2021 (1) TMI 770 - AT - Income Tax

Reopening of assessment u/s 147 - unexplained deposits - HELD THAT - It is in respect of deposit of ₹ 10 lac in Smt. Amarpreet Kaur and such FIR information does not mention or pertain to the assessee. Thus, the reasons recorded are based on factually incorrect information which admittedly does not belong to the assessee. The action of the AO for reopening the case u/s 147 is mechanical and without any application of mind, and therefore, the entire reasons recorded on such erroneous presumption of information or material cannot clothe Assessing Officer with jurisdiction u/s.147 and same is therefore bad in law and is quashed. - Decided in favour of assessee.

Summary

Issues: Validity of reopening u/s.147 and addition on account of cash deposits.

Validity of Reopening u/s.147:
The appeal was filed against the order passed by the Commissioner of Income Tax for the assessment year 2011-12 challenging the validity of reopening u/s.147 and addition of cash deposits in the bank account. The Assessing Officer noted no return of income was filed for the year, and based on the information from the ITD system, assessed income of the assessee. Despite notices, the assessee did not respond, leading to the assessment u/s.144/147 and an addition of sums aggregating to ?10,56,670. The CIT (A) refused to admit additional evidence under Rule 46A and confirmed the addition. The assessee contended that the information pertained to another individual, not the assessee, rendering the reasons recorded invalid. The ITAT found the information in question related to a different person, not the assessee, and concluded that the reasons for reopening were based on incorrect assumptions, lacking jurisdiction u/s.147. As a result, the appeal was allowed.

Addition on Account of Cash Deposits:
The Assessing Officer made an addition based on gross profit on total credit in the bank account and cash deposits. The assessee argued that the information used as the basis for adverse inference against them did not pertain to them, as evidenced by a disparity in names and addresses. Despite the different name in the information, the DR contended that cash was deposited in the assessee's account, justifying the jurisdiction assumption by the Assessing Officer. The ITAT analyzed the Individual Transaction Statement and found it related to a different individual, not the assessee, thus invalidating the reasons for assuming jurisdiction u/s.147. The ITAT held that the entire premise for the addition was flawed due to incorrect assumptions, leading to the quashing of the jurisdiction assumed by the Assessing Officer. Consequently, the appeal of the assessee was allowed, and the order was pronounced in their favor on 29th October 2020.