2022 (6) TMI 142 - AT - Income Tax

Reopening of assessment u/s 147 - validity of re-assessment proceedings - Reopening merely on the basis of AIR information of cash deposit - onus to prove source of bank deposits - HELD THAT - Similarly, the Chandigarh Bench of the ITAT in the case of ACIT Vs. Kisco Castings Pvt Ltd 2012 (10) TMI 314 - ITAT, CHANDIGARH has held that where the information is factual and not false and the same has merely been communicated to AO he would be within his statutory right to invoke the provisions of section 147 read with 148 of the Act. The Coordinate Bench of the Tribunal went on to hold that the information being factually correct and the assessee failing to respond to the proceedings under the Act, the AO had rightly assumed jurisdiction u/s 147 read with section 148 of the Act. We also note that the Ld. CIT(A) has also cited and relied on the judicial precedents which we have quoted in the above mentioned paragraphs and we are in complete agreement with the reliance so placed by the CIT(A). Therefore, on an overall facts of the case, we uphold the action of the CIT(A) in upholding the initiation of re-assessment proceedings. Accordingly, ground No.1 of the assessee s appeals stands dismissed. Cash deposits - We would be inclined to dismiss the assessee s appeal on the merits of the case also. However, we also note that the assessee is an Army Veteran who retired from the Army in 1984. As per his own admission, he had income only from agricultural activity as well as from pension. We also note that in the paper book which has been filed by the assessee, the assessee has filed copy of letters as obtained by commission agent that assessee had received an amount of Rs. 50,00,000/- during the year from sale of agricultural receipts. The assessee has also filed affidavit on his own behalf as well as of Shri Sukhjinder Singh, Numberdar, wherein, it has been stated that the actual value of the land sold by the assessee was Rs. 70,00,000/-. Although, these evidences were filed as additional evidences before the Ld. CIT(A), the Ld. CIT(A) did not accept them as there was no further corroborative evidence in support of the same. However, ignoring the past conduct of the assessee and on the peculiar facts of this case, duly noting that the assessee is a retired Army veteran, we would like to afford one more opportunity to him to explain the source of deposits before the Ld. First Appellate Authority and to come out with clean hand once of all. Therefore, in the interest of substantial justice, we restore this appeal to the file of the CIT(A) to be decided on merits of the addition after affording due opportunity to assessee to present its case. We also direct the assessee to submit all documentary evidences and submissions which the assessee wishes to rely upon in support of its claim without any delay and whenever the Ld. CIT(A) directs him to do so, failing which, the Ld. First Appellate Authority shall be at liberty to proceed ex-parte qua the assessee and decide the case on merits in accordance with law. Appeal of the assessee stands allowed partly for statistical purposes.

Summary

Issues Involved:
1. Validity of the action of the Assessing Officer (AO) in reopening the case under Section 148 of the Income Tax Act, 1961.
2. Confirmation of the addition of Rs. 58,81,000/- as unexplained cash deposits and treating the same as "Income from other sources."
3. Consideration of the source of cash deposits from the sale of agricultural lands.
4. Proper consideration of detailed submissions and evidence filed by the appellant.

Detailed Analysis:

1. Validity of Reopening the Case Under Section 148:
The assessee challenged the reopening of the case under Section 148, arguing that the action was based on mere conjectures and surmises. The Assessing Officer reopened the case based on AIR information regarding a cash deposit of Rs. 70,01,000/- in the assessee's savings bank account. The AO issued a verification letter under Section 133(6) and subsequently a notice under Section 148, to which the assessee did not respond initially. The Tribunal upheld the validity of the reopening, stating that the AO had tangible material (AIR information and bank statements) to believe that income had escaped assessment. The Tribunal cited judicial precedents supporting the AO's right to invoke Section 147/148 based on factual information and non-compliance by the assessee.

2. Confirmation of Addition as Unexplained Cash Deposits:
The AO added Rs. 65,01,000/- as income from undisclosed sources, after giving the benefit of Rs. 5,00,000/- from the sale deed submitted by the assessee. The CIT(A) further allowed relief of Rs. 6,20,000/- for another sale deed but confirmed the addition of Rs. 58,81,000/-. The Tribunal noted that the assessee had not been forthcoming in explaining the source of the deposits and had changed his stand multiple times. Despite this, the Tribunal decided to afford the assessee another opportunity to explain the source of the deposits before the CIT(A).

3. Source of Cash Deposits from Sale of Agricultural Lands:
The assessee claimed that the cash deposits were from the sale of agricultural lands. He provided sale deeds and affidavits stating that the actual sale consideration was Rs. 70,00,000/-, though the sale deeds showed lower amounts. The Tribunal noted that the assessee had not provided sufficient corroborative evidence to support his claim. However, considering the assessee's background as a retired Army veteran with limited income sources, the Tribunal decided to give him another chance to substantiate his claims before the CIT(A).

4. Consideration of Detailed Submissions and Evidence:
The assessee argued that his detailed submissions and evidence were not properly considered by the authorities. The Tribunal acknowledged the assessee's submission of additional evidence, including affidavits and sale deeds, but noted that these were not sufficiently corroborated. The Tribunal directed the CIT(A) to reconsider the evidence and submissions, affording the assessee a fair opportunity to present his case.

Conclusion:
The Tribunal upheld the validity of the reassessment proceedings under Section 148, citing sufficient tangible material and non-compliance by the assessee. On the merits, the Tribunal noted the assessee's inconsistent explanations and lack of corroborative evidence but decided to give him another opportunity to substantiate his claims before the CIT(A). The appeal was allowed partly for statistical purposes, with directions for the CIT(A) to reconsider the case on merits after giving the assessee a fair opportunity to present his evidence.