2013 (2) TMI 889 - AT - Income Tax

Summary

Issues Involved:
1. Validity of re-opening of assessment u/s 148
2. Authentication and admissibility of evidence
3. Addition of unexplained investment u/s 69
4. Opportunity to examine and verify documents
5. Assessment barred by limitation
6. Addition based on agreement

Summary:

1. Validity of Re-opening of Assessment u/s 148:
The assessee contended that the re-opening of assessment was not valid in law. The CIT(Appeals) rejected this ground, noting that the re-opening was based on information received from the Central Board of Direct Taxes (CBDT), which indicated that the assessee had made a declaration of endowment in favor of M/s. Webster Foundation, transferring Euro 123,000 to the Foundation's account. The Tribunal upheld the CIT(Appeals)' decision, confirming the validity of the re-opening u/s 148.

2. Authentication and Admissibility of Evidence:
The assessee argued that the documents relied upon by the Assessing Officer were not authenticated and lacked evidentiary value. The CIT(Appeals) and the Tribunal held that the information received from the CBDT was deemed authenticated as it was obtained on a Government-to-Government basis. The Tribunal noted that the documents, including the declaration of endowment and bank statements, were on the letterhead of LGT Bank in Liechtenstein and were initialed, thus holding them to be valid evidence.

3. Addition of Unexplained Investment u/s 69:
The Assessing Officer added the unexplained investment of CHF 770,796.60 (equivalent to Rs. 2,26,38,373) as income for the assessment year 2002-03. The assessee contended that the amount could not be added for this assessment year as it was available from March 2000. The Tribunal upheld the addition, stating that the balance as on 31.12.2001 was relevant for the assessment year 2002-03. The Tribunal also noted that the onus was on the assessee to explain the source of the amount, which he failed to do.

4. Opportunity to Examine and Verify Documents:
The assessee claimed that he was not given sufficient opportunity to examine and verify the documents. The Tribunal observed that the Assessing Officer had issued summons u/s 131 and provided the assessee with all relevant documents, giving him ample opportunity to respond. The Tribunal found that the assessee had failed to discharge the onus of proving the source of the investment.

5. Assessment Barred by Limitation:
The assessee argued that the assessment proceedings were barred by limitation. The Tribunal dismissed this contention, noting that the re-opening of the assessment was within the permissible time limits and based on valid information received from the CBDT.

6. Addition Based on Agreement:
The assessee contended that the addition was made solely based on his agreement to pay taxes. The Tribunal found that the addition was not solely based on the assessee's agreement but was supported by substantial evidence, including the declaration of endowment and bank statements. The Tribunal noted that the assessee had agreed to pay taxes to avoid litigation and maintain his reputation, but this did not invalidate the addition made by the Assessing Officer.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the re-opening of the assessment u/s 148, the authenticity and admissibility of the evidence, and the addition of unexplained investment u/s 69. The Tribunal confirmed that sufficient opportunity was given to the assessee to examine and verify the documents and that the assessment was not barred by limitation. The addition was not solely based on the assessee's agreement but was supported by substantial evidence.