2022 (3) TMI 24 - AT - Income Tax

Reopening of assessment - Unexplained cash deposits in bank account - HELD THAT - It is the submission of the Ld. Counsel for the assessee that the assessee is a trader in milk and his returns for AYs 2011-12 and 2012-13 were accepted by the AO in the orders passed u/s. 147/143(3) wherein the AO has accepted the provisions of section 44AD in the case of the assessee. It is also his submission that in the AYs 2013-14 to 2015-16, the returns were filed by applying the provisions of section 44AD and the AO has accepted the same without disturbing the return. Thus deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh in the light of the orders passed by him for AYs 2011-12 and 2012-13 wherein the AO has completed the assessment u/s. 147/143(3) of the Act. He shall also keep in mind the return filed by the assessee in the subsequent years which have been accepted by the AO. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Validity of reassessment proceedings under section 147/148 of the IT Act.
2. Addition on merit concerning cash deposit in the bank account.
3. Proper opportunity of hearing not allowed during assessment proceedings.
4. Assessment order framed under section 148/143(3) despite being ex-parte.

Validity of Reassessment Proceedings:
The Appellate Tribunal upheld the validity of the reassessment proceedings initiated under section 147/148 of the IT Act. The Tribunal dismissed the argument challenging the proceedings, emphasizing that the Assessing Officer (AO) had sufficient material before issuing the notice under section 148. The Tribunal noted that the AO conducted due diligence, obtained bank statements, and had material for belief formation. The Tribunal concluded that there was a 'reason to believe' before issuing the notice under section 148, thereby dismissing the challenge to the validity of the reassessment.

Addition on Merit - Cash Deposit:
Regarding the addition on merit related to a cash deposit in the bank account, the Tribunal reviewed the AO's decision to add a certain amount to the total income of the assessee. The Tribunal observed that the AO had considered evidence and added only a portion of the deposited amount to the income. The Tribunal found no reason to interfere with the AO's findings, as the transactions in the bank account were supported by evidence of frequent deposits and withdrawals. Consequently, the Tribunal upheld the addition on merit, affirming the AO's decision in this regard.

Proper Opportunity of Hearing:
The issue of proper opportunity of hearing not being allowed during the assessment proceedings was raised. However, since the assessee did not press this ground, the Tribunal dismissed it as 'not pressed,' indicating that the specific issue was not pursued further during the proceedings.

Assessment Order Framed Ex-Parte:
The Tribunal addressed the concern that the assessment order was framed under section 148/143(3) despite being ex-parte. The Tribunal considered the arguments presented by both sides and reviewed the orders of the AO and the CIT(A). After evaluating the submissions and relevant case laws, the Tribunal decided to restore the issue to the file of the AO for fresh adjudication. The Tribunal directed the AO to reexamine the issue in light of previous assessment years and the returns accepted for subsequent years, ensuring due opportunity for the assessee to be heard. Consequently, the Tribunal allowed the grounds raised by the assessee for statistical purposes, ultimately allowing the appeal filed by the assessee for statistical purposes.

This detailed analysis of the legal judgment covers the validity of reassessment proceedings, addition on merit, opportunity of hearing, and the framing of the assessment order, providing a comprehensive understanding of the Tribunal's decision in each aspect of the case.