Reopening jurisdiction upheld where undisclosed transactions indicate escapement; unexplained investment remitted for fresh adjudication after opportunity.

Assessing Officer validly reopened the assessment despite no original return because departmental information about purchase and transfer transactions supported a reason to believe escapement of income, and sanction for reopening was found proper; jurisdiction under reopening provisions was upheld. However, the addition as unexplained investment was set aside and remitted to the Assessing Officer for fresh adjudication because the assessee had not been afforded adequate opportunity to substantiate the source of funds; the officer must reexamine evidence and pass a speaking order.

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Issues: (i) Whether the Assessing Officer had jurisdiction to reopen the assessment for A.Y. 2012-13 by issuing notice under section 148/147 of the Income-tax Act, 1961 (including sanction under section 151) where no original return was filed; (ii) Whether the addition of Rs. 45,50,000 made as unexplained investment under section 69A (and deemed income under section 69B) is sustainable in the absence of evidence of source and whether the matter requires fresh adjudication.

Issue (i): Whether the Assessing Officer had jurisdiction to reopen the assessment for A.Y. 2012-13 by issuing notice under section 148/147 of the Income-tax Act, 1961 (including sanction under section 151) where no original return was filed.

Analysis: The Tribunal examined the facts that the assessee had not filed an original return, departmental information indicated purchase and transfer transactions (including stamp duty valuation and TDS entries), and sanction for issuance of notice under section 151 had been obtained. The Tribunal distinguished precedents relied upon by the assessee where returns had been filed or prior assessments completed, and followed authority confirming that where there is failure to disclose material facts and information shows possible escapement of income, the Assessing Officer may form a reason to believe and assume jurisdiction under section 147/148.

Conclusion: Against the assessee (in favour of the revenue). The Tribunal held that the Assessing Officer rightly assumed jurisdiction to reopen the assessment by issuing notice under section 148, and Grounds No. 1 and 2 are dismissed.

Issue (ii): Whether the addition of Rs. 45,50,000 made as unexplained investment under section 69A (and deemed income under section 69B) is sustainable in the absence of evidence of source and whether the matter requires fresh adjudication.

Analysis: The Tribunal noted that while the basic fact of purchase for Rs. 45,50,000 was undisputed, the record showed that neither at assessment nor on appeal had the assessee been effectively afforded adequate opportunity or the assessment officer given full chance to examine substantiating evidence of the source of funds. In the interest of justice the Tribunal found it appropriate to remit the matter to the Assessing Officer to reexamine the source of investment after affording a reasonable opportunity to the assessee and to pass a speaking order considering any evidence furnished.

Conclusion: In favour of the assessee. Ground No. 3 is allowed for statistical purposes and restored to the file of the Assessing Officer for fresh adjudication with opportunity to the assessee.

Final Conclusion: The appeal is partly allowed: jurisdictional challenges to the reopening are dismissed, but the substantive addition as unexplained investment is remitted for fresh adjudication after affording the assessee a reasonable opportunity to substantiate the source of funds.

Ratio Decidendi: Where no original return is filed and departmental information indicates transactions that may show escapement of income, the Assessing Officer may form a reason to believe and assume jurisdiction under section 147/148 (with sanction under section 151 where applicable); however, an addition on account of unexplained investment under section 69A/69B requires that the assessee be afforded adequate opportunity and the Assessing Officer must consider available evidence before making a final adjudication.

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