2019 (10) TMI 199 - AT - Income Tax

Tribunal upholds revenue's assessment order, dismissing appeal on unexplained investment

The tribunal dismissed the appeal, upholding the actions of the revenue authorities. It was determined that the AO had provided reasonable opportunities ... Reopening of assessment u/s 147 - validity of notice - unexplained cash deposited in the bank account - HELD THAT:- AO has issued the notice on the address on which the postal authorities were able to locate the assessee and on which the postal authorities have also served upon the assessee the notice issued by the AO. The notices issued by the AO was never returned by the postal authorities for being unserved and which is the standard procedure in case the postal authorities were unable to either locate the addressee or to serve upon the addressee if the addressee was located the packet handed over to the postal authorities and therefore the inherent presumption under Article 12 of the Constitution regarding the bonafide of the State action would apply as the postal authorities being the instrumentality of the State has no reason not to serve the notices as issued by the AO upon the assessee. The service of the notice as issued by the AO was rightly held to be complete. Once the notice u/s 148 is duly served upon the assessee in terms of the provisions of Section 282 AO was well within the jurisdiction conferred upon him to frame the reassessment under the provisions of Section 147 of I.T. Act, 1961. Once the notice issued by the AO u/s 144 of I.T. Act 1961 was also duly served upon the assessee in terms of the provisions of Section 282. AO was well within the jurisdiction conferred upon him to frame the reassessment to the best of his judgment. In view of the valid service of notice in terms of the provisions of Section 282 the impugned assessment order cannot be faulted with and upholding of this action by the AO is correct one. Hence, uphold the action of the revenue authorities on the issue of notice and reject the grounds raised by the assessee. As regards merit of the case is concerned, find that AO in his assessment order as well as in its remand report very specifically pointed out that the amount of ₹ 32,66,200/- was deposited by the assessee in its bank account during the previous year 2008-09 while the sale of immovable property which has been claimed by the assessee to be the source of cash deposit took place much earlier on 23.08.2006 which was separated from the period of cash deposit by almost 2½ years. AO has brought on record that one of the properties sold fetched only ₹ 11,30,000/- of which only 1/6th was the share of the assessee being a co-owner of 1/6th of the said property and therefore, the assessee could have got only ₹ 1,88,330/- out of the said sale of the immovable property. The other transaction of sale of immovable property was by the wife of the assessee Smt. Bhavna Sharma and was for ₹ 6,46,000/- only. Even if it is assumed for the sake of argument but without conceding anything the maximum amount which was available with the assessee and his wife as per the explanation of the appellant was ₹ 8,34,330/- when the cash deposited by the assessee in its bank account was ₹ 32,66,200/-. Further, the receipt of cash from the transactions of sale of property and the deposit of cash in the bank account is separated in time by almost 2½ years. The assessee has brought nothing on record to show that the cash which was received by the appellant and the wife of the appellant remained available with the appellant through the intervening period of 2½ years and was utilized for depositing ₹ 32,66,200/- in its bank account. The assessee has also brought nothing on record to explain the source of remaining amount of cash or ₹ 24,31,870/- which was found by the AO to have been deposited in the bank account of the assessee. The grounds taken by the assessee regarding the source of cash deposited in the bank account of the assessee is neither tenable nor acceptable. Therefore the same was rightly rejected and action of the AO was confirmed by the CIT(A), which does not need any interference on my part, hence, uphold the action of the CIT(A) of affirming the addition in dispute and accordingly reject the grounds raised by the Assessee. Issues Involved:1. Reasonable opportunity for the assessee to present his case before the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) [CIT(A)].2. Service of notice under sections 148 and 142(1) of the Income Tax Act, 1961.3. Validity of the assessment order under section 144 of the Income Tax Act, 1961.4. Source of cash deposits amounting to Rs. 32,66,200 in the assessee's bank account.5. Condonation of delay in filing the appeal before the CIT(A).Issue-wise Detailed Analysis:1. Reasonable Opportunity for the Assessee:The assessee contended that he was not given a reasonable opportunity to present his case before the AO and CIT(A). It was argued that the assessee was ill and did not receive any notice during the entire proceeding. However, the tribunal found that multiple opportunities were provided by the AO, including notices under sections 148 and 142(1), and a show cause notice under section 144. Despite these opportunities, the assessee failed to respond or provide the necessary information. The CIT(A) also considered the remand report from the AO and provided the assessee with an opportunity to present fresh evidence, which was duly considered and rejected by the AO.2. Service of Notice:The assessee argued that notices were sent to an incorrect address, and therefore, he did not receive them. The tribunal noted that the notices were sent to 'Manoj Kumar Sharma, Nai Abadi, Dadri, G.B. Nagar,' which was the same address where the assessee later received a penalty notice under section 271(1)(c). Since the postal authorities did not return any of the notices as unserved, it was presumed that the notices were duly served. The tribunal held that the service of notice was complete under section 282 of the Income Tax Act, 1961, and the AO had the jurisdiction to frame the reassessment under section 147 and the best judgment assessment under section 144.3. Validity of the Assessment Order:The tribunal upheld the validity of the assessment order under section 144, noting that the AO had followed due process by issuing multiple notices and providing ample opportunities for the assessee to respond. The assessee's failure to comply with these notices justified the AO's decision to complete the assessment to the best of his judgment based on the available material.4. Source of Cash Deposits:The AO added Rs. 32,66,200 to the assessee's income as unexplained investment under section 69, as the assessee failed to explain the source of the cash deposits in his bank account. The assessee claimed that the deposits were from the sale of immovable property, but the tribunal found discrepancies in this explanation. The sale transactions occurred almost 2½ years before the cash deposits, and the amounts from the property sales were significantly lower than the deposited amount. The tribunal concluded that the assessee failed to substantiate the source of the cash deposits, and thus, the addition made by the AO was justified.5. Condonation of Delay:The assessee filed the appeal before the CIT(A) beyond the permissible time limit and did not initially seek condonation of the delay. However, the CIT(A) condoned the delay considering the assessee's claim of non-receipt of the assessment order. The tribunal acknowledged this condonation and proceeded to address the substantive issues of the case.Conclusion:The tribunal dismissed the appeal, upholding the actions of the revenue authorities. It was determined that the AO had provided reasonable opportunities for the assessee to present his case, the notices were duly served, the assessment order under section 144 was valid, and the addition of Rs. 32,66,200 as unexplained investment was justified. The tribunal also noted the condonation of delay by the CIT(A) and found no grounds for interference with the revenue authorities' decisions.Order Pronounced on 03-10-2019.