2022 (12) TMI 78 - AT - Income Tax

Validity of reopening u/s 147 - Reason to believe - case reopened on the basis of information gathered in the ITD system that assessee has made time deposit in IDBI Bank but no return of income was filed - HELD THAT - As assessee neither before the AO nor before Ld.NFAC/CIT(A) and finally before me filed any submission or documents to substantive his case as to why the reopening is not valid. In my view, as assessee has not filed any return of income though assessee was given due opportunity before reopening by issuing query letter and seeking source of his investment. None of the notice / show cause notice or notice under section 148 was responded by the assessee. Therefore ground Nos. 1 and 2 of assessee are dismissed. Deposit in IDBI bank and State Bank of India - AO made both the additions in absence of any explanation or evidence produced by assessee. NFAC/CIT(A) granted partial relief with regard to deposit / credit in State Bank of India about the credit of salary. No other evidence to substantiate the source of investment filed nor any written submission is filed before me. Therefore, in absence of any explanation on the part of assessee, no merit in the ground No.s 3 4 raised by assessee

Issues:
1. Validity of reopening under section 147 of the Income Tax Act.
2. Addition of unexplained investment in IDBI Bank.
3. Addition of unexplained credits in State Bank of India account.

Analysis:

Issue 1: Validity of Reopening under Section 147
The appeal was against an order by the National Faceless Appeal Centre (NFAC) regarding the reopening of assessment for the assessment year 2011-12 under section 147 of the Income Tax Act, 1961. The assessee contended that the reopening was invalid. The Assessing Officer reopened the case based on information indicating that the assessee had made a time deposit in IDBI Bank without filing an income tax return. Despite multiple opportunities, the assessee did not provide any response or documentation to substantiate the source of the investment. The tribunal held that the information available was sufficient for the Assessing Officer to have a reason to believe that income had escaped assessment. As the assessee failed to provide any explanation or documents to challenge the validity of the reopening, the tribunal dismissed the grounds raised by the assessee regarding the validity of the reopening.

Issue 2: Addition of Unexplained Investment in IDBI Bank
The Assessing Officer made an addition of Rs. 5 lakh as unexplained investment in IDBI Bank as the source of the investment was not verified. The assessee failed to respond to queries and notices regarding the source of the investment. The NFAC/CIT(A) upheld this addition due to the lack of submissions from the assessee. The tribunal noted that without any evidence or explanations provided by the assessee, there was no merit in the grounds raised regarding the investment in IDBI Bank. Therefore, the tribunal dismissed the grounds related to this addition.

Issue 3: Addition of Unexplained Credits in State Bank of India Account
The Assessing Officer also added Rs. 8,28,908 as unexplained credits in the State Bank of India account. The assessee did not respond to the show cause notice issued in this regard. The NFAC/CIT(A) partially granted relief by reducing the addition to Rs. 2,49,320, attributing it to salary and remuneration. As the assessee did not provide any further evidence or submissions to support the source of these credits, the tribunal found no merit in the grounds raised by the assessee regarding the credits in the State Bank of India account. Consequently, the tribunal dismissed these grounds as well.

In conclusion, the tribunal upheld the reopening of the assessment, as well as the additions made by the Assessing Officer regarding the unexplained investment in IDBI Bank and the unexplained credits in the State Bank of India account. The appeal of the assessee was ultimately dismissed by the tribunal.

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