2018 (5) TMI 902 - HC - Income Tax

Unexplained money in the bank accounts of the assessee - addition relying upon the brought forward balance for the subsequent assessment year based on the closing cash on hand of the preceding assessment year - Held that - Adjudication on the opening cash in the subsequent assessment year would not arise. If the opening cash in hand is to be modified considering the arguments of the Revenue, it would certainly have an impact on the closing cash in hand of the preceding assessment year, which has attained finality. The issue which has reached finality cannot be reopened in the guise of the arguments now advanced by the Revenue. Tribunal rejected the appeals filed by the Revenue. No infirmity or irregularity is found in the order of the Tribunal. Hence, we answer the substantial question of law against the Revenue and in favour of the assessee.

Summary

Issues:
Challenge to orders of the Income Tax Appellate Tribunal regarding assessment years 2006-07, 2008-09, 2010-11, and 2011-12 under Section 260A of the Income Tax Act, 1961.

Analysis:
The appeals were filed by the Revenue challenging the orders of the Income Tax Appellate Tribunal for the assessment years 2006-07, 2008-09, 2010-11, and 2011-12. The assessee, an individual engaged in trading pipes and tubes, had undergone a survey under Section 133A of the Act, revealing deposits in various bank accounts. Assessment under Section 143(3) read with Section 147 was concluded for the mentioned assessment years. The assessee appealed before the Commissioner of Income Tax (Appeals) who partially allowed the appeals. Subsequently, the Revenue appealed before the Tribunal, which dismissed the appeals stating there was sufficient opening balance of cash in hand for each year, as per the CIT(A) orders. The Revenue contested the deletion of addition under Section 69A of the Act, based on unexplained money in bank accounts, by relying on the brought forward balance of the preceding year. The Tribunal held that the closing cash in hand of the previous year is the opening cash in hand for the subsequent year, and since the Revenue did not contest this, the appeals were rejected.

The substantial question of law raised was whether the Tribunal was justified in deleting the addition based on the brought forward balance of the preceding year, which the Revenue did not challenge further due to monetary limits for filing an appeal. The Revenue argued that the Tribunal should have allowed them to establish the opening cash in hand for the subsequent year. However, the Tribunal upheld its decision, stating that the closing cash in hand of the previous year is considered the opening cash in hand for the subsequent year. The Tribunal's decision was based on the principle that the issue which has reached finality cannot be reopened based on new arguments. The High Court agreed with the Tribunal, finding no irregularity in its order and dismissed the appeals, answering the substantial question of law in favor of the assessee and against the Revenue.