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2023 (6) TMI 728 - AT - Income TaxReopening of assessment u/s 147 - cash deposit in bank - Reasons to believe - HELD THAT - There is nothing on record to show that on receipt of the information, the AO had carried out any inquiry or investigation so as to demonstrate the source of the impugned cash deposits in the bank, which according to the AO was income escaped from the assessment so as to attract initiation of proceedings u/s 147. Assumption of jurisdiction by the AO to reopen the case of the assessee merely on the basis in formation of cash deposit in bank was not in accordance with law, and therefore, the impugned assessment order passed by the ld.CIT(A) is set aside and the assessment order passed under section 147 of the Act quashed. Decided in favour of assessee.
Issues involved:
The judgment involves the validity of reopening of assessment u/s 147 and the restriction of addition by the AO u/s 68 of the Income Tax Act. Validity of Reopening of Assessment u/s 147: The appeal was filed against the order passed by the Commissioner of Income Tax (Appeals) under section 250(6) of the Income Tax Act, 1961, pertaining to the assessment year 2010-11. The AO had reopened the assessment based on information that the assessee had deposited cash in a bank, leading to an addition of Rs. 18,91,000 to the income. The assessee challenged this before the ld.CIT(A), who upheld the reopening but restricted the addition to Rs. 2,38,000. The assessee contended that the AO acted on suspicion, not belief, of income escapement. The Tribunal agreed, citing precedents, and quashed the assessment as the AO did not investigate the source of cash deposits to prove income escapement. Restriction of Addition by the AO u/s 68: The second issue raised was regarding the AO's disallowance under section 68 of the Act amounting to Rs. 2,38,000. The assessee argued against this disallowance, which was upheld by the ld.CIT(A). However, since the reassessment order was quashed due to the invalid reopening, the Tribunal deemed the issue of the validity of the addition as academic and did not address it. Ultimately, the appeal of the assessee was allowed based on the quashing of the reassessment order.
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