2022 (6) TMI 886 - AT - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT - There is no dispute with regard to the fact that the Assessing officer was in possession of information regarding deposit of cash into the bank account of the assessee. It is also undisputed fact that the explanation regarding such cash deposit was not furnished to the Assessing Officer by the assessee prior to reopening of the assessment. Therefore, under these facts we of the considered view that there was reason to form belief regarding escapement of income from assessment. Hence, no reason to quash the assessment as prayed by the assessee. Ground nos. 1 2 of the assessee s appeal are rejected. Addition u/s 69A - Unexplained cash deposits - HELD THAT - CIT(Appeals) has failed to advert to the explanation offered by the assessee regarding the source of cash deposit. The learned CIT(Appeals) being the first appellate authority ought to have considered the submissions of the assessee regarding source of cash deposit. Before me the assessee has filed bank statement. There from, it is clear that there were cash withdrawals as well as cash deposits. Before the assessing authority the assessee has categorically stated that he had withdrawn cash of Rs. 8,25,900/- and Rs. 2,00,000/- was cash receipt during the year under consideration. Further the assessee has also claimed cash in hand from past savings of Rs. 2,50,000/-. Both the authorities have failed to consider the fact and in a cryptic manner sustained the addition which is not permissible under the law. It cannot be presumed that there was no opening cash balance looking to the fact that the assessee has been earning income for the past many years. Further, the assessee has also demonstrated that there were cash withdrawals from the bank account. Thus addition made by the Assessing Officer is unjustified, hence the same is deleted. Ground of assessee allowed. Addition being unexplained expenditure made u/s 69C - CIT(Appeals) has failed to consider the submissions of the assessee. Assessee has given confirmation as well as bank statement relating to wife of the assessee. Therefore, the authorities below ought to have considered the submissions and evidences filed by the assessee. Non consideration of the same has resulted into miscarriage of justice. Therefore, considering the material available on record, hereby direct the Assessing Officer to delete the addition. Ground of assessee are allowed.

Summary

Issues involved:
1. Legality of reopening the assessment
2. Addition of Rs. 10,72,000 under Section 69A
3. Addition of Rs. 5,81,000 under Section 69C

Issue 1: Legality of reopening the assessment:
The appeal challenges the reopening of the assessment under Section 147 of the Income Tax Act, 1961, based on cash deposits in the bank account and non-filing of income tax return. The Assessing Officer made additions totaling Rs. 16,53,000, leading to a revised income assessment. The appellant argued that the reopening was unjustified as the return of income was filed, while the respondent contended that the cash deposit information warranted the reassessment. The Tribunal upheld the reassessment, stating that the Assessing Officer had valid reasons to believe in income escapement due to the unexplained cash deposits.

Issue 2: Addition of Rs. 10,72,000 under Section 69A:
The appeal contested the addition of Rs. 10,72,000 under Section 69A for cash deposits, claiming that withdrawals and deposits were not correctly offset. The appellant argued that the Assessing Officer did not consider the source of cash withdrawals adequately. The Tribunal found that the CIT(A) failed to consider the appellant's explanation regarding cash deposits and withdrawals. After reviewing bank statements and explanations, the Tribunal concluded that the addition made by the Assessing Officer was unwarranted and deleted the same.

Issue 3: Addition of Rs. 5,81,000 under Section 69C:
The appeal challenged the addition of Rs. 5,81,000 under Section 69C for unexplained expenditure. The appellant contended that payments were made from the wife's savings account, and the credit card statement was not readily available for submission. The Tribunal noted that the CIT(A) did not adequately consider the submissions and evidence provided by the appellant. Upon reviewing the material, the Tribunal directed the Assessing Officer to delete the addition, citing a miscarriage of justice due to the non-consideration of relevant evidence.

The Tribunal partially allowed the appeal, deleting the additions made under Section 69A and Section 69C while upholding the legality of the assessment reopening. The general ground in the appeal required no specific adjudication.