2024 (8) TMI 1240 - AT - Income Tax

Assessment reopening under Section 147 invalid when no addition made for original reason stated

Umesh Bhimrao Chiprikar, Shanti Dental Hospital Versus The Income Tax Officer, Ward-1, Ichalkaranji

The ITAT Pune held that reopening of assessment under section 147 was invalid as no addition was made for the original reason (cash deposits in bank ... Reopening of assessment u/s 147 - cash deposits in bank account - HELD THAT:- Cash deposits in Bank Account maintained with YOUTH DEVELOPMENT CO-OP. BANK LTD., KOLHAPUR. It is also observed that no addition has been made on account of impugned cash deposits. Thus, no addition has been made on account of reason for reopening. As decided in Jet Airways (I) Ltd [2010 (4) TMI 431 - BOMBAY HIGH COURT] if no addition has been made on account of the income alleged to have been escaped assessment in the reasons recorded, then it is not open for AO to independently assess some other income. In this case, AO had independently tried to assess which was outside the initial reasons. Therefore, it is held that AO had no jurisdiction to add independently. Accordingly, we direct the AO to delete the addition. Addition u/s 56 - As observed that assessee’s father had issued a cheque in the name of assessee. The source of this is well explained as maturity amount received from maturity of Fixed Deposits. Therefore, source stands explained. Hence, assessee has fulfilled his primary onus of proving identity, genuineness and creditworthiness. Assessing Officer has not brought on record any document to negate the Assessee’s submission. Any sum of money received from a Relative(defined in the section) as gift is not taxable as per section 56(2)(vii). Assessee has received sum by cheque as gift from his father. We are of the opinion that addition is not sustainable - Decided in favour of assessee. Issues:1. Addition made beyond the reasons for which assessment was reopened.2. Addition of Rs. 2,16,000 under section 69A without considering genuine sources submitted by the assessee.Analysis:Issue 1:The appeal was filed against the order of the Commissioner of Income Tax-(Appeal) under section 250 of the Act for the Assessment Year 2013-14. The primary contention was that the Assessing Officer (AO) exceeded the scope of the assessment by delving into matters beyond the reason for which the assessment was reopened. The case involved a doctor who had cash deposits in a bank account, leading to the reopening of the assessment. However, during the assessment, the AO inquired about a gift received by the doctor from his father via cheque. The appellant argued that the AO went beyond the subject matter for which the assessment was reopened, seeking the quashing of the order.Issue 2:The second ground of appeal focused on the addition of Rs. 2,16,000 under section 69A without considering the genuine sources provided by the assessee. The AO questioned the deposit of this amount, allegedly received as a gift from the doctor's father. The appellant contended that the amount was a gift from the father's fixed deposit maturity proceeds, supported by bank statements. Despite the explanation provided by the assessee, the AO deemed the gift as non-genuine and made the addition under section 69A. The appellant appealed the decision before the Tribunal, challenging the addition.Detailed Findings:The Tribunal analyzed the case, noting that no addition was made concerning the cash deposits that triggered the assessment reopening. Citing a judgment by the Bombay High Court, the Tribunal emphasized that if no addition was made based on the income initially suspected to have escaped assessment, the AO could not independently assess other income. In this instance, the AO had attempted to assess the Rs. 2,16,000 gift independently, beyond the initial reasons for reopening the assessment. Consequently, the Tribunal directed the AO to delete the Rs. 2,16,000 addition.Further examination revealed that the source of the Rs. 2,16,000 gift was well-explained as the maturity amount from fixed deposits, supported by bank statements. The Tribunal found that the assessee had fulfilled the burden of proving the identity, genuineness, and creditworthiness of the gift. Additionally, as the gift was received from a relative, it was not taxable under the relevant section of the Act. The Tribunal concluded that the addition of Rs. 2,16,000 was unsustainable, directing the AO to delete the amount and allowing the grounds of appeal raised by the assessee.In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of adhering to the scope of assessment and considering genuine sources of income to avoid unwarranted additions.