2023 (1) TMI 864 - AT - Income Tax

Reopening of assessment u/s 147 - validity of notice issued u/s.143(2) within the stipulated time period - investment towards purchase of the properties as sourced from the cash refund of loans from his relatives - HELD THAT - As the assessee had impliedly filed his return of income in compliance to the notice u/s.148 of the Act, dated 07.08.2006 therefore, the notice issued u/s.143(2) dated 13.11.2006 was well within the stipulated time period. In our considered view the Ld. AR had confused the time period that was available for issuing notice u/s.143(2) in case of a simplicitor assessment, wherein such notice for the year under consideration i.e. A.Y.2004-05 could not have been issued beyond 31.03.2006. Be that as it may, as notice u/s.143(2) dated 13.11.2006 had validly been issued within the stipulated time period from the date of filing of return of income by the assessee u/s. 148 of the Act, i.e. on 07.08.2006 (supra), we, therefore, finding no substance in the aforesaid claim of the Ld. AR, dismiss the same. Addition u/s 69A - As the assessee had failed to substantiate on the basis of irrefutable documentary evidence that the cash withdrawals made from his aforesaid bank account were utilized for making investment of Rs.5 lac in in question, therefore, we are unable to concur with the claim of the Ld. AR that both the lower authorities had erred in making/sustaining the addition of the said amount u/s.69A in the hands of the assessee. We, thus, in terms of our aforesaid observation, finding no merit in the claim of the assessee, uphold the order of the CIT(Appeals). Grounds of appeal No.(s) 1 to 3 raised by the assessee are dismissed.

Summary

Issues:
1. Validity of assessment framed by the A.O u/ss.147/143(3) of the Act
2. Addition of Rs.5,00,000/- made u/s 69A of the Income Tax Act
3. Appeal against the order of the CIT(Appeals)

Issue 1: Validity of assessment framed by the A.O u/ss.147/143(3) of the Act:
The appeal challenges the assessment framed by the A.O under sections 147/143(3) of the Income-tax Act, 1961. The contention raised is regarding the validity of the assessment due to the timing of the notice u/s.143(2) of the Act. The Ld. AR argued that the notice was issued beyond the stipulated time period. However, it was clarified that the notice was issued in compliance with the notice u/s.148, thus within the prescribed time. The claim of the Ld. AR was dismissed as misconceived, and the assessment was upheld as valid.

Issue 2: Addition of Rs.5,00,000/- made u/s 69A of the Income Tax Act:
The A.O reopened the case due to inconsistencies in the claim of the assessee regarding an investment of Rs.6.77 lac for purchasing flats. The assessee claimed that Rs.5 lac was sourced from cash refunds of loans given to relatives. However, the A.O rejected this claim as unsubstantiated and made an addition of Rs.5 lac u/s.69A of the Act. The Ld. AR argued that the funds were available based on bank account transactions and affidavits of relatives. The Tribunal, after examination, found the claim to be unsubstantiated, as the balance sheet and lack of documentary evidence failed to prove the utilization of cash withdrawals for the investment. Consequently, the addition made by the A.O was upheld.

Issue 3: Appeal against the order of the CIT(Appeals):
The assessee appealed against the order of the CIT(Appeals) sustaining the addition of Rs.5,00,000/- u/s 69A of the Income Tax Act. The Tribunal considered arguments from both parties and examined the evidence presented. Ultimately, the Tribunal upheld the order of the CIT(Appeals) and dismissed the appeal of the assessee based on the lack of substantiated proof regarding the source of investment. The grounds of appeal raised by the assessee were dismissed, and the decision of the CIT(Appeals) was upheld.

This detailed analysis of the legal judgment from the Appellate Tribunal ITAT Raipur covers the issues raised, arguments presented, and the final decision rendered by the Tribunal.