2023 (2) TMI 415 - AT - Income Tax

Reopening of assessment u/s 147 - reason to believe - HELD THAT - Assessee has escaped from assessment and the AO on the specific information received from the Investigation Wings of the Department and information was not vague but was a specific information pertaining to the transaction made by the appellant by stating details of accommodation entry received by the assessee. Sanction has been granted in the background of facts and information which was part of the approval of the folder from the findings of the ld. CIT(A) s order. We also gainful to state to the fact that the AO did not provide the assessee, the copy of reasons to believe recorded by him before furnishing notice u/s 148 of the Act to the assessee was not correct as the CIT(A) in his findings stated that as per order-sheet of AO Copy of the reasons recorded has been provided to the ld. AR. Therefore, ground taken by the assessee are not sustainable accordingly we dismiss the ground taken by the assessee. Addition u/s 68 - accommodation entry to deposit various cash/cheques from the parties - During the assessment proceedings, the ld. AO had given ample opportunity to the assessee but the assessee in his reply stated that now about 8 years have lapsed and he was not in touch with the beneficiaries, therefore, he could not provide the exact address of the parties. All the facts narrated above and the ld. CIT(A) categorically stated while passing his order by which he confirmed the addition made by the ld. AO. He after considering the facts of the case in our hand, we are of the considered view that the order passed by the ld. CIT(A) need not required to be interfered any more by this Tribunal and accordingly, we affirm the order passed by the ld. CIT(A) and set aside the grounds taken by the assessee.

Issues Involved:
1. Validity of the Assessment Order.
2. Legality of Reassessment Proceedings.
3. Proper Sanction for Reassessment.
4. Provision of "Reasons to Believe".
5. Reassessment Proceedings Based on Information.
6. Ad Hoc Addition of Undisclosed Income.
7. Excessiveness of the Addition.
8. Non-production of Party.
9. Address Typographical Error.

Detailed Analysis:

1. Validity of the Assessment Order:
The assessee contended that the Assessment Order was "bad in law as well as on facts." The Tribunal, after reviewing the submissions, upheld the order, finding no procedural errors or misapplication of law by the Assessing Officer (AO).

2. Legality of Reassessment Proceedings:
The assessee argued that the reassessment proceedings were initiated on "borrowed satisfaction," making them null and void. The Tribunal noted that the AO had followed the proper procedure as laid down in the Income Tax Act, 1961, and the reassessment was based on specific information from the Investigation Wing. Thus, the reassessment proceedings were deemed valid.

3. Proper Sanction for Reassessment:
The assessee claimed that the reassessment was initiated without proper sanction, or if granted, it was done mechanically. The Tribunal referred to the CIT(A)'s findings, which confirmed that the sanction was granted based on concrete material received from the Financial Intelligence Unit (FIU) and the Investigation Wing. The Tribunal found no merit in the assessee's contention and upheld the sanction's validity.

4. Provision of "Reasons to Believe":
The assessee argued that the AO did not provide the "reasons to believe" before issuing the notice under Section 148. The Tribunal referred to the order-sheet dated 19.02.2015, which showed that the reasons were provided to the assessee's Authorized Representative (AR). Therefore, this ground was dismissed.

5. Reassessment Proceedings Based on Information:
The assessee contended that the AO did not rely on the information received from the DDIT(Inv) and proceeded to consider the entire deposits as unexplained cash credit. The Tribunal noted that the AO had specific information about high-volume cash transactions and had given sufficient opportunity to the assessee to explain the deposits. The reassessment was based on concrete material, and this ground was also dismissed.

6. Ad Hoc Addition of Undisclosed Income:
The AO made an ad hoc addition of Rs. 17,16,91,393/- as undisclosed income. The Tribunal found that the AO had ample evidence of unexplained cash deposits in the assessee's bank account and had given the assessee multiple opportunities to provide details of the beneficiaries, which the assessee failed to do. Therefore, the addition was upheld.

7. Excessiveness of the Addition:
The assessee argued that the addition was arbitrary and excessive, given his financial condition. The Tribunal noted that the assessee failed to substantiate his claim of being a mere name lender and did not provide any proof of the alleged 1% commission. The addition was deemed justified and was upheld.

8. Non-production of Party:
The assessee claimed that it was impossible to locate the party (Mr. Arun Agarwal) after several years. The Tribunal found that the assessee had not provided any credible evidence or current address for Mr. Agarwal, leading to the conclusion that the assessee's claims were unsubstantiated. This ground was dismissed.

9. Address Typographical Error:
The assessee argued that the additions were confirmed due to a typographical error in the address. The Tribunal found that the assessee failed to provide correct details and produce the relevant party, which justified the AO's action. This ground was also dismissed.

Conclusion:
The Tribunal, after considering all the issues and the evidence on record, dismissed the appeal of the assessee and upheld the order passed by the CIT(A). The appeal was pronounced dismissed in the open court on 09.02.2023.

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