2023 (2) TMI 28 - AT - Income Tax

Validity of reopening of assessment u/s 147 - addition u/s 68 on account of cash deposited which remained unexplained - HELD THAT - As correctly held by CIT-A Prima facie there was material available with the AO in the form of information from the from ADIT(lnv.)-02, Kanpur that that huge cash deposits has been credited in the various banks that income had escaped assessment. In spite of number of opportunities afforded, the appellant has not substantiated its assertions raised in the grounds of appeal. Since the appellant has chosen not to attend proceedings before the undersigned or furnished any submission to substantiate the grounds taken, it is held that the AO had validly initiated proceedings by way of issue of notice u/s 148. Commissioner not only considered the factual aspects of the case, while deciding the validity of the initiation of the reassessment proceedings, but also taken into consideration various judgments, and also the amended provisions of Section 147 consequently, we are inclined not to interfere in the conclusion drawn by the learned Commissioner qua initiation of reassessment proceedings and issuance of notice u/s 148 of the Act. Addition u/s 68 - It appears clearly from the orders passed by the authorities below that the Assessee has failed to prove its primary onus lies on it, to prove the identity of the creditor, creditworthiness of the creditor and genuineness of the transaction. Further, the Assessee also failed to substantiate its grounds of appeal qua merits of the case, before the learned Commissioner, therefore, Commissioner in the constrained circumstances, affirmed the addition made by the AO u/s 68 of the Act. Even we do not find any material or reason to controvert the findings of the Ld. Commissioner. Consequently, we are inclined to uphold the order impugned. Appeal filed by the Assessee stands dismissed.

Summary

Issues:
1. Validity of reassessment proceedings and notice u/s 148 of the Income Tax Act, 1961.
2. Merits of the case regarding addition made by the Assessing Officer (AO) u/s 68 of the Act.

Issue 1 - Validity of Reassessment Proceedings and Notice u/s 148:
The Assessee filed an appeal against the order passed by the Ld. Commissioner of Income tax (Appeals)-7, challenging the validity of the reassessment proceedings and the issuance of notice u/s 148 of the Income Tax Act for the assessment year 2010-11. The Assessee had earlier filed its return electronically, declaring Nil income, which was processed under section 143(1) of the Act. Subsequently, a notice u/s 148 was issued based on information received, leading to the addition of Rs. 2,63,53,166/- by the AO. The Ld. Commissioner upheld the validity of the initiation of proceedings u/s 147 by issuing the notice u/s 148, citing material available with the AO regarding income escaping assessment. The Assessee failed to attend proceedings or substantiate grounds, resulting in the dismissal of the appeal challenging the validity of reassessment proceedings.

Issue 2 - Merits of the Case and Addition u/s 68 of the Act:
The AO made an addition of Rs. 2,63,53,166/- u/s 68 of the Act on account of unexplained cash credit. The Assessee challenged this addition on merits, but the Ld. Commissioner upheld it after considering the replies filed by the Assessee. The Ld. Commissioner emphasized the Assessee's failure to prove the genuineness of the transactions and the primary onus lying on the Assessee to establish the identity, creditworthiness, and genuineness of the transactions. Despite repeated opportunities, the Assessee did not substantiate the grounds of appeal, leading to the confirmation of the addition by the Ld. Commissioner. The Assessee's failure to prove the primary onus and substantiate grounds before the Ld. Commissioner resulted in the affirmation of the addition by the AO u/s 68 of the Act. The Appellate Tribunal, after considering the facts and circumstances, upheld the order impugned, dismissing the appeal filed by the Assessee.

In conclusion, the Appellate Tribunal affirmed the validity of the reassessment proceedings and notice u/s 148 of the Act, along with the addition made by the AO u/s 68 of the Act. The Assessee's failure to substantiate claims and prove the genuineness of transactions led to the dismissal of the appeal. The Tribunal upheld the order pronounced on 30.01.2023, emphasizing the importance of meeting the burden of proof in tax matters.