2022 (7) TMI 395 - AT - Income Tax

Tribunal Invalidates Notice, Deletes Additions, and Rejects Penalty - Appellant's Appeal Allowed

The Tribunal deemed the notice issued under section 148 as time-barred and invalid, leading to the unsustainable addition of Rs.6,49,177. The Tribunal ... Reopening of assessment u/s 147 - unexplained money u/s 69A - HELD THAT:- It is evident based on AIR information indicating that the assessee had made investment of Rs.18 lakhs in fixed deposits with Bank of India, the AO reopened the assessment under section 147 - In course of assessment proceeding, the assessee furnished documentary evidence and submitted that the fixed deposit made is of Rs.3 lakhs and not 18 lakhs. On cross verification with the bank, the AO having found assessee’s claim to be correct did not make any addition of the fixed deposits. Whereas, he made addition of deposits made in some other bank accounts while completing the assessment. The issue arising for consideration is, whether without assessing the income for which the assessment was reopened under section 147 can AO make other addition. The answer to the aforesaid question certainly will be in the negative. In case of CIT Vs. Jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] while dealing with an identical issue, has held that without assessing the income, for which the assessment was reopened, the AO cannot assess any other item of income. No hesitation in holding that the addition made is unsustainable. Accordingly, delete the addition. Ground is allowed. Issues:1. Validity of notice issued under section 1482. Validity of assessment order and demand notice3. Addition of unexplained cash credit4. Direction to initiate penalty proceedings5. Non-provision of hard copy of order under section 250Validity of notice issued under section 148:The appellant contended that the notice issued under section 148 was time-barred and invalid. The Assessing Officer reopened the assessment based on information that the assessee had deposited Rs.18 lakhs in a bank account. The assessee claimed the deposit was only Rs.3 lakhs from agricultural income and past savings. The Assessing Officer rejected the claim of agricultural income due to lack of evidence. The Tribunal held that without assessing the income for which the assessment was reopened, the Assessing Officer cannot make other additions, citing judicial precedents. The addition of Rs.6,49,177 was deemed unsustainable, and the Tribunal allowed the ground.Validity of assessment order and demand notice:The appellant raised concerns about the assessment order and demand notice being unsigned and invalid. However, the main focus was on the validity of the additions made by the Assessing Officer. The Tribunal's decision on the validity of the notice issued under section 148 indirectly addressed the concerns regarding the assessment order and demand notice, as the Tribunal found the addition of Rs.6,49,177 to be unsustainable due to procedural irregularities.Addition of unexplained cash credit:The Assessing Officer treated additional deposits in other bank accounts as unexplained money under section 69A of the Act, totaling Rs. 8,97,200. The Tribunal found that the Assessing Officer could not make such additions without first assessing the income for which the assessment was reopened. The Tribunal relied on judicial precedents to support its decision and deemed the addition unsustainable, leading to its deletion.Direction to initiate penalty proceedings:The Tribunal addressed the issue of the Commissioner directing the Assessing Officer to initiate penalty proceedings under sections 269SS/T, deeming it bad in law. However, the Tribunal's primary focus was on the additions made by the Assessing Officer without properly assessing the income for which the assessment was reopened. The Tribunal found such additions unsustainable and deleted them, indirectly addressing the penalty proceedings issue.Non-provision of hard copy of order under section 250:The appellant raised concerns about not receiving a hard copy of the order under section 250. While this issue was mentioned, the Tribunal's decision primarily focused on the validity of the additions made by the Assessing Officer without properly assessing the income for which the assessment was reopened. The Tribunal found such additions unsustainable and allowed the appeal based on this ground.