2017 (8) TMI 1131 - AT - Income Tax

Reopening of assessment u/s 147 - assessment of the peak deposits in bank account - reasons to believe - Held that - In this case there is no change in opinion of the Assessing Officer as the matter was never investigated or adjudicated or information on the issue was called or examined by the Assessing Officer. It may be mentioned here that as mentioned by the AO, the Appellant had been issued a letter for verification of the deposits which was however not responded to, therefore the Appellant s contention that the AO did not verify the deposits before issuing the notice also u/s. 147 cannot be accepted. Therefore, relying on the various case laws as discussed above and facts and circumstances, the issuance of notice u/s. 148 was rightly held to be valid by the Ld. CIT(A), which does not need any interference on my part, hence, uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground of appeal in dispute raised by the assessee. Addition on cash deposit in saving bank account - While the contention of the Assessee that she was a handicapped widow with no source of income has been considered, however she has been unable to explain the source of cash deposits in her account or provide evidence in the form of confirmations of relatives or persons who have claimed to have given her such amounts for her son s wedding etc. Therefore in the absence of any evidence or the above explanation being substantiated by even corroborative evidence cannot be accepted. It may be mentioned that since the cash credits are there in her bank account, the onus is on the Assessee to prove the source of the same, Kale Khan Mohd Hanif vs CIT(1963 (2) TMI 33 - SUPREME Court). It is immaterial that she did not have any business activities or known source of income, cash deposits in bank have to be explained by the assessee otherwise they can be added U/S 69 or 66B. AO has already taken a reasonable approach of taking the peak balance of the deposits in her account and benefit of telescoping i.e withdrawals for the same has already been given. Accordingly Ld. CIT(A) has rightly held that the addition made by the AO was justified and the same was confirmed - Decided against assessee.

Issues Involved:
1. Validity of the order passed by the Assessing Officer (AO).
2. Initiation of provisions under section 148 of the Income Tax Act.
3. Treatment of cash deposits as income escaped assessment.
4. Addition of ?5,55,000/- on account of cash deposits in the savings bank account.
5. Application of the peak credit theory.
6. Mention of the provision under which the addition was made.
7. Compliance with various judgments of the Supreme Court and Jurisdictional High Courts.
8. Delay in filing the appeal before the Tribunal.

Issue-wise Detailed Analysis:

1. Validity of the Order Passed by the AO:
The appellant contended that the order passed by the AO was bad in law and against the facts of the case. However, the Tribunal did not find any substantial argument or evidence presented by the appellant to support this claim.

2. Initiation of Provisions under Section 148 of the Income Tax Act:
The appellant argued that the AO erred in initiating provisions under section 148. The Tribunal found that the AO had valid reasons to believe that income had escaped assessment based on the AIR information about cash deposits of ?10,66,850/-. The reasons for reopening the assessment were duly recorded, and the AO followed the due process. The Tribunal upheld the validity of the notice issued under section 148, referencing the case of Jawand Sons vs. CIT and other relevant case laws.

3. Treatment of Cash Deposits as Income Escaped Assessment:
The appellant challenged the AO’s decision to treat cash deposits as income escaped assessment. The Tribunal supported the AO's decision, noting that the appellant did not comply with multiple notices and failed to provide a satisfactory explanation for the cash deposits. The Tribunal referenced the Hon’ble Supreme Court's rulings, which permit the reopening of assessments if the AO has reason to believe that income has escaped assessment.

4. Addition of ?5,55,000/- on Account of Cash Deposits in the Savings Bank Account:
The AO added ?5,55,000/- as income from other sources based on the peak balance observed in the appellant's bank account. The appellant claimed that the deposits were collected from relatives for her son's marriage. However, she failed to provide corroborative evidence or confirmations from the relatives. The Tribunal upheld the AO's addition, citing the appellant's inability to substantiate her claims and the legal precedent that unexplained cash deposits can be added to income under sections 69 or 66B.

5. Application of the Peak Credit Theory:
The AO used the peak credit theory to determine the income, which the appellant contested. The Tribunal found the AO's approach reasonable, as the peak balance method considered the highest balance during the period, giving the benefit of withdrawals. The Tribunal upheld the AO's use of the peak credit theory.

6. Mention of the Provision under which the Addition was Made:
The appellant argued that the AO did not specify the provision under which the addition was made. However, the Tribunal did not find this argument compelling enough to overturn the AO's decision, given the context and the explanations provided.

7. Compliance with Various Judgments of the Supreme Court and Jurisdictional High Courts:
The appellant claimed that the AO did not follow relevant judgments. The Tribunal found that the AO and the CIT(A) had considered relevant case laws and legal principles in their decisions, and the appellant did not present any specific judgments that were overlooked or misapplied.

8. Delay in Filing the Appeal before the Tribunal:
There was a delay of 44 days in filing the appeal, which the appellant attributed to her physical condition and circumstances. The Tribunal condoned the delay, considering the appellant's plausible reasons and the principles of natural justice, and proceeded to decide the appeal on its merits.

Conclusion:
The Tribunal dismissed the appeal, upholding the orders of the lower authorities. It found that the AO had valid reasons to reopen the assessment, the addition of ?5,55,000/- was justified, and the appellant failed to provide sufficient evidence to challenge the AO's findings. The Tribunal also validated the procedural aspects followed by the AO and the CIT(A).

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