2015 (11) TMI 1675 - AT - Income Tax

Reopening of assessment - Held that - Assessing Officer is empowered to reopen the assessment if he has reasons to believe that the income has escaped from the assessment. It is not required by the Revenue to show that income which has escaped assessment was due to the failure on the part of the appellant to disclose fully and truly all the materials relevant to the assessment. In the case before us, the Assessing Officer has reopened the assessment because he had information due to the survey conducted u/s. 133A in the business premises of Smt. Leela Surana that the assessee had made cash payment during the relevant assessment year i.e. on 17.09.2008 and 24.09.2008 of ₹ 6,80,000/- and ₹ 30,000/- respectively against which he had obtained back dated contract note for the purchase of ₹ 4700 shares of Shyam Star . Therefore, Assessing Officer has rightly invoked the provisions of section 147 & 148 of the Act. Accordingly we uphold the order of the Revenue on this issue.

Summary

Issues:
1. Reopening of assessment under Sec.147/148 of the Act.
2. Disallowance of unexplained income under the head "income from other sources".

Reopening of Assessment:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (A)-II, Chennai, challenging the reopening of assessment under Sec.147/148 of the Act. The Assessee had made cash payments to purchase shares, and the Assessing Officer added the amount as unexplained income. The Commissioner opined that the case was reopened within the permissible period of four years, and the Assessing Officer had the authority to reopen the assessment based on reasons to believe that income had escaped assessment. The Tribunal upheld the Commissioner's decision, stating that the Assessing Officer rightly invoked the provisions of Sec.147/148 based on information from a survey. The case laws cited by the Commissioner were deemed appropriate.

Disallowance of Unexplained Income:
Regarding the disallowance of unexplained income under the head "income from other sources," the Assessee submitted evidence to support the investment in shares during the relevant assessment year. However, the Tribunal found discrepancies in the records submitted by both the Assessee and the Revenue authorities. In the interest of justice, the matter was remitted back to the Assessing Officer to verify the authenticity of the accounts and pass an appropriate order. The Assessee was directed to cooperate with the Revenue in the proceedings. The Tribunal allowed the appeal of the Assessee for statistical purposes.

The judgment was pronounced on 13th November 2015 in Chennai by the Appellate Tribunal ITAT Chennai, with detailed analysis and decisions on the issues of reopening of assessment and disallowance of unexplained income.