2019 (3) TMI 262 - AT - Income Tax

Validity of the reassessment proceedings u/s 147/148 - unexplained money u/s 69A - amount paid towards admission and donation/capitation fee - HELD THAT - Son of the assessee Dr. Sandeep Jain who appeared before the Assessing Officer had categorically stated that whatever amount has been paid towards admission and donation/capitation fee has been paid by him. He and his wife are doctors since 1996 and have sufficient source to pay this amount. Therefore, when Shri Sandeep Jain admitted before the Assessing Officer regarding the payment of such capitation fee and when Shri Sandeep Jain and his wife are both doctors which is not in dispute, therefore, in my considered opinion, addition, if any could have been made in the hands of the son of the assessee i.e., Shri Sandeep Jain and not in the hands of the assessee. No doubt Shri P. Mahalingam in his statement had accepted to have received capitation fee as unaccounted money from Shri S.K. Jain, f/o Shri Sandeep Jain and has surrendered the same for taxation as mentioned by the Assessing Officer. However, a perusal of the statement recorded of Shri Mahalingam, which has been reproduced by the CIT(A) in his order, nowhere shows he has taken the name of the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Addition of unexplained money u/s 69A of the IT Act.
2. Validity of reassessment proceedings.

Analysis:

Issue 1: Addition of unexplained money u/s 69A of the IT Act
The case involved an appeal by the assessee against the CIT(A)'s order confirming the addition of ?10,01,000 as unexplained money under section 69A of the IT Act. The Assessing Officer had reopened the assessment based on information about cash payments made for admission to a medical college. The son of the assessee, a doctor, admitted to making the payments and stated that he and his wife had sufficient sources to pay. The Assessing Officer made the addition based on another individual's statement admitting to receiving unaccounted money from the son of the assessee. However, the Tribunal held that since the son admitted to making the payments and had the means to do so, any addition should have been made in his hands, not the assessee's. The Tribunal found no conclusive evidence linking the payments to the assessee, leading to the direction to delete the addition in the assessee's hands.

Issue 2: Validity of reassessment proceedings
The assessee challenged the validity of the reassessment proceedings, arguing that the reasons recorded by the Assessing Officer were invalid and lacked proper application of mind. The assessee contended that the initiation of proceedings was based on borrowed satisfaction and lacked opportunity for cross-examination. The Tribunal did not delve into this issue as the appeal succeeded on merits. The Tribunal emphasized that since the addition was not justified in the assessee's hands due to the son's admission and financial capacity, the legality of the reassessment proceedings was not addressed further.

In conclusion, the Tribunal allowed the appeal, directing the deletion of the addition of ?10,01,000 made under section 69A of the IT Act. The decision highlighted the importance of attributing additions to the appropriate party based on evidence and financial capacity, thereby setting aside the CIT(A)'s order and emphasizing the need for a thorough assessment of facts before making such additions.