2021 (4) TMI 1161 - AT - Income Tax

Reopening of assessment u/s 147 - eligibility of reasons to believe - addition u/s 69A - HELD THAT - Assessing Officer is not suppose to arrive at the final conclusion. He is supposed to reach at a reasonable belief, which a prudent man will arrive at, that the income has escaped assessment. It has to be a prima facie case regarding escapement of income. AO is not passing the final judgement. In the case in hand there is no two opinion that the assessee had bank account in which substantial cash was being deposited from various parts of the country. It is also a fact that the assessee had not disclosed this account to the department and also not filed his return of income for the relevant assessment year. The Assessing Officer has recorded all this in his reasons and then he took the approval of the competent authority as provided in the Act. Everything is in order. The satisfaction and the reason has to be that of Assessing Officer, not of anybody else - the Assessing Officer had enough reasonable and actionable information to arrive at a particular decision. Therefore, the ground challenging reopening u/s 147 is dismissed. We do not find any infirmity in the finding of Ld.CIT(A) as the assessee has not supported his submissions by filing any contrary evidences. Hence, Ground of appeal raised by the assessee are dismissed. Addition u/s 69A on Unexplained money - We do not see any infirmity into the findings of the Ld.CIT(A) as the assessee had only made a bald statement without giving any supportive evidences regarding his business. No detail is furnished by the assessee regarding whom spare parts as claimed by the assessee were supplied and the complete details of parties to whom he supplied computer parts. In the absence of such material evidences, we do not see any reason to interfere in the findings of the authorities below. Therefore, Ground of appeal raised by the assessee are rejected and same are dismissed. Addition made in respect of the salary income - We find that the Assessing Officer did not make any inquiry from the employer of the assessee whether he had actually received the salary. Merely, offer made by the assessee in our considered view, ought not to have been taken as a conclusive evidence of earning salary income by the assessee. Therefore, in the absence of any conclusive evidence that the assessee infact had earned salary from M/s. Oldy Goldy Computers, the Assessing Officer was not justified in taking the addition and making the addition on account of earning of salary income. Moreover, if it is presumed that the assessee had earned salary income in that event, the Assessing Officer should have accepted source of deposit made in bank account. We, therefore, direct the Assessing Officer to delete this addition. Thus, Ground of appeal raised by the assessee is allowed.

Summary

Issues Involved:
1. Legality of action under Section 147 of the Income Tax Act.
2. Validity of additions made under Section 69A of the Income Tax Act.
3. Explanation of deposits in bank accounts.
4. Addition of salary income.

Detailed Analysis:

1. Legality of Action under Section 147 of the Income Tax Act:
The assessee challenged the reopening of the assessment under Section 147 of the Income Tax Act. The Tribunal noted that the Assessing Officer (AO) had received specific information about cash deposits in the assessee's bank accounts, which led to the belief that income had escaped assessment. The Tribunal upheld the AO’s action, stating that the AO had sufficient and actionable information to form a "reason to believe" that income had escaped assessment. The Tribunal cited various judicial pronouncements emphasizing that the AO must form an objective and prima facie opinion based on relevant material. The Tribunal concluded that the reopening was valid as the AO followed due process, including obtaining approval from the competent authority.

2. Validity of Additions Made Under Section 69A of the Income Tax Act:
The assessee contested the additions made under Section 69A, which pertains to unexplained money. The AO had made additions of ?9,14,800/- and ?2,01,617/- for the assessment year 2009-10, among others for subsequent years, based on unexplained cash deposits in the assessee's bank accounts. The Tribunal upheld these additions, noting that the assessee failed to provide satisfactory explanations or documentary evidence to support the source of these deposits. The Tribunal agreed with the findings of the CIT(A), who had observed that the assessee's explanation regarding the proceeds from the sale of computer parts was not supported by any concrete evidence.

3. Explanation of Deposits in Bank Accounts:
The assessee claimed that the cash deposits were proceeds from the sale of computer parts, deposited by buyers across different parts of the country. However, the Tribunal found this explanation unconvincing due to the lack of supporting evidence. The CIT(A) had noted that the information leading to the AO's action was concrete and specific, and the assessee failed to disclose these bank accounts or the related business activities to the department. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee did not provide any material evidence to substantiate his claims.

4. Addition of Salary Income:
For the assessment year 2009-10, the AO added ?88,000/- as salary income based on the assessee's admission. The Tribunal, however, directed the deletion of this addition, noting that the AO did not make any inquiry from the employer to verify the receipt of the salary. The Tribunal held that merely based on the assessee's statement, without corroborative evidence, the addition was not justified. Similarly, for the assessment year 2011-12, the Tribunal directed the deletion of the addition of ?1,75,000/- as salary income, as the AO again failed to verify the claim with the employer.

Conclusion:
The Tribunal partly allowed the appeals, upholding the reopening of the assessments and the additions under Section 69A for unexplained cash deposits, while directing the deletion of the additions made for salary income due to the lack of verification by the AO. The decision was pronounced on the conclusion of the virtual hearing on 28th April 2021.