2023 (10) TMI 663 - AT - Income Tax

Validity of reopening of assessment - unexplained cash found deposited in Bank Account - HELD THAT -As decided in the case of Raymond Woolen Mills Ltd. 1997 (12) TMI 12 - SUPREME COURT has held that in determining whether commencement of re-opening proceedings are valid it has only to be seen whether there was prima facie some material on the basis of which department could re-open the case. In this case, ld AO received AIR information about cash deposit in Saving Bank A/c based on which case was reopened by issue of notice u/s 148 - AO was having sufficient cogent material to form his reason to believe about escapement of income so as to reopen the case and therefore, issue of notice u/s 148 of the Act for re-opening the assessment was valid and legal, hence sustained. Addition u/s 69A - Unexplained cash - cash deposited in the bank account - HELD THAT - As there is no evidence that assessee does any business. Further, ld. CIT (A) has found that there is no evidence/proof of agricultural income. In these circumstances, the source of cash remains unsubstantiated. Hence, we uphold the order of ld. CIT (A). Appeal decided against assessee.

Summary

Issues involved:
The issues involved in this case are the validity of proceedings under section 147 and the treatment of cash deposits in the bank account as unexplained money under section 69A.

Validity of Reopening Proceedings:
The appeal was filed against the order of the ld. CIT (Appeals) pertaining to the assessment year 2009-10. The assessee challenged the validity of proceedings under section 147, contending that the AO was not justified in treating the amount as unexplained cash deposit. The ld. CIT (A) upheld the reopening, stating that the AO had sufficient material to form a belief about income escapement based on cash deposit information. Citing legal precedents, the ld. CIT (A) deemed the reopening valid, as supported by relevant material, and dismissed the appeal on this ground.

Treatment of Cash Deposits as Unexplained Money:
Regarding the merits of the case involving cash deposits of Rs. 16,70,320, the ld. CIT (A) noted the assessee's submissions about land ownership and recycling of funds. However, the ld. CIT (A) found the explanations insufficient, emphasizing the lack of evidence for business activities or agricultural income. The ld. CIT (A) held that the appellant failed to provide necessary documentation to support claims, such as purchase/sale bills or agricultural income details. The appellant's failure to prove the source of cash deposits led to the conclusion that the amount should be taxed as unexplained money under sections 69 or 69B of the Act. The ld. CIT (A) upheld the AO's addition of Rs. 16,70,120 as unexplained money, dismissing the appeal on this ground as well.

Final Decision:
The ITAT Agra, after considering the arguments and records, found no reason to interfere with the ld. CIT (A)'s order. The tribunal concurred with the findings that there was a lack of evidence supporting business activities or agricultural income, rendering the source of cash deposits unsubstantiated. Consequently, the appeal of the assessee was dismissed, upholding the order of the ld. CIT (A) in its entirety.