2022 (5) TMI 544 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT - As information was received from the Assessing Officer in another case, wherein during the course of the search it was found that said person was engaged in providing accommodation entries and the assessee before us also received loan from one of such party. In our opinion, the information was received from reliable sources and there was relevant material on which a reasonable person could make a requisit belief that income escaped Assessment, and therefore the Assessing Officer is justified in reopening the assessment. CIT(A) has also rejected the contention of the assessee that there was no failure on the part of the assessee in making full and true disclosure, as false claim was made by the assessee regarding the loan. In absence of any rebuttal by the assessee before us, we concur with the finding of the CIT(A) on the issue in dispute and uphold the finding of the Ld. CIT(A). The grounds raised by the assessee challenging the legality of the reassessment are accordingly dismissed. Addition u/s 68 - We find that assessee failed to discharge its onus under section 68 of the Act and therefore the Ld. CIT(A) is justified in upholding the addition. We do not find any error in the order of the Ld. CIT(A) on the issue-indispute and accordingly we uphold the same. The grounds, pertaining to merit of the additions are also dismissed. - Decided against assessee. Penalty u/s 271D - Revenue has treated the credit of the loan as unexplained and levied the penalty treating that loan was received otherwise than by account payee cheque - CIT(A) has cancelled the penalty stating as we upheld the addition made u/s. 68 the penalty order passed u/s 271D is not sustainable - HELD THAT - The finding of the Ld. CIT(A) is justified as the Revenue cannot have held the loan as unexplained and simultaneously treat that the loan was received otherwise than by account payee cheque and levy penalty. We do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the Revenue accordingly, dismissed.

Summary

Issues:
1. Assessment of unexplained cash credit.
2. Legality of reassessment proceedings under section 147.
3. Addition of unexplained cash credit under section 68.
4. Charging of interest under section 234B.
5. Legality of penalty under section 271D.

Assessment of Unexplained Cash Credit:
The judgment involved two appeals against orders by the Commissioner of Income Tax (Appeals) for the assessment year 2009-10. The assessee's appeal challenged the addition of unexplained cash credit upheld by the Commissioner. Despite no representation from the assessee, the appeals were heard ex-parte. The assessee contended that the reassessment proceedings were initiated without proper statutory preconditions and lacked tangible material. However, the Commissioner upheld the addition of Rs. 1,00,00,000, stating the burden was on the revenue to establish unexplained credit. The Tribunal concurred with the Commissioner, dismissing the assessee's appeal.

Legality of Reassessment Proceedings under Section 147:
The assessee challenged the legality of the reassessment proceedings, claiming insufficient disclosure and improper initiation. The Commissioner held that the Assessing Officer was justified in reopening the assessment based on information received, indicating a false claim by the assessee regarding a loan. The Tribunal agreed, stating the information was reliable, justifying the reassessment. The grounds challenging the legality of the reassessment were dismissed.

Addition of Unexplained Cash Credit under Section 68:
The assessee received a loan from a company, contested as unexplained cash credit. The Commissioner upheld the addition, noting the failure of the assessee to provide a satisfactory explanation. The Tribunal concurred, stating the assessee did not discharge its burden under section 68. The grounds related to the addition were dismissed.

Charging of Interest under Section 234B:
The assessee contested the charging of interest under section 234B, but no specific details or arguments were provided in the judgment. The order passed by the Commissioner was upheld, implying that the charging of interest was deemed appropriate.

Legality of Penalty under Section 271D:
The Revenue treated the loan credit as unexplained and levied a penalty for receiving the loan otherwise than by account payee cheque. However, the Commissioner cancelled the penalty, citing conflicting stands by the Department. The Tribunal upheld the cancellation, stating that the penalty order was not sustainable due to the conflicting positions taken by the Department. The grounds of the Revenue's appeal were dismissed.

In conclusion, both the appeals of the assessee and the Revenue were dismissed by the Tribunal. The judgment highlighted various issues related to unexplained cash credit, reassessment proceedings, addition of income, charging of interest, and the legality of penalties under the Income Tax Act.