Tribunal Partially Allows Appeals, Quashes Reassessments, Upholds Revenue Jurisdiction

Sunita Madhok Versus The Assistant Commissioner of Income Tax, Circle 1 (2) (1), Bengaluru.

Sunita Madhok Versus The Assistant Commissioner of Income Tax, Circle 1 (2) (1), Bengaluru. - TMI Issues Involved:
1. Jurisdiction of the Assessing Officer.
2. Validity of reopening assessments.
3. Addition of unexplained investment under Section 69 of the Income Tax Act.
4. Levy of interest under Section 234B of the Income Tax Act.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer:
The assessee contended that the Assessing Officer (AO) who passed the assessment orders lacked jurisdiction. Initially, the case was under the jurisdiction of the Income Tax Officer, Ward-10(1), Bengaluru, and was later transferred to the Deputy Commissioner of Income Tax, Circle-2(1), Bengaluru, under Section 127 of the Income Tax Act. However, the impugned orders were passed by the Assistant Commissioner of Income Tax, Circle-1(2)(1), Bengaluru, after a notification dated 15.11.2014. The Tribunal held that the jurisdiction was properly transferred to ACIT, Circle-1(2)(1), Bengaluru, through a valid order under Section 127, and thus, the AO had the proper jurisdiction to pass the assessment orders.

2. Validity of Reopening Assessments:
The assessee challenged the reopening of assessments on the grounds that the reasons recorded did not constitute "reason to believe" that income had escaped assessment. The Tribunal observed that the reasons recorded were identical for all years and did not specify the amount of income that had escaped assessment for each year. The reasons were based on the information received about an HSBC Bank account opened in 2001, which was not linked to the specific assessment years in question. The Tribunal held that the reasons recorded were vague and did not meet the legal standards required for reopening assessments under Section 147. Consequently, the reopening of assessments was deemed invalid.

3. Addition of Unexplained Investment under Section 69:
The AO made additions under Section 69, treating the deposits in the HSBC Bank, Geneva, as unexplained investments. The Tribunal noted that the addition was based on an unsigned and unverified piece of paper without proper evidence. The assessee had stated that the bank account belonged to Troyes Investing Corporation (TIC), a corporate entity, and not to the assessee personally. The Tribunal found that the AO did not provide sufficient evidence to prove that the assessee was the beneficial owner of the bank account. The Tribunal emphasized that the corporate veil could not be lifted without proper investigation and evidence. Therefore, the addition under Section 69 was deleted.

4. Levy of Interest under Section 234B:
The Tribunal dismissed the ground relating to the levy of interest under Section 234B as infructuous.

Conclusion:
The Tribunal allowed the appeals partly, quashing the reassessments due to invalid reopening and deleting the additions made under Section 69 for lack of proper evidence. The issue of jurisdiction was resolved in favor of the Revenue, affirming that the AO had the proper jurisdiction to pass the assessment orders. The levy of interest under Section 234B was dismissed as infructuous.