2024 (8) TMI 417 - AT - Income Tax

Validity of reopening of assessment - Addition on account of purchase of jewellery as undisclosed investments u/s 69 - HELD THAT - We note that assessee has carried out substantial transactions during the year and she did not file her return of income. After receiving notice u/s 148, return was filed. In regard to purchase of jewellery by Mr. Puttarangaiah, the assessee could not substantiate with credible evidence of agricultural income or savings of jewellery buyer in regard to cash purchase and the confirmation is from Mr. P. Venkatachaliah, his son. The assessee has also not submitted the death certificate of Mr. Puttarangaiah. It is pertinent to mention here that the onus to prove the genuineness of the transaction, creditworthiness and identity lies with the appellant and it is to be discharged with reasonable explanation which has not been put forward unequivocally by the appellant. The bill is also in the name of assessee. As we concur with the order of the CIT(A). Accordingly we reject this ground of the assessee. Addition of property has been purchased in the joint name of assessee and Srinivasan Mahesh with 50% share - During the course of hearing it was asked who is/are the beneficiary of the property and if any income is derived from that property and if any amount is remitted to Srinivasan Mahesh or any utility cost is borne by the second joint holder or property is lying vacant, electricity bill , water bill or property tax payment, but the assessee could not submit any document. Even the statement of affairs of Srinivasan Mahesh to prove that assessee is a debtor in his books was not furnished. As per the Sale Deed, the assessee is the first owner of the immovable property which clearly bestows beneficial ownership to her. There is no definite share defined in the purchase deed but the assessee has deducted TDS on purchase of property of Rs. 1,55,645/- which is 1% of Rs. 1,55,64,500/- and transaction amount is also the same as reported in Form No. 26AS, in view of this the assessee s share is 50% in the purchased property. The assessee has got benefit without any payment more than the prescribed limit as per section 56(2) - CIT(Appeals) has rightly considered it as income from other sources u/s. 56(2) since payment of share of the appellant is without consideration. We reject the argument of the ld. AR that loan is still outstanding and it is liability of the assessee, since it is not substantiated with cogent evidence. Accordingly we dismiss the grounds of assessee.

Issues Involved:
1. Legality of the appellate order.
2. Legality of the reopening of assessment under Section 148.
3. Confirmation of the assessment order.
4. Addition of Rs. 14,33,573/- as undisclosed investments under Section 69.
5. Addition of Rs. 1,55,64,500/- under Section 56(2) instead of Section 69.
6. Applicability of Section 115BBE.
7. Liability to pay interest under Sections 234A, 234B, and 234C.

Detailed Analysis:

1. Legality of the Appellate Order:
The appellant argued that the appellate order was "bad in law" and should be quashed. However, the tribunal did not find any procedural or legal errors in the manner the order was passed by the CIT(Appeals).

2. Legality of the Reopening of Assessment under Section 148:
The appellant contended that the conditions precedent for issuing a notice under Section 148 were not satisfied, making the reopening of the assessment "bad in law." The tribunal upheld the reopening, noting that the Risk Management Strategy formulated by the CBDT through ITBA software identified substantial transactions by the assessee, justifying the notice under Section 148.

3. Confirmation of the Assessment Order:
The appellant argued that the CIT(Appeals) erred in confirming the assessment order. The tribunal found that the CIT(Appeals) had correctly considered the facts and circumstances, thus upholding the assessment order.

4. Addition of Rs. 14,33,573/- as Undisclosed Investments under Section 69:
The appellant claimed no purchase of jewellery and alleged misuse of her PAN Card. The tribunal noted contradictory statements from the appellant and lack of credible evidence to substantiate the claim that the jewellery was purchased by a relative using the appellant's PAN. Therefore, the tribunal upheld the addition as undisclosed investments under Section 69.

5. Addition of Rs. 1,55,64,500/- under Section 56(2) instead of Section 69:
The appellant argued that the addition should not be made under Section 56(2) as the property was purchased jointly, and the amount was an interest-free loan from the co-owner, Srinivasan Mahesh. The tribunal found no evidence of a loan agreement or repayment terms and noted that the property was beneficially owned by the appellant. Thus, the tribunal upheld the addition under Section 56(2), rejecting the argument that it was a loan.

6. Applicability of Section 115BBE:
The appellant contended that Section 115BBE, which imposes a tax rate of 30% on undisclosed income, should not apply. The tribunal did not find merit in this argument, given the substantiated additions under Sections 69 and 56(2).

7. Liability to Pay Interest under Sections 234A, 234B, and 234C:
The appellant denied liability for interest under these sections. The tribunal upheld the interest levied, noting that the additions made justified the imposition of interest as per the Income Tax Act.

Conclusion:
The tribunal dismissed the appeal, upholding the order of the CIT(Appeals) and confirming the additions made by the Assessing Officer. The tribunal found the reopening of the assessment justified, the additions under Sections 69 and 56(2) substantiated, and the applicability of Section 115BBE and interest under Sections 234A, 234B, and 234C appropriate.

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