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2023 (6) TMI 768 - AT - Income TaxReopening of assessment u/s 147 - Unexplained cash credit u/s. 68 - HELD THAT - Reasons to believe for reopening and recorded reasons clearly set out to verify the source of amount of investment and not set out the escapement of income. In case of Manzi Dineshkumar Shah 2018 (5) TMI 1176 - GUJARAT HIGH COURT has clearly set out that the AO cannot reopen the assessment which was already been verified by the AO. Thus, the reasons recorded here are not justified by the authority. Hence, the assessment itself is void ab initio - Decided in favour of assessee.
Issues Involved:
The appeal challenges the order passed by the Ld. Commissioner of Income Tax (Appeals) for A.Y. 2008-09 regarding addition made on account of unexplained cash credit u/s. 68. Issue 1: Addition on Account of Unexplained Cash Credit u/s. 68 The assessee deposited Rs. 24,06,100/- with the Bank of India during the Financial Year 2007-08 but declared income of only Rs. 1,31,300/-. The Assessing Officer made additions totaling Rs. 12,90,350/-, including Rs. 10,65,350/- of unconfirmed labor income and Rs. 2,25,000/- of non-genuine transaction. The CIT(A) upheld the additions. Judgment Details: The Ld. A.R. challenged the Assessment Order citing that the reasons for reopening the case did not indicate escapement of income but verification of deposit details. Citing the case of PCIT vs. Manzil Dineshkumar Shah, it was argued that the assessment was invalid. The Ld. D.R. supported the assessment and CIT(A) order. The Tribunal noted that the reasons for reopening focused on verifying the source of investment, not income escapement. Referring to the Manzil Dineshkumar Shah case, it was emphasized that assessments cannot be reopened without valid reasons for income escapement. The Court's ruling highlighted the need for a belief that income has escaped assessment, not just for verification purposes. Consequently, the assessment was deemed void ab initio, and Ground No. 1 was allowed in favor of the assessee. Since Ground No. 1 was decided in favor of the assessee, Ground No. 2 was not adjudicated upon as it related to the merit of the assessment, which was held void ab initio. In conclusion, the appeal of the assessee was allowed based on the invalidity of the assessment order. This Order was pronounced in Open Court on 14/06/2023.
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