2015 (6) TMI 1175 - AT - Income Tax

Tribunal Validates Assessment Reopening & Notice Issuance, Allows Additional Evidence Admission

Ms Sushila Singla, C/o M/s Shree Ganesh Industries Versus The ACIT, Circle-1, Ludhiana

Ms Sushila Singla, C/o M/s Shree Ganesh Industries Versus The ACIT, Circle-1, Ludhiana - TMI Issues Involved:1. Validity of the reopening of assessment under Section 147 and issuance of notice under Section 148 of the Income Tax Act.2. Addition of Rs. 5 lakhs as income from undisclosed sources.3. Admission of additional evidence by the CIT(A).Issue-wise Detailed Analysis:1. Validity of the reopening of assessment under Section 147 and issuance of notice under Section 148 of the Income Tax Act:The assessee challenged the reopening of the assessment under Section 147 and the issuance of notice under Section 148, arguing that the Assessing Officer (AO) did not form an independent opinion and relied solely on the information provided by the ACIT, CC-V, Ludhiana. The CIT(A) rejected this contention, stating that the information received constituted a 'reason to believe' that income chargeable to tax had escaped assessment. The Tribunal upheld the CIT(A)'s decision, citing the Supreme Court's ruling in ACIT v. Rajesh Jhaveri, which clarified that at the stage of issuing notice, the AO needs only a prima facie belief based on relevant material, not conclusive proof of income escapement. The Tribunal found that the information regarding the Rs. 5 lakhs gift was sufficient for the AO to form a requisite belief, thus validating the reopening of the assessment.2. Addition of Rs. 5 lakhs as income from undisclosed sources:The AO added Rs. 5 lakhs to the assessee's income, treating the gift as unexplained credit under Section 68 of the Act. The assessee argued that the gift was genuine and supported by sufficient evidence. The CIT(A) upheld the AO's addition, but the Tribunal noted that the CIT(A) did not admit the additional evidence submitted by the assessee, which could prove the genuineness and creditworthiness of the donor. The Tribunal directed the CIT(A) to admit the additional evidence and reconsider the issue, ensuring a fair opportunity for the assessee to present her case.3. Admission of additional evidence by the CIT(A):The assessee submitted additional evidence, including an affidavit, gift deed, bank statements, and explanations of bank entries, to the CIT(A), which were not considered. The Tribunal found that the CIT(A) wrongly refused to admit the additional evidence, citing factual inaccuracies in the CIT(A)'s observations about the assessee's non-appearance before the AO. The Tribunal emphasized that the CIT(A) has the power under Section 250(4) and Rule 46A to admit additional evidence if it is crucial for deciding the appeal. The Tribunal directed the CIT(A) to admit the additional evidence and decide the matter afresh, providing a fair opportunity for both the assessee and the AO to be heard.Conclusion:The Tribunal upheld the validity of the reopening of the assessment but directed the CIT(A) to admit the additional evidence and reconsider the addition of Rs. 5 lakhs as income from undisclosed sources. The appeal was allowed partly for statistical purposes, ensuring a fair reassessment process.