2020 (4) TMI 545 - AT - Income Tax

Unexplained investment - HELD THAT - Despite the opportunities given by the AO and the Ld. CIT(Appeals) to the assessee and also before us, the assessee failed to bring any evidence showing the sources of investment made by the assessee in purchasing properties. As the assessee failed to explain the investment made by him and sources thereof more particularly from coaching classes, home tuitions and agricultural activities, no interference is required in the findings given by the Ld. CIT(Appeals) and the same is thereby upheld. Thus, ground No.1 raised in appeal by the assessee is dismissed. Reopening of assessment - assessee is against not passing a separate order to the objections taken by the assessee against the initiation of re-assessment - HELD THAT - notice u/s.148 was issued on 15-03-2016 which was served on 16-03-2016. No reply was filed in response to notice u/s.148. It is not coming either from the assessment order or from any other material that assessee raised any objection to the initiation of re-assessment proceedings, which could have warranted the passing of a separate order by the AO before espousing the assessment on merits. It is further pertinent to note on a perusal of the grounds taken before the ld. CIT(A) that no such issue was taken up. The ld. AR has not invited our attention towards any material divulging the raising of objections before the AO against the initiation of re assessment proceedings. In such circumstances, there could have been no occasion for the AO to pass a separate order disposing the objections to the re-assessment. We, therefore, dismiss this ground of appeal. Addition being 15% of various expenses as the assessee failed to produce the supporting details like bills, vouchers etc. - HELD THAT - Once the basic amount is added back as unexplained investment then the disallowance @15% made by the Assessing Officer and confirmed by the Ld. CIT(Appeals) is at higher side and therefore, we restrict the disallowance @5%. Thus, the assessee gets the relief patially. We order accordingly. Thus, ground raised in appeal by the assessee is partly allowed.

Summary

Issues involved:
1. Dismissal of appeal confirming undisclosed income addition
2. Legality of reopening assessment under Section 147
3. Failure to pass 'speaking order' on reassessment initiation
4. Confirmation of adhoc addition by AO
5. Confirmation of addition on opening and closing balance discrepancy

Issue 1: Dismissal of appeal confirming undisclosed income addition
The appeal challenged the addition of undisclosed income of ?6,61,000 by the AO, which was confirmed by the Ld. CIT(A). The assessee failed to provide evidence for the investment in an immovable property, leading to the addition. The Ld. CIT(A) upheld the addition as the appellant failed to explain the sources of investment adequately, despite some savings being accepted. The Tribunal upheld the decision, stating the appellant failed to provide evidence of sources for the investment.

Issue 2: Legality of reopening assessment under Section 147
The assessee contested the reopening of assessment under Section 147, claiming it was illegal and lacked jurisdiction. The Tribunal referred to a previous decision by a Co-ordinate Bench on a similar issue. The Tribunal dismissed the grounds as the facts and laws remained unchanged, following the Co-ordinate Bench's decision.

Issue 3: Failure to pass 'speaking order' on reassessment initiation
The appellant raised concerns about the initiation of reassessment without recording satisfaction under Section 147. The Tribunal referred to a Co-ordinate Bench's decision on a similar issue, where no objections were raised against the initiation of reassessment proceedings. As no objections were raised, the Tribunal dismissed the grounds raised by the appellant.

Issue 4: Confirmation of adhoc addition by AO
The AO made an adhoc addition of ?92,482, which was confirmed by the Ld. CIT(A). The Tribunal noted that the disallowance was made on an estimate basis and reduced the disallowance to 5% of the total amount, providing relief to the assessee.

Issue 5: Confirmation of addition on opening and closing balance discrepancy
The Ld. CIT(A) confirmed the addition of ?1,25,000 due to a discrepancy in opening and closing capital balances. The Tribunal upheld the decision as the appellant failed to provide any arguments or evidence to rebut the discrepancy. The order of the Ld. CIT(A) was deemed reasonable and fair, leading to the dismissal of the grounds raised by the assessee.

In conclusion, the Tribunal partly allowed the appeal, providing relief on the adhoc addition while upholding the decisions on undisclosed income addition and opening and closing balance discrepancy. The issues related to the legality of reopening assessment and failure to pass a 'speaking order' were dismissed based on previous decisions by the Tribunal.