2022 (4) TMI 634 - AT - Income Tax

Tax Tribunal Grants Assessee's Appeals for 2011-12 and 2013-14, Dismissing Reopening, Cash Deposits, and Tuition Income

The Tribunal allowed the assessee's appeals for assessment years 2011-12 and 2013-14, partly on the merits. The reassessment proceedings were not ... Validity of reopening of assessment u/s 147 - Unexplained cash deposit in the bank account - It was the assessee's contention before the Assessing officer as well as the Ld. CIT(A) that the source of cash deposits was the balance of cash brought forward from earlier assessment years and that the same was duly reflected in the balance sheet which had been filed by the assessee along return of income - HELD THAT:- The assessee has filed paper books for both the years under consideration and we note that for assessment year 2010-11, the assessee had filed copy of the balance sheet for the years ending 31.3.2010 and 31.3.2011. The balance sheet as at 31.03.2010 shows the closing cash balance in hand amounting to ₹ 12,61,473.32 and during this year i.e. 2011-12, the assessee had made deposits in bank account amounting to ₹ 13,40,000/-. During this year, the assessee had also made cash withdrawals of ₹ 3 lacs of which the Assessing officer had given due credit and had proceeded to add the remaining amount of ₹ 10,40,000/- only to the income of the assessee. It is not in doubt that these balance sheets were filed before the Assessing officer during the course of assessment proceedings as well as the before the Ld. CIT(A) but the same were not considered by them while deciding on the merits of the case. Apparently, the explanation given by the assessee has been rejected without assigning any reason. To our mind, if the assessee's explanation of having the opening cash in hand was to be disbelieved, there should have been cogent reasoning behind the same. Therefore, we accept the assessee's contention that as on 31.3.2010 the assessee had a closing balance of cash in hand of ₹ 12,61,473.32 which ought to have been considered for the purposes of explaining the source of cash deposits in the bank accounts. Disbelieving the assessee's contention having earned tuition income - Again it remains undisputed that the Department has accepted that the assessee had earned tuition fee in preceding assessment years, as is evident from the copies of the assessment order passed u/s. 143(3) of the Act read with section 147 of the Act for assessment year 2010-11. Not only this, the assessee's returned income was also accepted in assessment year 2012-13 also in order passed u/s. 143 read with section 147 of the Act. Therefore, in our considered opinion, the lower authorities had no reason to disbelieve the assessee's claim of having earned tuition income in this assessment year as well for the simple reason of rule of consistency Therefore, we do not concur with the findings of the authorities below on the issue of not accepting the assessee's of having received income from tuition fee. Thus, in assessment year 2011-12, on merits, we hold that the lower authorities had no justifiable reason to make the impugned additions - Decided in favour of assessee. Issues Involved:1. Validity of reassessment proceedings under Section 148 of the Income Tax Act.2. Addition of cash deposits as unexplained income under Section 69.3. Treatment of tuition income as income from undisclosed sources under Section 69A.4. Taxation of additions under Section 115BBE.Issue-wise Detailed Analysis:1. Validity of Reassessment Proceedings under Section 148:- In ITA No. 1144/Chd/2019 for AY 2011-12, the assessee did not press the ground challenging the reassessment proceedings on legal grounds.- In ITA No. 1145/Chd/2019 for AY 2013-14, the assessee argued that the reopening was based on information from the Investigation Wing without independent application of mind by the Assessing Officer (AO). The Tribunal did not delve into this issue as relief was granted on merits.2. Addition of Cash Deposits as Unexplained Income under Section 69:- For AY 2011-12, the AO added Rs. 10,40,000 as unexplained income after giving credit for Rs. 3,00,000 cash withdrawal. The assessee contended that the deposits were from the opening cash balance of Rs. 12,61,473 from the previous year, which was reflected in the balance sheet and accepted by the Department.- For AY 2013-14, the AO added Rs. 10,40,000 as unexplained income. The assessee argued that the deposits were from the opening cash balance of Rs. 12,58,949 as per the balance sheet for the previous year, accepted by the Department.- The Tribunal noted that the balance sheets were filed and accepted in previous assessments, and the AO did not provide reasons for disbelieving the opening cash balance. Thus, the Tribunal accepted the assessee's explanation for both years.3. Treatment of Tuition Income as Income from Undisclosed Sources under Section 69A:- For both AY 2011-12 and AY 2013-14, the AO treated the tuition income as income from undisclosed sources. The assessee argued that the tuition income had been regularly accepted in previous and subsequent years.- The Tribunal observed that the Department had accepted the tuition income in earlier and subsequent assessments, and there was no material change in facts. Following the principle of consistency, the Tribunal held that the tuition income should be accepted as declared by the assessee.4. Taxation of Additions under Section 115BBE:- The assessee contended that the additions confirmed by the CIT(A) were wrongly taxed under Section 115BBE.- As the Tribunal decided in favor of the assessee on the merits of the additions under Sections 69 and 69A, the issue of taxation under Section 115BBE became moot.Conclusion:- For AY 2011-12 (ITA No. 1144/Chd/2019), the Tribunal allowed the appeal on grounds 2, 3, and 4, holding that the additions were unjustified. Ground 1 was dismissed as not pressed.- For AY 2013-14 (ITA No. 1145/Chd/2019), the Tribunal allowed the appeal on merits, without addressing the legal ground of reassessment validity.Final Result:- Both appeals of the assessee were partly allowed.