2013 (4) TMI 658 - AT - Income Tax

Re opening of assessment - assessing officer formed an opinion that income of the assessee is only Rs.2,96,246/-, whereas he has deposited an amount of more than 27,24,750/- in two saving bank accounts in cash, thus the income has escaped assessment - Held that - As during the course of hearing a query being put to the assessee that, whether assessee has annexed the copy of the bank statement with the return or made any note on the computation of income showing as to how a large number of amounts have been deposited in cash replied in negative. The information received from the investigation wing suggest deposits of Rs.27,24,750/- in cash in two banks accounts. It could be cross verified with the bank statements along with the disclosure of facts that this amount was received on account of sale proceeds of the hotel etc. In absence of complete information, assessing officer has to make an inquiry. Thus the assessing officer has concrete information which enable him to form an opinion that income has escaped assessment. Against assessee. CIT(A) deleted the addition - cash deposited in cash in two bank accounts - Held that - The assessee has explained the source in this case. The grievance of the AO is, why he has not deposited the amount in the bank on the date of receipt itself is too be hyper technical in his approach, once assessee has demonstrated the availability of cash in hand more than the one deposit in the bank account, though subsequently, then probably explanation of the assessee ought to be accepted, unless some other incriminating facts brought on record. AO has simply disbelieved and the explanation of the assessee and simple denial is a no denial, he has to assign the reason which is acceptable in law. No merit in this appeal of the revenue.

Summary

Issues:
1. Reopening of assessment u/s 147 of the Income Tax Act challenged by the assessee.
2. Grounds of appeal raised by the revenue against the order of the ld. CIT (A) dated 5.4.2011.
3. Deletion of addition of Rs.20.20 lacs challenged by the revenue.
4. Deletion of interest u/s 234B of the Income Tax Act challenged by the revenue.

Issue 1: Reopening of assessment u/s 147 of the Income Tax Act challenged by the assessee:
The assessing officer reopened the assessment based on information that the assessee had deposited significant amounts in two bank accounts in cash, exceeding the declared income. The assessee contested the reopening, arguing that the reasons provided lacked analytical application and did not conclusively show income escaping assessment. The assessing officer's belief was based on concrete information received, justifying the reopening. The tribunal upheld the reopening, emphasizing that the assessing officer needed to form a prima facie opinion at the notice issuance stage, not a conclusive finding. The tribunal dismissed the assessee's appeal.

Issue 2: Grounds of appeal raised by the revenue against the order of the ld. CIT (A) dated 5.4.2011:
The revenue challenged the deletion of addition of Rs.20.20 lacs made during the assessment. The assessee had deposited amounts in bank accounts, attributing them to cash receipts in the regular course of business and proceeds from a hotel sale. The assessing officer accepted the explanation for deposits in one bank account but disbelieved the explanation for deposits in another account, leading to the addition. However, the ld. CIT (A) accepted the assessee's explanation after reviewing the sale agreement, civil suit filed by the buyer, and the circumstances surrounding the transactions. The tribunal concurred with the ld. CIT (A), noting that the assessing officer's hyper-technical approach was unwarranted. The tribunal found no merit in the revenue's appeal and dismissed it.

Issue 3: Deletion of addition of Rs.20.20 lacs challenged by the revenue:
The revenue contested the deletion of the addition of Rs.20.20 lacs, arguing that the assessing officer had valid reasons for making the addition based on discrepancies in deposit dates and receipts related to a hotel sale. However, the ld. CIT (A) accepted the assessee's explanation supported by documentary evidence, such as the sale agreement and civil suit filed by the buyer. The tribunal, after careful review, found the assessee's explanation satisfactory and criticized the assessing officer's overly technical approach. Consequently, the tribunal upheld the ld. CIT (A)'s decision and dismissed the revenue's appeal.

Issue 4: Deletion of interest u/s 234B of the Income Tax Act challenged by the revenue:
The revenue challenged the deletion of interest u/s 234B of the Income Tax Act. However, detailed information or arguments related to this specific issue were not provided in the judgment. Therefore, the outcome or reasoning behind the deletion of interest u/s 234B remains unclear based on the available information.

In summary, the judgment addressed various issues related to the reopening of assessment, addition of income, and interest under the Income Tax Act. The tribunal upheld the assessing officer's decision to reopen the assessment and dismissed the assessee's appeal. Additionally, the tribunal supported the ld. CIT (A)'s decision to delete the addition of Rs.20.20 lacs, finding the assessee's explanation satisfactory and criticizing the assessing officer's technical approach. The outcome of the challenge against the deletion of interest u/s 234B by the revenue was not explicitly detailed in the judgment.