2022 (6) TMI 1103 - AT - Income Tax

Tribunal Upheld Assessment Reopening Under Income Tax Act Section 147, Partially Allowed Appeal for Re-Examination

The Tribunal upheld the reopening of the assessment under section 147 of the Income Tax Act due to the assessee's failure to explain cash deposits. ... Reopening of assessment u/s 147 - assessment was reopened on the basis of having some information regarding the cash deposit in the bank a/c of the assessee - HELD THAT:- The assessee has not rebutted the finding of the AO that he had written various letters to the assessee seeking explanation regarding cash deposits in the impugned assessment order - AO has recorded that verification letters were issued to the assessee on 24.02.2012, 19.12.2014, 07.08.2015 and 09.09.2015 seeking explanation regarding the source of the cash deposit, however despite the letters were duly served on the assessee no explanation was given to him. Assessee could not point out that before the Assessing Authority, the assessee had offered explanation regarding cash deposits. No reason to interfere into the decision of the Assessing Officer for reopening of the assessment. Ground No. 1 of the assessee's appeal is dismissed. Unexplained cash receipts - There is no dispute with regard to the fact that there was no representation on behalf of the assessee before the Assessing Officer. Therefore, the Assessing Officer made addition of the entire cash deposits. Hence, the subject matter of the assessment was the cash deposit. In the remand report before the Ld. CIT(A), AO accepted the explanation of the source of the cash deposit to the extent of the gift received from his father of Rs. 5,00,000/- and 1/3rd share of Rs. 6,44,300/- found to be explained. Thus, out of addition of Rs. 27,34,000/-, this amount of Rs. 11,44,300/- ought to have been reduced. Now coming to the rest of the addition the source of deposit was stated to be the lease amount received from one Sh. Shravan Singh. The evidences regarding receipt of lease amount was not believed by the authorities below on the basis that the lease deed as furnished did not disclose the name and address of the witnesses. This approach of the authorities below is erroneous in law and fact when the assessee has furnished certain evidences of ownership of land also the affidavits of person who had tilled the land. Revenue has not brought any material to suggest that the land remained uncultivated. In the absence of such evidence, the evidence filed by the assessee should have been enquired into and verified by the authorities below. Therefore, we restore the issue related to the balance addition to the Assessing Officer for decision afresh after verifying the evidence filed by the assessee. Needless to say that AO would afford adequate opportunity to the assessee. The grounds raised by the assessee are partly allowed. Issues:1. Reopening of assessment u/s. 147 of the Income Tax Act.2. Sustaining the addition of Rs. 27,36,810/-.Issue 1: Reopening of assessment u/s. 147 of the Income Tax Act:The Assessing Officer reopened the assessment based on cash deposits in the bank account of the assessee. The assessee challenged the reopening, arguing that mere cash deposits are insufficient to establish income escaping assessment. The Tribunal noted that the AO had issued verification letters seeking explanations for the cash deposits, which went unanswered by the assessee. As the assessee failed to provide any explanation, the Tribunal upheld the reopening of the assessment, dismissing the appeal against it.Issue 2: Sustaining the addition of Rs. 27,36,810/-:The assessee contested the addition of Rs. 27,36,810/-, presenting evidence to support his claims. The Assessing Officer had accepted certain explanations in a remand report but disputed others. The Tribunal observed that as the assessee did not appear before the Assessing Officer, the entire cash deposit was added to the income. However, the Tribunal found that part of the cash deposit was explained by gifts and sale proceeds of land. Regarding the lease amount received, the Tribunal disagreed with the lower authorities, stating that the evidence provided by the assessee should have been considered further. The Tribunal directed the Assessing Officer to re-examine the issue of the remaining addition of Rs. 15,89,700/-, emphasizing the need for a thorough verification of the evidence provided by the assessee. Consequently, the Tribunal partially allowed the appeal filed by the assessee.In conclusion, the Tribunal upheld the reopening of the assessment due to lack of explanation from the assessee regarding cash deposits. Regarding the addition of Rs. 27,36,810/-, the Tribunal partially allowed the appeal, directing a re-examination of the evidence related to a portion of the amount.