2024 (4) TMI 403 - AT - Income Tax

Reopening of assessment u/s 147/148 - reasons to believe - unexplained deposits in the bank account - HELD THAT - AO having gone through the information and the bank statement concluded that the income has escaped assessment and therefore the reasons were recorded by the Assessing Officer based on tangible material, which are valid reasons for reopening the assessment. We note that the case laws relied by the Ld. Counsel for the assessee, are not squarely applicable to the facts of the assessee s case. The Ld. Counsel also stated that notice under section 148 of the Act, was not issued to the assessee. However, we do not agree with assessee because the Assessing Officer has clearly mentioned in his assessment order that the notice under section 148 of the Act was issued to the assessee on dated 29.03.2019, hence, we reject this technical plea raised by the assessee. Moreover, we note that the assessee has not contested the issue of reopening of assessment, under section 147/148 of the Act during the assessment stage, therefore, in our view, the reopening of assessment under section 147/ 148 of the Act is valid, thus, ground No.1 raised by the assessee is dismissed. Unexplained cash deposited in the bank account - Counsel stated that the assessee has redeposited the cash withdrawn from the bank and partly amount deposited from the agricultural income - We note that there is a little merit in the arguments advanced by assessee, hence considering the above facts we are of the view that end of the justice would be meet if some percentage of the total addition may be added in the hands of the assessee. We note that the entire cash deposit in the bank account is not income of the assessee. Therefore we direct the assessing officer to disallow 10% of the balance amount - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening of assessment u/s 147.
2. Confirmation of total addition of Rs. 14,50,659/- u/s 69A.
3. Consideration of maximum peak credit in bank.

Summary:

Issue 1: Validity of reopening of assessment u/s 147

The assessee challenged the reopening of assessment u/s 147, arguing that the notice issued u/s 148 was "bad in law and without jurisdiction." The tribunal examined the assessment order and found that the Assessing Officer (AO) had valid reasons to believe that income had escaped assessment based on tangible material. The tribunal rejected the assessee's technical plea regarding the issuance of the notice u/s 148, noting that the AO had clearly mentioned the issuance of the notice on 29.03.2019. The tribunal concluded that the reopening of assessment u/s 147 was valid and dismissed ground No.1 raised by the assessee.

Issue 2: Confirmation of total addition of Rs. 14,50,659/- u/s 69A

The AO noted that the assessee had made cash deposits amounting to Rs. 11,02,500/- and other credit entries of Rs. 6,84,646/- in the bank account, totaling Rs. 17,87,146/-, which remained unexplained. The AO treated this amount as unexplained money u/s 69A and added it to the total income. The CIT(A) partly allowed the appeal, reducing the addition to Rs. 14,50,683/- after considering some explained amounts. The tribunal found that the assessee failed to provide cogent evidence to explain the cash deposits but acknowledged that the assessee had some agricultural income and cash withdrawals from the bank. The tribunal directed the AO to disallow 10% of the balance amount of Rs. 14,50,683/-, resulting in an addition of Rs. 1,45,068/-.

Issue 3: Consideration of maximum peak credit in bank

The assessee argued that the addition should consider the maximum peak credit in the bank account. The tribunal noted that the assessee provided some explanation for the cash deposits, including agricultural income and redeposited cash withdrawals. The tribunal found merit in the argument that not the entire cash deposit should be treated as income and directed the AO to disallow 10% of the balance amount, thereby partly allowing the appeal.

Conclusion:

The tribunal upheld the reopening of the assessment u/s 147, confirmed part of the addition u/s 69A, and directed a 10% disallowance of the balance amount, partly allowing the assessee's appeal. The order was pronounced on 08/04/2024.