2023 (3) TMI 1101 - AT - Income Tax

Assessment u/s 147 - cash deposits unexplained - addition on account of undisclosed sources - HELD THAT - If an opportunity is given to the assessee to substantiate the source of cash deposits and also to produce the copy of the agreement of sale relied by the assessee and if the CIT(A) considers the same and passes the order afresh, the substantial justice would be rendered. Irgo, we partly allow the grounds of appeal for statistical purpose by remanding the matter to the file of the CIT(A) with a direction to the assessee to substantiate the source of the cash deposits and also to prove the agreement to sale relied by the assessee and further we direct the CIT(A) to consider the same and pass appropriate order in accordance with law. Appeal filed by the assessee is partly allowed for statistical purpose.

Summary

Issues Involved:
The judgment involves issues related to reopening of case u/s 147, addition of income from other sources, non-provision of details by the bank, failure to verify agreement details, lack of proper consideration by the AO, imposition of interest u/s 234A, 234B, 234C, and inadequate opportunity of being heard.

Reopening of Case u/s 147:
The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) for assessment year 2009-10. The assessee contended that the reasons recorded for reopening the case u/s 148 were not sufficient as cash deposits in the bank account did not necessarily indicate escaped income. The Tribunal quashed the reassessment proceedings based on insufficient reasons and held that all other issues on merits were rendered academic and infructuous.

Addition of Income from Other Sources:
The Assessing Officer made an addition of Rs 3,00,00,000/- as income from other sources without considering that this amount was received as advance money against an agreement of sale of immovable property. The agreement was later revoked by mutual agreement, and the amount was returned to the party. The AO failed to verify the truthfulness of the agreement and made conclusions without proper investigation, indicating ill intentions. The Tribunal found that the AO did not provide adequate opportunity for explanation and did not consider the provided evidence, leading to an incorrect addition.

Non-Provision of Bank Details:
During the hearing, the bank details of a credit of Rs 30,00,000/- were requested, but the bank denied providing the information. The AO did not invoke necessary sections to obtain the details, and the Tribunal noted the failure to verify the transaction properly due to lack of cooperation from the bank.

Failure to Verify Agreement Details:
The AO did not attempt to verify the agreement dated 14-08-2008, through which major payments were received. The Tribunal observed that the AO did not properly investigate the transaction and drew conclusions without sufficient evidence, indicating potential ill intentions. The Tribunal highlighted the importance of proper verification before making additions to the income.

Imposition of Interest u/s 234A, 234B, 234C:
The CIT(A) was criticized for not reversing the action of the AO in charging interest under various sections of the Income Tax Act, 1961. The Tribunal found that the imposition of interest was not justified based on the facts and circumstances of the case, indicating a lack of proper consideration by the authorities.

Inadequate Opportunity of Being Heard:
The AO did not provide the assessee with a proper opportunity to explain doubts or provide necessary clarifications. The Tribunal noted that the AO made additions without concrete basis and failed to consider the explanations provided, leading to a flawed assessment order. The Tribunal emphasized the importance of providing a fair opportunity for the assessee to present their case.