2022 (5) TMI 277 - AT - Income Tax

Reopening of assessment u/s 147 - information received by department that the assessee has made investment in the property during the year under consideration - creditworthiness of the lenders and the genuineness of these loan transactions - HELD THAT - The assessee has stated that department can obtain bank statement of these lenders directly from the bank, as due to passage of time the assessee is not able to obtain these bank statements. One of the purposes of Public Authorities is to assist Public in their genuine and bonafide difficulties, as Public Authorities are meant to serve public. The assessee has also produced notorized affidavit dated 18.04.2022, of son of Mr. Jehangir Alam(since deceased), wherein it is averred by son of Mr. Jehangir Alam (since deceased) that his father has given cheque of Rs. 5 lacs to his friend s brother-in-law, namely Shri Sanjay Kumar, in the year 2009. This is an additional evidence filed by the assessee before the tribunal which requires verification by authorities below. Thus we are inclined to restore the matter back to the file of ld. CIT(A) for fresh adjudication on merits of the issues concerning loans aggregating to Rs. 10 lacs raised from Mr. Jeetender Kumar (Rs. 5,00,000) and from Mr. Jehangir Alam(Rs. 5,00,000/-) respectively,in accordance with law. Needless to say that ld. CIT(A) will give proper and adequate opportunity of hearing to the assessee in set aside remand proceeding in accordance with the principle of natural justice and in accordance with law. CIT(A) is directed to pass reasoned and speaking order.

Issues Involved:
1. Addition of deposits of Rs. 5,00,000/- each from two individuals.
2. Validity of the notice issued u/s 148 of the Income-tax Act, 1961.
3. General validity of the assessment order on facts and law.

Detailed Analysis:

1. Addition of Deposits:
The primary issue revolves around the addition of deposits totaling Rs. 10,00,000/- received from two individuals. The assessee contested the addition made by the Assessing Officer (AO) and partly upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The AO had added Rs. 51,00,000/- as unexplained investment under Section 69 of the Income-tax Act, 1961, due to non-compliance by the assessee in providing the source of the investment. The CIT(A) reduced this to Rs. 8,95,000/- after considering the assessee's explanations and remand report from the AO, which partially validated the sources of funds.

The CIT(A) upheld the addition of Rs. 10,00,000/- due to the assessee's failure to prove the creditworthiness and genuineness of the transactions, specifically the loans from Mr. Jitender Kumar and Mr. Jehangir Alam. The assessee argued that these loans were received via cheques, which were reflected in the bank statement, contrary to the CIT(A)'s findings. The Tribunal found merit in the assessee's argument and noted that the cheques were indeed reflected in the bank statement, but the assessee did not file a rectification petition under Section 154. The Tribunal decided to remand the issue back to the CIT(A) for fresh adjudication, allowing the assessee to present additional evidence, including an affidavit from the son of Mr. Jehangir Alam.

2. Validity of Notice u/s 148:
The assessee claimed that the notice issued under Section 148 was barred by limitation. The CIT(A) observed that the notice was issued via registered post, and the assessee did not provide evidence to substantiate the claim that it was not served. Therefore, this contention was rejected as devoid of merit. The Tribunal did not find it necessary to delve deeper into this issue, as the primary focus was on the unexplained investments.

3. General Validity of the Assessment Order:
The assessee contended that the assessment order was bad both on facts and law. The CIT(A) noted that the assessee did not participate in the reassessment proceedings despite multiple opportunities. The AO had assumed other income of Rs. 1,60,000/- without giving reasons, which the CIT(A) corrected by considering the returned income of Rs. 1,55,235/-. The Tribunal upheld this correction and focused on the unexplained investment issue.

Conclusion:
The Tribunal remanded the matter back to the CIT(A) for fresh adjudication concerning the unexplained loans of Rs. 10,00,000/-, directing the CIT(A) to provide a proper hearing and consider additional evidence. The appeal was allowed for statistical purposes, with instructions for a reasoned and speaking order. The Tribunal did not comment on the merits of the issue, keeping all contentions open.

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