2023 (2) TMI 710 - AT - Income Tax

Validity of re-opening of the assessment - Unexpalined cash deposited in his bank account - no supporting evidence was furnished regarding creditworthiness of persons - HELD THAT - As in the absence of any supporting evidence regarding source of such deposit, the AO was justified in re-opening the assessment and making addition out of cash deposits which was not explained and proved with the supporting evidences. - Decided against assessee. Cash deposits - Assessee ought to have been given opportunity for furnishing the confirmation from his wife and other persons who gave advance to the assessee. AO could have secured their attendance for recording their statement and confirming the same to the assessee before making the impugned addition. Therefore, to sub-serve the interest of substantial justice, we hereby set aside the findings of the authorities below on the issue of impugned addition. The issue is restored to the file of AO for decision afresh. Ground raised by the assessee partly allowed for statistical purposes.

Issues Involved:
1. Challenge on facts and law regarding the order of Ld. CIT(A) for the assessment year 2011-12.
2. Addition of Rs. 19,00,000 as unexplained cash deposited u/s 68.
3. Power of CIT(A) to go beyond matters arising from proceedings before the AO.
4. Enhancement of addition without specific show cause notice.
5. Reopening of assessment u/s 147 without jurisdiction.
6. Condonation of delay in filing the appeal.

Analysis:

1. Challenge on Ld. CIT(A) Order:
The appellant challenged the order of Ld. CIT(A) on various grounds, including violation of principles of natural justice and substantial justice. The appellant raised concerns about the findings recorded by Ld. CIT(A) and the dismissal of the appeal.

2. Addition of Unexplained Cash Deposit:
The AO made an addition of Rs. 19,00,000 as unexplained cash deposited by the assessee in the bank account. The Ld. CIT(A) sustained this addition, noting discrepancies in the explanations provided by the assessee regarding the source of the cash deposits. However, the Tribunal set aside the findings and restored the issue to the AO for fresh consideration, emphasizing the need for the assessee to provide supporting evidence.

3. Power of CIT(A) and Enhancement of Addition:
The appellant challenged the power of CIT(A) to go beyond the matters arising from the AO's proceedings and the enhancement of the addition without a specific show cause notice. The Tribunal allowed the grounds for statistical purposes, highlighting the importance of providing a fair opportunity to the assessee to present relevant evidence.

4. Reopening of Assessment:
The AO reopened the assessment u/s 147 based on information regarding cash deposits in the assessee's bank account. The Ld. CIT(A) upheld the validity of the reopening, emphasizing the need for the assessee to explain the source of the cash deposits. The Tribunal affirmed this decision, stating that there was a live link between the information possessed by the AO and the belief that income had escaped assessment.

5. Condonation of Delay:
The assessee filed an application seeking condonation of delay in filing the appeal due to the Covid-19 pandemic. The Ld. Sr. DR opposed the condonation, citing the assessee's negligence. However, the Tribunal, considering the exceptional circumstances of the pandemic, condoned the delay and admitted the appeal for hearing.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, emphasizing the importance of providing a fair opportunity to the assessee to present evidence and ensuring compliance with procedural requirements. The judgment addressed various legal issues, including the validity of reopening assessments, the power of appellate authorities, and the impact of exceptional circumstances on procedural timelines.

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