2023 (4) TMI 277 - AT - Income Tax

Tribunal grants appeal, orders fresh assessment, ensures fair hearing for assessee.

The Tribunal allowed the appeals for statistical purposes, setting aside the issues to the Assessing Officer for fresh adjudication. The Tribunal directed ... Reopening of assessment u/s 147 - Mistakes in reason to believe - Non disposal of objections raised against reopening - HELD THAT:-The mistake was done in the recorded reason as the assessee was treated as non filler of ITR, whereas the assessee had filed the income tax return during his assessment year. Assessee had filed objection against the recorded reason before the Ld. AO which was not disposed off during the assessment proceeding. Both objections are duly clarified by the Ld. CIT(A) in the appeal order. But the assessee was wrongly treated as non-filer of return for impugned assessment year which is not correct observation - There is no such proper adjudication in the order of the Ld. CIT(A) related to the assessee's claim in the factual grounds. The observation of the CIT(A) was not duly rebutted by the assessee in his submission. All the issues, legal & factual should be disposed off in proper manner by the Ld. AO by allowing the assessee a reasonable opportunity of hearing. Issues Involved:1. Condonation of delay in filing the appeal.2. Legality of reopening the assessment under section 148 of the Income Tax Act.3. Validity of the reasons recorded for reopening the assessment.4. Treatment of cash deposits as unexplained income.5. Jurisdictional validity of the assessment order.Summary:1. Condonation of Delay:The assessee filed an application for condonation of a 2-day delay in filing the appeal, attributing it to postal delays beyond their control. The Tribunal condoned the delay as there was no strong objection from the Departmental Representative (DR).2. Legality of Reopening the Assessment:The assessee challenged the reopening of the assessment under Section 148, arguing that the reasons recorded for reopening were based on false premises and surmises. The assessee contended that the Assessing Officer (AO) incorrectly presumed that the assessee had not filed a return for the relevant assessment year, despite having done so.3. Validity of Reasons for Reopening:The AO recorded reasons for reopening the assessment based on AIR information indicating cash deposits in the assessee's bank accounts. The Tribunal noted that the reasons recorded were arbitrary and not based on relevant material facts. The AO's assumption that cash deposits constituted undisclosed income was deemed fallacious and not sufficient to justify the reopening of the assessment.4. Treatment of Cash Deposits:The AO added cash deposits in the assessee's bank accounts as unexplained income. The assessee argued that these deposits were related to business transactions of a firm in which the assessee was a partner. The Tribunal found that the AO had not properly adjudicated the factual basis of these deposits and had treated the assessee as a non-filer erroneously.5. Jurisdictional Validity:The Tribunal observed that the AO had acted without proper jurisdiction by recording false and arbitrary reasons for reopening the assessment. The Tribunal also noted that the objections raised by the assessee against the recorded reasons were not adequately addressed by the AO.Conclusion:The Tribunal set aside the entire issue to the AO for fresh adjudication, directing that all legal and factual issues be disposed of properly, and the assessee be given a reasonable opportunity of hearing. Consequently, the appeals were allowed for statistical purposes. Order pronounced in the open court on 20.03.2023.