Tribunal Upheld Assessment Reopening Under IT Act 1961

The tribunal upheld the validity of reopening the assessment under section 147 of the IT Act, 1961, due to tangible material indicating income had escaped assessment. It dismissed the objection regarding non-disposal of objections against the notice under section 148, as the filed letter did not constitute a formal objection. Additionally, it confirmed the addition of Rs. 4,00,000/- under section 69 for unexplained investment, supported by consistent seized material and statements. The appeal was dismissed, and the order was pronounced on 21/08/2020.

---

---

Issues Involved:
1. Validity of reopening the assessment under section 147 of the IT Act, 1961.
2. Non-disposal of objections against the notice under section 148.
3. Addition of Rs. 4,00,000/- under section 69 for unexplained investment.

Issue-wise Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147 of the IT Act, 1961:
The primary issue was whether the reopening of the assessment for the assessment year 2009-10 was valid. The assessee did not file any return of income under section 139(1) of the IT Act. The AO issued a notice under section 148 based on information from a search and seizure operation that revealed the assessee paid Rs. 4,00,000/- as On Money for a plot in the Revenue Residency Scheme. The assessee argued that the AO did not apply his mind independently and acted merely on the information received. The tribunal held that the seized material and the statement of Shri Madan Mohan Gupta constituted tangible material for the AO to form a belief that income had escaped assessment. The tribunal also clarified that the ITO Ward-2, Bharatpur, had the territorial jurisdiction to issue the notice, and the case was later transferred to ITO Ward-3, Bharatpur, after the assessee filed the return revealing her status as a salaried person. Therefore, the tribunal upheld the validity of the reopening of the assessment.

2. Non-disposal of Objections Against the Notice Under Section 148:
The assessee contended that the AO did not dispose of the objections against the notice under section 148 before passing the assessment order. However, the tribunal found that the letter dated 24th October 2016, filed by the assessee, was a response to a notice issued by the AO seeking an explanation on the seized material and not an objection against the notice under section 148. The tribunal noted that the letter was filed at the fag end of the assessment proceedings, and there was no formal objection raised by the assessee against the notice under section 148. Consequently, the tribunal dismissed this ground of appeal, stating there was no merit or substance in the assessee's claim.

3. Addition of Rs. 4,00,000/- Under Section 69 for Unexplained Investment:
The AO made an addition of Rs. 4,00,000/- based on the statement of Shri Madan Mohan Gupta, who confirmed the receipt of On Money for the plot allotted to the assessee. The assessee argued that the addition was unjustified as it was based on a third-party statement without providing an opportunity for cross-examination. The tribunal noted that the seized material, including the diary entries and the statement of Shri Madan Mohan Gupta, provided detailed information about the On Money payments and were consistent with the facts. The tribunal emphasized that the assessee did not provide any contrary evidence or documents to refute the seized material and the statement. Citing the principle that seized documents should be considered in their entirety, the tribunal upheld the addition of Rs. 4,00,000/- as unexplained investment under section 69.

Conclusion:
The tribunal dismissed the appeal of the assessee, upholding the validity of the reopening of the assessment, the non-requirement of disposing of objections against the notice under section 148, and the addition of Rs. 4,00,000/- under section 69 for unexplained investment. The order was pronounced in the open court on 21/08/2020.

---