2016 (3) TMI 1460 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - unexplained cash deposits - HELD THAT - As modus operandi of the transaction is that the moment the cash is deposited immediately the cheques are issued in favour of the somebody. Mostly the name appears of Milap Automotive Pvt. Ltd. - we reject the contention of the assessee that there is no live link between the reasons and the information received. The assertion of Assessee that on receipt of the information from another AO AO has simply jumped to the conclusion that the deposit is unaccounted income of the assessee. For this our view is that the moment any person of little bit of common sense looks at this account with the income earning employment of the assessee he will jump to same conclusion. Therefore we upheld that reopening of assessment is validly initiated. Therefore ground no 1 of the appeal is dismissed. Addition u/s 68 - As it is evident that u/s 133(6) letters have been issued by the AO to them and out of them few responded. This might have happened because of short time available during the remand proceedings and death of Shri Dinesh Prasad who was the main person collecting money from other parties. As the AO himself has stated that the assessee may not be the real owner of the sum so deposited therefore in the interest of justice we set aside all three appeals back to the file of AO for verification of the details filed and also to enquire from the beneficiaries of the sum received from the bank account of the assessee. Verification from the bank also may be conducted for the companies in which the assessee has made investment. In view of this all the three appeals are set aside to the file of AO to make assessment de novo. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues involved:
- Reopening of assessment for Assessment Year 2005-06, 2006-07, and 2007-08
- Addition of cash deposits in the bank account of the assessee under sections 68 and 69 of the Income Tax Act

Reopening of Assessment:
The assessee appealed against the reopening of assessment for the mentioned years. The basis for reopening was substantial cash deposits in the bank account of the assessee, which were not explained satisfactorily. The assessee argued that there was no live link between the information received and the reasons recorded for reopening. However, the tribunal upheld the reopening, stating that the specific information received regarding the cash deposits, along with the bank statements, provided a clear basis for initiating the reassessment. The tribunal found the explanation provided by the assessee regarding being an entry operator for his deceased brother-in-law insufficient to justify the cash deposits.

Addition of Cash Deposits under Sections 68 and 69:
The significant addition made under sections 68 and 69 of the Income Tax Act was contested by the assessee. The assessee claimed that the large sums deposited were not his unaccounted income but were funds received from his deceased brother-in-law for investment purposes. The tribunal noted that the assessing officer had questioned the source of such significant deposits, considering the modest income of the assessee as an accountant. The tribunal directed a thorough examination of the transactions, beneficiaries, and investments made through the bank account. It was emphasized that the onus of proving the source of the deposits rested on the assessee. Consequently, the appeals were remanded back to the assessing officer for a fresh assessment, including verification of details, inquiries with beneficiaries, and examination of related parties.

Conclusion:
The tribunal partially allowed the appeals for statistical purposes, setting aside the additions made under sections 68 and 69 of the Income Tax Act. The reassessment for all three years was directed to be conducted afresh, focusing on verifying the sources of the cash deposits and examining the transactions and beneficiaries thoroughly. The onus of proving the legitimacy of the deposits was reiterated to lie with the assessee.