Assessee wins appeal pending verification of deposits in bank account.

The appeal of the assessee was allowed, subject to verification, with the addition of Rs. 5,00,000 sent for verification due to the lack of proof of deposit in the assessee's bank account. The addition of Rs. 2.20 crores was dependent on the verification outcome of the Rs. 5,00,000 addition. Grounds 3 to 5 were not separately adjudicated as they became academic. The tribunal directed verification regarding the additions, and the appeal outcome favored the assessee.

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Issues Involved:
1. Legality of the assumption of jurisdiction by ITO Ward-7(1).
2. Validity of the initiation of proceedings under Section 147.
3. Legality of the reopening of assessment under Section 147.
4. Addition of Rs. 5,00,000 under Section 68.
5. Addition of Rs. 2,20,00,000 under Section 68.
6. Admission of additional evidence under Rule 46A.
7. Provision of cross-examination and confrontation with adverse material.

Issue-wise Detailed Analysis:

1. Legality of the Assumption of Jurisdiction by ITO Ward-7(1):
- Ground No. 1: The assessee did not press this ground, hence it was not considered.

2. Validity of the Initiation of Proceedings under Section 147:
- Ground Nos. 3 to 5: These grounds relate to the reopening of assessment under Section 147. The tribunal did not adjudicate these grounds separately as they became academic in nature due to the findings on other grounds.

3. Legality of the Reopening of Assessment under Section 147:
- Ground Nos. 3 to 5: The tribunal noted that the reopening of assessment was based on information received from the Investigation Wing. The reasons recorded for issuing the notice under Section 148 included details of the alleged accommodation entry of Rs. 5,00,000 from M/s. Aasheesh Capital Services Pvt. Ltd.

4. Addition of Rs. 5,00,000 under Section 68:
- Ground No. 6: The tribunal found that the Assessing Officer (AO) had added Rs. 5,00,000 to the income of the assessee based on information from the Investigation Wing. However, the assessee provided certificates from various banks stating that the cheque in question was not cleared/deposited/collected. The tribunal directed the AO to verify the deposit of the cheque in the assessee's bank account, emphasizing that the revenue had sufficient time to provide these details.

5. Addition of Rs. 2,20,00,000 under Section 68:
- Ground No. 7: The tribunal examined the applicability of Explanation-3 to Section 147, which allows the AO to assess any other income that comes to notice during reassessment proceedings. The tribunal referred to the judgment in Ranbaxy Laboratories Ltd. Vs CIT, which held that the AO must assess the income for which reasons were recorded before assessing any other income. The tribunal concluded that the addition of Rs. 2.20 crores depends on the verification of the Rs. 5,00,000 addition.

6. Admission of Additional Evidence under Rule 46A:
- Ground No. 6.1: The tribunal did not specifically address the admission of additional evidence under Rule 46A, but the certificates provided by the assessee were considered in the decision-making process.

7. Provision of Cross-Examination and Confrontation with Adverse Material:
- Ground Nos. 6.2 and 7.1: The assessee argued that they were not provided cross-examination of relevant persons or confronted with adverse material. The tribunal's decision to direct verification of the Rs. 5,00,000 deposit implicitly addresses these concerns.

Conclusion:
- Addition of Rs. 5,00,000: Sent for verification due to the absence of proof of deposit in the assessee’s bank account.
- Addition of Rs. 2.20 crores: Dependent on the outcome of the verification of the Rs. 5,00,000 addition.
- Ground Nos. 3 to 5: Not adjudicated separately as they became academic in nature.
- Appeal Outcome: The appeal of the assessee is allowed, subject to the directed verification.

Order Pronounced in the Open Court on 21/10/2020.

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