2010 (12) TMI 1256 - AT - Income Tax

Summary

Issues involved: Validity of initiation of reassessment proceedings u/s 147 and confirmation of addition of Rs. 5,00,000.

Validity of initiation of reassessment proceedings:
The appeal was against the CIT(A) order confirming proceedings u/s 147 initiated after four years from the end of the relevant assessment year. The AO received information alleging that the assessee had taken a loan of Rs. 5,00,000 from M/s Sober Associates Pvt.Ltd. The assessee argued that all material facts were disclosed during the original assessment u/s 143(3). The CIT(A) upheld the initiation of reassessment proceedings, stating that the confirmation allegedly filed during the original assessment was not available on record. The assessee challenged the validity of the initiation of reassessment proceedings, claiming that there was no failure to disclose material facts necessary for assessment. The AR contended that the reasons given by the AO were vague and did not mention any failure to disclose material facts. The AR cited relevant case laws to support the argument that the reassessment proceedings were invalid.

Confirmation of addition of Rs. 5,00,000:
The AO added the loan amount to the assessee's income based on information received from the Investigation Wing. The assessee claimed to have provided evidence during the original assessment to prove the genuineness of the loan, which was accepted by the AO. However, the AO initiated reassessment proceedings based on a report alleging the loan was not genuine. The CIT(A) found that the confirmation allegedly filed during the original assessment was not on record and upheld the addition. The AR argued that the reassessment proceedings were wrongly initiated as all material facts were disclosed during the original assessment. The DR supported the CIT(A)'s order, stating that the addition was rightly confirmed as the assessee did not furnish any evidence. The Tribunal directed the AO to provide the source of information regarding the loan and to allow the assessee to substantiate the genuineness of the entry. The appeal was partly allowed for statistical purposes.