the addition of Rs. 10,02,500, allegedly borrowed from S/Shri Vipin Kumar and Ashok Kumar Vindal. The CIT (Appeals) confirmed the addition, stating that the assessee failed to establish the genuineness of the transactions and the creditworthiness of the creditors. The Tribunal upheld this decision, noting that the assessee did not provide relevant evidence for the assessment year 2002-03 to prove the creditworthiness of the creditors and the genuineness of the transactions.The Tribunal emphasized that the assessee must prove the identity of the creditor, the capacity of the creditor to advance money, and the genuineness of the transaction. The documents submitted by the assessee pertained to the previous assessment year and did not establish the creditworthiness of the creditors for the relevant assessment year. The Tribunal concluded that the assessee failed to discharge the onus of proving the genuineness of the transactions and the creditworthiness of the creditors.Conclusion:The Tribunal dismissed the appeal, upholding the validity of the reopening of the assessment and the addition of Rs. 10,02,500 to the income of the assessee. The Tribunal found that the AO had a prima facie reason to believe that income had escaped assessment based on credible information and that the assessee failed to prove the genuineness of the transactions and the creditworthiness of the creditors.