2015 (7) TMI 1203 - AT - Income Tax

Reopening of assessment - unexplained gifts received - Held that - The issue is squarely covered in favour of the Revenue and against the assessee by the decision of Hon ble jurisdictional High Court in the case of Jaspal Singh vs CIT (2006 (9) TMI 143 - PUNJAB AND HARYANA High Court) wherein it has been held that mere identification of the donor and showing the movement of the gift amount through banking channel is not enough to prove genuineness of the gift. The assessee is required to establish that the donor had the means and the gift was genuine for natural love and affection. The facts of the present case are almost similar to the facts of the case above thus find no infirmity in the findings of the lower authorities on this issue. - Decided against assessee Reasons for reopening of the assessment are different from the basis on which addition was made by the Assessing Officer - Held that - Assessing Officer has power to make additions even on the ground on which reassessment notice might not have been issued in case during reassessment proceedings he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for reassessment under section 148 of the Act. Respectfully following the ratio laid down by the Hon ble jurisdictional High Court in the case of Majinder Singh Kang vs CIT (2012 (6) TMI 616 - Punjab and Haryana High Court) hold that reopening of the assessment was valid and therefore ground raised by the assessee in this appeal deserves to be rejected. Penalty u/s 271(1)(c) - Held that - The gift said to have been received by the assessee was held to be bogus. Once that is so the only conclusion is that the assessee had furnished inaccurate particulars of his income and the order of the Tribunal deleting the penalty is unsustainable in law. Accordingly it is held that the assessee had concealed the particulars of income and thus penalty was liable to be levied against him under section 271(1)(c) of the Act. See CIT Vs. Deep Chand 2011 (2) TMI 604 - PUNJAB AND HARYANA HIGH COURT - Decided against assessee

Summary

Issues Involved:
1. Legality of the reassessment order.
2. Addition of Rs. 5,00,000 to the assessee's income.
3. Validity of reopening the assessment based on different grounds.
4. Imposition of penalty under Section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Legality of the Reassessment Order:

The assessee contended that the reassessment order should be quashed as no notice under Section 148 was served. However, this ground was not pressed by the assessee's counsel during the hearing, and thus, it was dismissed as not pressed.

2. Addition of Rs. 5,00,000 to the Assessee's Income:

The assessee challenged the addition of Rs. 5,00,000 made by the Assessing Officer (AO) on the grounds that the reasons for reopening the assessment differed from the basis on which the addition was made. The AO had received information from the Investigation Wing that the assessee had received hawala payments. The AO observed credit entries of Rs. 3,00,000 and Rs. 2,00,000 in the assessee's bank account and required the assessee to prove the identity, creditworthiness, and genuineness of these transactions. The assessee claimed these amounts were gifts from Shri Bhim Sain Goyal and Shri Bhiwani Shankar but failed to produce the donors for verification. The AO, relying on the judgments in Jaspal Singh v CIT and Lal Chand Kalra v CIT, concluded that the gifts were not genuine and treated the amount as income from undisclosed sources. The CIT(A) upheld this addition. The Tribunal found the issue covered in favor of the Revenue by the decision in Jaspal Singh v CIT, which held that mere identification of the donor and showing the movement of the gift amount through banking channels is insufficient to prove the genuineness of the gift.

3. Validity of Reopening the Assessment Based on Different Grounds:

The assessee argued that the reassessment was invalid as the addition was made on different grounds than those stated in the notice under Section 148. However, the Tribunal referred to the decision in Majinder Singh Kang v CIT, which upheld that the AO has the power to make additions on any ground that comes to his notice during the reassessment proceedings, even if it was not the ground on which the reassessment notice was issued. Thus, the Tribunal held that the reopening of the assessment was valid.

4. Imposition of Penalty under Section 271(1)(c):

The AO imposed a penalty of Rs. 1,43,032 under Section 271(1)(c) for concealment of income, which was upheld by the CIT(A). The Tribunal referred to the decision in CIT v Deep Chand, which held that if a gift is found to be bogus, the assessee is deemed to have furnished inaccurate particulars of income, justifying the imposition of penalty. The Tribunal, following this binding precedent, upheld the penalty imposed on the assessee.

Conclusion:

The Tribunal dismissed all three appeals filed by the assessee, upholding the reassessment order, the addition of Rs. 5,00,000, the validity of the reassessment, and the imposition of penalty under Section 271(1)(c). The judgments of the jurisdictional High Court in Jaspal Singh v CIT, Lal Chand Kalra v CIT, Majinder Singh Kang v CIT, and CIT v Deep Chand were pivotal in the Tribunal's decision.