Tribunal upholds assessment reopening & income addition, dismissing appeal for lack of evidence.

The Tribunal upheld the re-opening of the assessment, issuance of notice by the jurisdictional officer, and the addition of Rs. 3,28,888/- as business income. The Tribunal found that the Assessing Officer had sufficient reason to believe income had escaped assessment and followed due procedure. The appeal was dismissed as the assessee failed to substantiate claims against the additions made.

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Issues Involved
1. Legality of the re-opening of the assessment under Section 147.
2. Issuance of notice under Section 148 by a non-jurisdictional officer.
3. Addition of Rs. 3,28,888/- as business income.
4. Application of Section 44AD and presumption of business income.
5. Disposition of objections without a speaking order.

Detailed Analysis

1. Legality of the Re-opening of the Assessment under Section 147
The assessee challenged the re-opening of the assessment on the grounds that it was initiated without tangible material and without proper sanction as envisaged in Section 151 of the Income Tax Act, 1961. The Tribunal noted that the Assessing Officer (AO) had information regarding substantial cash deposits and interest income which led to the belief that income had escaped assessment. The AO followed due procedure, including obtaining sanction from the Principal Commissioner of Income Tax (PCIT). The Tribunal upheld the re-opening, stating that the AO had sufficient reason to believe that income had escaped assessment and that the procedure laid down under the Act was followed.

2. Issuance of Notice under Section 148 by a Non-Jurisdictional Officer
The assessee contended that the notice under Section 148 was issued by a non-jurisdictional officer. The Tribunal found that the initial notice was issued by the ACIT Circle 41(1), but the case was subsequently transferred to the ITO Ward 41(3), who had the jurisdiction. The notice under Section 148 was issued by the jurisdictional officer after following the due procedure, making the assessee's contention baseless.

3. Addition of Rs. 3,28,888/- as Business Income
The AO treated the cash deposits as business receipts and made an addition under Section 44AD of the Act, estimating the income at 8% of the deposits. The Tribunal noted that the assessee had been declaring business income in previous years and failed to provide evidence for any other source of the cash deposits. Therefore, the addition made by the AO was justified and upheld by the Tribunal.

4. Application of Section 44AD and Presumption of Business Income
The assessee argued that the addition under Section 44AD was invalid as no business was conducted during the year under consideration. The Tribunal observed that the assessee had a history of declaring business income and did not file a return for the assessment year in question. Given the lack of evidence for any other source of cash deposits, the AO's presumption of business income was deemed appropriate.

5. Disposition of Objections without a Speaking Order
The assessee claimed that the AO disposed of the objections without passing a speaking order. The Tribunal referred to the Supreme Court's decision in GKN Driveshafts (India) Ltd. v. ITO, which mandates that the AO must dispose of objections through a speaking order. The Tribunal found that the AO had indeed provided a detailed point-wise reply to the objections, fulfilling the requirement of a speaking order.

Conclusion
The Tribunal dismissed the appeal of the assessee, upholding the re-opening of the assessment, the issuance of notice by the jurisdictional officer, and the addition of Rs. 3,28,888/- as business income. The Tribunal found that the AO followed due procedure and that the assessee failed to substantiate claims against the additions made. The order was pronounced in the open Court on 24th August, 2022.

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