9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 885 - AT - Income TaxReopening of assessment u/s 147 - Tangible material available with the AO for forming the belief that income of the assessee has escaped assessment for the year under consideration - unexplained cash credit u/s 68 - whether cash deposits represent the income of the assessee and gives rise to the AO to believe that income has escaped assessment within the meaning of the provisions of section 147 ? - HELD THAT - Mere deposit of cash itself does not represent income unless and until some tangible material available on record evidencing that such deposits is the income of the assessee. Therefore, mere information of cash deposit does not give any rise to form believe that the income of the assessee has been escaped assessment. In this regard we draw support and guidance from order of Delhi tribunal in case of Bir Bahadur Singh Sijwali 2015 (2) TMI 60 - ITAT DELHI . Tangible material received by the AO from any other source for the year under consideration - Information received by the AO was pertaining to the financial year 2010-11 corresponding to assessment year 2011-12 based on which the proceedings u/s 153C of the Act were initiated against the assessee. Now the question arises the information pertaining to the assessment year 2011-12 can be used for the year under consideration being the financial year 2009-10 corresponding to assessment year 2010-11. In our considered view, such information cannot be used for forming believe that income in the year under consideration also escaped assessment unless and until fresh tangible material pertaining to the year under consideration brought on record. The information or material pertaining to different assessment year may give rise to suspicion but not the reason to believe. We are of the view that reason to believe formed by the AO for reopening the assessment is not valid as the same is not based on any tangible material which prima facie suggest income has escaped assessment rather the AO form believe merely based on suspicion, surmise and conjecture. Reason to be belief formed by the AO is not based on any fresh tangible material. Therefore we hereby quashed the proceeding under section 147 of the Act. Hence the ground of cross objection of the assessee is allowed. Unexplained cash credit u/s 68 - There cannot be any addition to the total income of the assessee on account of cash deposited in the bank unless the AO demonstrate that the amount in question has been used by the assessee for any other purpose. Thus in our considered view the addition is made by the AO on inferences and presumptions which is bad in law. Accordingly, we do not find any infirmity in the order of the learned CIT(A). Thus we direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is hereby dismissed. Unexplained cash credit under section 68 - proof of identity - AO has held that the identity of the Kalpesh Patel was not proven by the assessee. However we note the AO in paragraph number 8.4 of his order has given the details of income declared by Shri Kalpesh Patel for the last 3 years. Thus, there is contradiction in the finding of AO. Further the learned CIT-A has given categorical finding that the AO while framing the assessment of Sarthav Infrastructure Pvt Ltd (SIPL) for the year under consideration has accepted the identity of Shri Kalpesh Patel. Therefore in these facts and circumstances, no doubt remains on the identity of the loan parties. Now coming to the second and third condition, i.e. genuineness of the transaction and creditworthiness of the parties, regarding this we note that all the transactions were carried out through banking channel and the assessee has refunded the amount through banking channel to all the parties and in case of Kalpesh Patel within 2 days. The repayment of the loan amount by the assessee was duly accepted by the Revenue. There remains no doubt that the transaction of the advance received by the assessee from the parties was not genuine. In our considered view, once the assessee is able to prove that the money received by it was returned during the year in the account of the same parties, then there remains no doubt to draw an inference that the advances received by the assessee were unexplained cash credit. Similarly, we also note that in respect of all the parties as discussed above the AO had sufficient documentary pieces of evidence including the details of the income of the loan parties namely Saral Management Consultancy who were assessed by the same AO and showing healthy amount of taxable income. Therefore in our considered view, the assessee has discharged its onus imposed under section 68 of the Act. In view of the above, we do not find any infirmity in the order of Ld. CIT (A). Hence the ground of appeal of the revenue is hereby dismissed.
Issues Involved:
1. Jurisdiction and validity of proceedings initiated under section 147 of the Income Tax Act, 1961. 2. Addition of unexplained cash credits under section 68 of the Act. 3. Addition of unexplained credits from unsecured loans under section 68 of the Act. Issue-wise Detailed Analysis: 1. Jurisdiction and Validity of Proceedings Initiated under Section 147 of the Act: The assessee challenged the initiation of proceedings under section 147 of the Act, contending that the notice issued under section 148 was based on an Excel sheet found during a search at a third party's premises. The assessee argued that the reasons to believe were not sustainable as they were based on materials relevant to a different assessment year (A.Y. 2011-12) and not the year under consideration (A.Y. 2010-11). The AO formed the belief that the income had escaped assessment based on cash deposits found in the bank accounts of different persons, including the assessee, and initiated proceedings under section 147. The Tribunal held that the mere deposit of cash does not represent income unless tangible material evidences that such deposits are the income of the assessee. The Tribunal found that the AO's belief was based on suspicion rather than tangible material. Consequently, the Tribunal quashed the proceedings under section 147, holding that the reason to believe formed by the AO was invalid. 2. Addition of Unexplained Cash Credits under Section 68 of the Act: The AO added ?98,31,461/- as unexplained cash credits under section 68, contending that the cash deposits in the assessee's bank accounts were not satisfactorily explained. The assessee argued that the deposits were made out of cash withdrawals from banks on earlier occasions and from amounts received from debtors or employees. The AO found the transactions of withdrawing and depositing cash unusual and without rationality, treating them as a device for tax evasion. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the assessee had provided sufficient evidence, including cash books and bank statements, to explain the cash deposits. The Tribunal emphasized that suspicion cannot replace evidence and that the AO failed to bring any tangible material to disprove the assessee's explanation. 3. Addition of Unexplained Credits from Unsecured Loans under Section 68 of the Act: The AO added ?3,81,00,000/- as unexplained credits under section 68, arguing that the assessee failed to prove the identity, creditworthiness, and genuineness of the transactions with the loan parties, Saral Management & Consultancy and Kalpesh Patel. The assessee provided PAN, ledger copies, and bank statements to support the identity and genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that the assessee had discharged its onus by furnishing necessary details. The transactions were conducted through banking channels, and the loans were repaid within the year, supporting the genuineness of the transactions. The Tribunal found no infirmity in the CIT(A)'s order, emphasizing that the AO had sufficient documentary evidence to verify the creditworthiness of the loan parties. Conclusion: The Tribunal allowed the assessee's cross-objection, quashing the proceedings under section 147, and dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the additions made by the AO under section 68 of the Act. The Tribunal emphasized the importance of tangible material evidence and the inadequacy of suspicion in forming reasons to believe for income escapement.
|
