2021 (4) TMI 1161 - AT - Income Tax

Tribunal upholds assessments for cash deposits, deletes additions for unverified salary income. Decision on 28th April 2021.

Arpit Goel Versus ITO, Ward-30 (2), New Delhi.

Arpit Goel Versus ITO, Ward-30 (2), New Delhi. - TMI Issues Involved:1. Legality of action under Section 147 of the Income Tax Act.2. Validity of additions made under Section 69A of the Income Tax Act.3. Explanation of deposits in bank accounts.4. Addition of salary income.Detailed Analysis:1. Legality of Action under Section 147 of the Income Tax Act:The assessee challenged the reopening of the assessment under Section 147 of the Income Tax Act. The Tribunal noted that the Assessing Officer (AO) had received specific information about cash deposits in the assessee's bank accounts, which led to the belief that income had escaped assessment. The Tribunal upheld the AO’s action, stating that the AO had sufficient and actionable information to form a 'reason to believe' that income had escaped assessment. The Tribunal cited various judicial pronouncements emphasizing that the AO must form an objective and prima facie opinion based on relevant material. The Tribunal concluded that the reopening was valid as the AO followed due process, including obtaining approval from the competent authority.2. Validity of Additions Made Under Section 69A of the Income Tax Act:The assessee contested the additions made under Section 69A, which pertains to unexplained money. The AO had made additions of Rs. 9,14,800/- and Rs. 2,01,617/- for the assessment year 2009-10, among others for subsequent years, based on unexplained cash deposits in the assessee's bank accounts. The Tribunal upheld these additions, noting that the assessee failed to provide satisfactory explanations or documentary evidence to support the source of these deposits. The Tribunal agreed with the findings of the CIT(A), who had observed that the assessee's explanation regarding the proceeds from the sale of computer parts was not supported by any concrete evidence.3. Explanation of Deposits in Bank Accounts:The assessee claimed that the cash deposits were proceeds from the sale of computer parts, deposited by buyers across different parts of the country. However, the Tribunal found this explanation unconvincing due to the lack of supporting evidence. The CIT(A) had noted that the information leading to the AO's action was concrete and specific, and the assessee failed to disclose these bank accounts or the related business activities to the department. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee did not provide any material evidence to substantiate his claims.4. Addition of Salary Income:For the assessment year 2009-10, the AO added Rs. 88,000/- as salary income based on the assessee's admission. The Tribunal, however, directed the deletion of this addition, noting that the AO did not make any inquiry from the employer to verify the receipt of the salary. The Tribunal held that merely based on the assessee's statement, without corroborative evidence, the addition was not justified. Similarly, for the assessment year 2011-12, the Tribunal directed the deletion of the addition of Rs. 1,75,000/- as salary income, as the AO again failed to verify the claim with the employer.Conclusion:The Tribunal partly allowed the appeals, upholding the reopening of the assessments and the additions under Section 69A for unexplained cash deposits, while directing the deletion of the additions made for salary income due to the lack of verification by the AO. The decision was pronounced on the conclusion of the virtual hearing on 28th April 2021.