2018 (12) TMI 913 - AT - Income Tax

Reopening of assessment - unexplained source of deposits made in the bank account - ex parte assessment order - non-application of mind and without examination of the correctness of the facts in respect of the alleged escaped income - non filling of return of income by assessee - Held that - Here the assessee have neither filed any return of income under section 139(1) nor in response to notice under section 148, then the assessee could not raise any objection before the AO against the notice under section 148 of the Act and consequently the said objection cannot be raised before the appellate authority. Hence, we decline to admit the additional ground raised by the assessee. The same is rejected. For unexplained source of deposits made in the bank account - admission of additional evidence - Once the assessee are agriculturists and holding a substantial amount of land in their personal names as well as in the names of the family members, then the entire deposit made in the bank account cannot be treated as taxable income of the assessees. The assessees filed the additional evidence in the shape of revenue record showing the land holding in the names of the assessees as well as their family members. The land holding of the assessees are more than 16 hectares in case of the father and about 6 hectares in case of son. Therefore, we find that though the assessees did not produce these evidences before the A.O, however, once the evidences produced by the assessee is the official record which can be independently verified, then the same is required to be verified and considered for the purpose of explaining the source of deposits made in the bank account - remit the matter to the record of the AO for conducting a proper enquiry - appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
1. Challenge to ex parte assessment order under section 147/144 of the IT Act, 1961.
2. Non-admittance of additional evidences under Rule 46A of the I.T. Rules.
3. Addition of income from other sources and interest thereon.
4. Validity of notice under section 147/148 for reopening assessment.

Analysis:

Issue 1:
The assessees challenged the dismissal of their appeal against the ex parte assessment order under section 147/144 of the IT Act, 1961. They contended that they were prevented by reasonable cause from complying with statutory notices. The Tribunal acknowledged the legal and factual errors by the CIT (A) and quashed the decision, allowing the appeal for statistical purposes.

Issue 2:
The assessees raised concerns about the non-admittance of additional evidences under Rule 46A of the I.T. Rules by the CIT (A). The Tribunal noted that the additional evidence provided by the assessees, related to the source of deposits in their bank accounts, was crucial for the case. Despite not being submitted before the AO, the Tribunal admitted the evidence for verification and remitted the matter back to the AO for a proper enquiry.

Issue 3:
Regarding the addition of income from other sources and interest, the Tribunal found that the authorities erred in confirming the addition without considering the facts correctly. The Tribunal deemed the addition as bad in law and ordered its deletion, thereby allowing the appeal for statistical purposes.

Issue 4:
The validity of the notice under section 147/148 for reopening the assessment was contested. The assessees argued that the AO lacked sufficient reasons to believe and did not apply the mind before initiating proceedings. The Tribunal, however, upheld the initiation of proceedings as the assessees had not filed any return of income in response to the notice under section 148. The additional ground challenging the validity of the notice was rejected, as the assessees had not cooperated during the assessment proceedings.

In conclusion, the Tribunal allowed the appeals of the assessees for statistical purposes, addressing the issues related to the ex parte assessment order, non-admittance of additional evidences, addition of income from other sources, and the validity of the notice for reopening the assessment.