2022 (2) TMI 524 - AT - Income Tax

Reopening of assessment u/s 147 - undisclosed sources addition u/s 68 - HELD THAT - As reasons so recorded clearly state that the amount of ₹ 25 lakhs received from Dhanus Technologies Ltd., is dated 25th June, 2011 and does not pertain to assessment year 2011-12, but, pertained to AY 2012-13 and, therefore, no addition could have been made for AY 2011-12. We find, although the assessee has stated the same before the CIT(A), however, the CIT(A) has brushed aside the argument of the assessee without verifying the record himself or calling for the remand report from the AO. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the bank statement of the assessee and the information received. In case the amount pertains to assessment year 2012-13, then the AO could not have made the addition in AY 2011-12 and, accordingly, if it pertains to AY 2012-13, then, to delete the addition for AY 2011-12. Grounds raised by the assessee are accordingly allowed for statistical purposes.

Summary

Issues:
Validity of reassessment proceedings and addition on merit challenged before CIT(A).

Analysis:
The appeal was against the CIT(A)'s order related to the assessment year 2011-12. The assessee, a private limited company, initially declared a loss of ?3,06,078. Subsequently, based on information received regarding accommodation entries, the case was reopened, and a notice u/s 148 was issued. The AO added ?25 lakhs u/s 68 of the IT Act as income from undisclosed sources due to lack of response from M/s Dhanus Technologies Ltd. The CIT(A) upheld the validity of reassessment proceedings and the addition on merit.

The grounds raised by the assessee before the Tribunal included challenges to the validity of proceedings u/s 147, issuance of notice u/s 148, and the addition made under sec. 68 without proper approval. The assessee argued that the information regarding the accommodation entry pertained to AY 2012-13, not 2011-12, and therefore, the addition was incorrect. The Tribunal found merit in the assessee's argument and directed the AO to verify the records and delete the addition if it pertained to AY 2012-13. The issue was remanded to the AO for further examination.

The Tribunal held that the CIT(A) had not adequately considered the facts and directed the AO to verify the bank statement to determine the correct assessment year for the accommodation entry. The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of verifying the facts before making additions. The decision was pronounced in open court on 10th February 2022.