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2024 (8) TMI 969 - AT - Income TaxReopening of assessment - undisclosed cash deposits - HELD THAT - Despite entering into massive financial transactions, the assessee had not filed any return of income was filed u/s 139, thus, in our considered view keeping in view factual matrix as is emerging from the records, the AO was having sufficient and tangible incriminating information that the income of the assessee has escaped assessment and in my considered view, the AO has rightly invoked provisions of Section 147/148. Existence of reasons to belief by way of tangible material and its live link/nexus with formation of belief by the AO that income of the assessee has escaped assessment is relevant, and not the sufficiency of material because at the stage of reopening prima-facie belief of the AO based on material on record that income has escaped assessment. Reference is drawn to judgment and order of Rajesh Jhaveri Stock Brokers Private Limited 2007 (5) TMI 197 - SUPREME COURT . Thus, uphold reopening of the assessment by the AO by invoking provisions of Section 147. The cash stood deposited in the bank accounts of the assessee. The assessee did not denied that the bank account did not belong to the assessee nor any denial is there that cash was not deposited by the assessee. The onus is on the assessee to explain the source of cash deposit in the bank account. The assessee also did not filed return of income in pursuance to notice u/s 148.The assessee never asked for reasons recorded by the AO u/s 147 for reopening of the assessment. The assessee did not participated in reassessment proceedings before the AO, nor appellate proceedings before the ld. CIT(A). The assessee has now obtained reasons recorded u/s 147 by the AO for reopening of the assessment, through RTI application. The assessee has not brought on record any evidences for explaining sources of cash deposits in the bank accounts held by it with Vijaya Bank and Indusind Bank. Addition u/s 68 - Ex-parte assessment under Section 144 - So far as merits of the additions are concerned, assessee has now taken a plea before ITAT for the first time, which plea is taken without prejudice, that only peak credit can be added with respect to cash deposits and entire cash deposits cannot be added, and in context thereof the assessee has filed additional evidences before the Tribunal by way of working of peak cash credits to the tune of Rs. 1174,730/- as well bank statements of both the bank accounts viz. Vijaya Bank and Indusind Bank for the relevant period are filed, and contentions are made that the entire cash deposits in the bank cannot be added and it is the peak amount which could be added, as there were cash deposits as well cash withdrawals from the Bank. The additional evidences filed requires verification by authorities below. The mandate of the 1961 Act is to bring to tax correct income in the hands of the correct assessee for the correct assessment year, keeping in view provisions of the 1961 Act. Thus, Revenue has right to collect correct taxes. Admit the additional evidence filed by the assessee by way of working of peak credit, although filed without prejudice, which requires verification by authorities below. Whatever may be the reasons, it is a fact on record, that both the assessment as well appellate proceedings were adjudicated ex-parte in the absence of the assessee. Thus, in the interest of justice, restore the matter back to the file of ld. CIT(A) to re-adjudicate the issue of additions made by the AO on merits in accordance with law - The appeal of the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Delay in filing the appeal. 2. Re-opening of assessment under Section 147. 3. Addition of cash deposits as unexplained cash credit under Section 68. 4. Ex-parte assessment under Section 144. 5. Non-compliance with statutory notices. 6. Admission of additional evidence regarding peak cash credit. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 38 days beyond the time prescribed under Section 253(3) of the Income-tax Act, 1961. The assessee claimed that the delay was due to unawareness of the ex-parte appellate order passed by the CIT(A) on the ITBA Portal. The Revenue did not object to the delay. The Tribunal condoned the delay, citing that the reasons provided by the assessee were plausible, especially considering the transition phase to new technologies by the Revenue. The Tribunal emphasized that substantial justice should prevail over technicalities, referencing the Supreme Court decision in Collector of Land Acquisition, Anantnag v. Mst. Katiji (1987 AIR 1353(SC)). 2. Re-opening of Assessment under Section 147: The AO reopened the assessment under Section 147 due to cash deposits in the assessee's bank accounts and other financial transactions which were not declared. The assessee argued that the reopening was merely for verification of cash deposits, which is not permissible. The Tribunal upheld the reopening, stating that the AO had tangible material leading to a belief that income had escaped assessment. The Tribunal referenced the Supreme Court decision in ACIT v. Rajesh Jhaveri Stock Brokers Private Limited, (2007) 291 ITR 500(SC), emphasizing that at the stage of reopening, only a prima facie belief based on material is required. 3. Addition of Cash Deposits as Unexplained Cash Credit under Section 68: The AO added Rs. 29,93,000/- as unexplained cash credit under Section 68, which was later reduced to Rs. 24,83,000/- by the CIT(A). The assessee did not provide any explanation or documentary evidence for the cash deposits. The Tribunal noted that the onus was on the assessee to explain the source of the cash deposits, which was not discharged. The Tribunal admitted additional evidence regarding the working of peak cash credit but remanded the matter back to the CIT(A) for re-adjudication on merits, emphasizing that correct income should be taxed. 4. Ex-parte Assessment under Section 144: The AO completed the assessment ex-parte under Section 144 due to non-compliance by the assessee with statutory notices. The CIT(A) upheld the ex-parte assessment. The Tribunal noted that the assessee did not comply with notices during both assessment and appellate proceedings. The Tribunal restored the matter to the CIT(A) for re-adjudication, directing the assessee to comply with notices. 5. Non-compliance with Statutory Notices: The assessee did not respond to notices issued under Sections 148 and 142(1) during the reassessment proceedings. The Tribunal observed that the assessee's non-compliance justified the ex-parte assessment and the additions made by the AO. The Tribunal emphasized the importance of compliance with statutory notices. 6. Admission of Additional Evidence Regarding Peak Cash Credit: The assessee submitted additional evidence regarding the working of peak cash credit for the first time before the Tribunal. The Tribunal admitted the additional evidence and remanded the matter to the CIT(A) for verification. The Tribunal highlighted that the Revenue has the right to collect correct taxes and that the mandate of the Income-tax Act is to bring correct income to tax. Conclusion: The Tribunal partly allowed the assessee's appeal for statistical purposes, condoning the delay in filing the appeal, upholding the reopening of assessment under Section 147, and remanding the matter to the CIT(A) for re-adjudication on the merits of the additions made by the AO. The Tribunal emphasized the importance of compliance with statutory notices and the need for correct income to be taxed. The appeal was disposed of accordingly.
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