2019 (5) TMI 1787 - AT - Income Tax

ITAT Pune rules for deletion of unexplained money additions; quashes 2007-08 reassessment, dismisses appeals for 2010-12.

Ulhas Shantaram Ghosalkar Versus The Income Tax Officer, Ward - 1, Ratnagiri  And Vice-Versa.

Ulhas Shantaram Ghosalkar Versus The Income Tax Officer, Ward - 1, Ratnagiri  And Vice-Versa. - TMI Issues involved:1. Addition of sale proceeds of machinery as unexplained money under section 69A.2. Addition of cash deposits in bank accounts under section 69.3. Legality of assessment completed under section 147 r.w.s. 143(3) and reopening of assessment.Analysis:1. Addition of sale proceeds of machinery as unexplained money under section 69A:The assessee contested the addition of Rs. 4,00,000 as sale proceeds of machinery, arguing that it was a credit to the capital account and not an unexplained investment under section 69A. The appellant explained that the amount credited was an advance against the sale of machinery and thus not taxable under section 68. The ITAT Pune considered the submissions and directed the ITO to delete the addition.2. Addition of cash deposits in bank accounts under section 69:The appellant challenged the addition of Rs. 6,50,933 representing cash deposits in bank accounts, contending that the sources of the deposits were explained and reflected in revised books of accounts. The ITAT Pune noted that the cash deposits were duly reflected in the revised books, and thus, not considered unexplained credit under section 69. The ITAT directed the ITO to delete the addition.3. Legality of assessment completed under section 147 r.w.s. 143(3) and reopening of assessment:The ITAT Pune examined the legality of the assessment completed under section 147 r.w.s. 143(3) and the reopening of assessment based on information regarding investments in life insurance policies. The Assessing Officer reopened the assessment due to the non-disclosure of a Rs. 15 lakh investment in life insurance policies. However, no addition was made concerning this reason for reopening. The ITAT Pune referred to the Bombay High Court judgment in CIT v. Jet Airways (I) Ltd. and held that if no addition is made based on the reasons for reopening, the assessment order assessing other income is not sustainable. Therefore, the ITAT allowed the additional ground of appeal raised by the assessee and quashed the reassessment.In conclusion, the ITAT Pune allowed the appeal of the assessee for the assessment year 2007-08, dismissed the appeals for assessment years 2010-11 and 2011-12, and also dismissed the appeal of the Revenue for the assessment year 2007-08.