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2023 (10) TMI 551 - AT - Income TaxReopening of assessment u/s 147 - Reason to believe - valid approval obtained u/s 151 or not? - Addition u/s 68 - Applicability of higher rate of tax u/s 115BBE - Sourcing unsecured loan against Cash Deposit - HELD THAT - AO had recorded the detailed reasons for reopening of assessment wherein the relevant documentary evidences including the documentary evidence found during the course of survey operation and statements recorded during and post survey operations were in possession of AO which was sufficient material indicating the escapement of assessment by the assessee. AO also carried out the necessary analysis and examination of the said material, correlating the same with the income tax returns filed by the assessee as well as the statement recorded during the course of investigations. Therefore, the AO had sufficient reasons to believe that income had escaped assessment and therefore, he rightly invoked the action u/s. 147 of the Act for initiation of reassessment proceedings and for issuance of notice u/s. 148 of the Act and thus, he assumed valid jurisdiction to frame the reassessment order u/s. 147/143(3) of the Act, after proper analysis and evaluation of facts based on available evidences. We decline to accept the contentions of Ld. Counsel for the assessee that the AO had proceeded to initiate the reassessment proceedings without having tangible material and the reasons recorded do not constitute valid reason to believe for initiation of reassessment proceedings. We are unable to see any factual mistakes by the AO which could establish non- application of mind by the AO while recording the reasons, when the AO has evaluated the bank statements of the assessee as well as the creditors and the assessee failed to substantiate the source of cash deposits and the genuineness of the transactions of unsecured loan then the AO was validly entitled to have reason to believe that income had escaped assessment. Thus we hold that the AO assumed valid jurisdiction to initiate reassessment proceedings u/s 147. Approval granted u/s. 151 - We are unable to see any ground by the assessee before the Ld. CIT(A) challenging the approval granted u/s. 151 - From the relevant para for approval order, we note that CIT(A) has categorically stated and observed that after perusing the relevant material and reasons recorded by the AO, he is satisfied that it was a fit case of reopening assessment u/s. 147 and issuance of notice u/s. 148 of the Act and accordingly, ground of the assessee being devoid of merits is also dismissed. Addition of cash credit - We hold that the other hand, the AO and Ld. CIT(A) recorded categorical finding that the assessee failed to explain and prove the creditworthiness of loan creditor and genuineness of transaction of unsecured loan received by her for purchase of immovable property. We reach to a logical conclusion that AO was quite correct and justified in treating the unsecured loan as unexplained cash credit in the hands of the assessee while invoking the provisions of section 68 and the Ld. CIT(A) was also correct in upholding the same after detailed logical analysis of documentary evidence, allegations of the AO and explanation of the assessee. Accordingly, we are unable to see any valid reason to interfere the findings affirmed by the Ld. CIT(A) while confirming the addition u/s. 68 of the Act in the hands of the assessee, hence, we uphold the same. Assessee failed to reconcile the opening cash in hand with the income tax returns of previous year AY 2012-13 - CIT(A) thus rightly observed that since there was no income or receipt in cash during the last several years, there was no justification of having any cash in hands otherwise, what has been withdrawal over the years from the bank accounts of the assessee. We also observe that the AO as well as Ld. CIT(A) provided due opportunity to the assessee to explain the source of cash deposit but the assessee did not submit any specific reason explaining the source of cash deposit during the year. We decline to accept the explanation of the assessee as the assessee has failed to explain the source of cash deposit to her bank account upto the month of July, 2012 and hence, the impugned amount remained unexplained and the AO was right in making the addition in the hands of the assessee u/s. 68 of the Act and hence, we are unable to see any perversity or any other valid reason to interfere with the findings of AO and conclusion recorded by the Ld. CIT(A), hence, we uphold the same. We uphold the conclusion of the AO for AY 2019-20 wherein he made addition to the income of the assessee u/s. 68 and ordered to change higher rate u/s. 115BBE.
Issues Involved:
1. Validity of initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961. 2. Addition of Rs. 75,00,000/- as unexplained cash credit under Section 68 of the Act. 3. Addition of Rs. 2,05,000/- as unexplained cash credit under Section 68 of the Act. 4. Addition of Rs. 12,40,000/- as unexplained cash credit under Section 68 of the Act. 5. Addition of Rs. 20,00,000/- as unexplained cash credit under Section 68 of the Act. 6. Taxation of income under Section 115BBE of the Act. Summary: Issue 1: Validity of initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961 The assessee challenged the initiation of reassessment proceedings under Section 147 and the issuance of notice under Section 148, arguing that there was no specific, relevant, reliable, and tangible material to form a "reason to believe" that income had escaped assessment. The Tribunal upheld the reassessment proceedings, noting that the Assessing Officer (AO) had valid reasons to believe that income had escaped assessment based on documentary evidence, including bank statements and statements recorded during investigations. The Tribunal concluded that the AO had assumed valid jurisdiction to initiate reassessment proceedings. Issue 2: Addition of Rs. 75,00,000/- as unexplained cash credit under Section 68 of the Act The AO made an addition of Rs. 75,00,000/- as unexplained cash credit, noting that the assessee failed to establish the creditworthiness of the loan creditors and the genuineness of the transaction. The Tribunal upheld the addition, agreeing with the AO and CIT(A) that the transaction was bogus and the assessee failed to prove the creditworthiness of the loan creditors and the genuineness of the transaction. Issue 3: Addition of Rs. 2,05,000/- as unexplained cash credit under Section 68 of the Act The AO made an addition of Rs. 2,05,000/- as unexplained cash credit, noting discrepancies in the cash in hand shown in the income tax returns and the statement submitted by the assessee. The Tribunal upheld the addition, agreeing with the AO and CIT(A) that the assessee failed to explain the source of the cash deposit and the same remained unexplained. Issue 4: Addition of Rs. 12,40,000/- as unexplained cash credit under Section 68 of the Act The AO made an addition of Rs. 12,40,000/- as unexplained cash credit, noting discrepancies in the cash in hand and the source of cash deposits. The Tribunal upheld the addition, agreeing with the AO and CIT(A) that the assessee failed to substantiate the source of the cash deposits and the same remained unexplained. Issue 5: Addition of Rs. 20,00,000/- as unexplained cash credit under Section 68 of the Act The AO made an addition of Rs. 20,00,000/- as unexplained cash credit, noting discrepancies in the cash in hand and the source of cash deposits. The Tribunal upheld the addition, agreeing with the AO and CIT(A) that the assessee failed to substantiate the source of the cash deposits and the same remained unexplained. Issue 6: Taxation of income under Section 115BBE of the Act The Tribunal upheld the AO's decision to tax the unexplained cash credits under Section 115BBE at a higher rate, noting that the assessee failed to prove the nature of the credits as salary by proving an employer-employee relationship. The Tribunal concluded that the AO was justified in invoking Section 115BBE and taxing the unexplained cash credits at a higher rate. Conclusion: The Tribunal dismissed all the appeals filed by the assessee, upholding the additions made by the AO and the CIT(A) and confirming the validity of the reassessment proceedings under Section 147 of the Income Tax Act, 1961.
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