2019 (1) TMI 882 - AT - Income Tax

Reopening of assessment - claim of 54F denied - Held that - Approval given by the Ld. Pr. CIT in this case is very much on the record and there is no infirmity. With regard to tangible material, it is noted that the AO had issued query letters in response to which the then AR had filed sale deeds and bank statements from where the AO noted the mistake of an extra zero which he discussed in the body of his order. It is only after examining the tangible material that the AO has dropped the proceedings against the daughter of the assessee and has taken action u/s. 147/148 against the assessee. Hence, CIT(A) has rightly dismissed this ground, which does not need any interference on my part, therefore, we uphold the same and reject the ground raised by the assessee. Plot has been registered in the name of Ram Baksh who is father of the assessee. Similarly, the sale deed has been executed by Ram Bakh and his son Sita Ram. From these documents, it is clear that the ownership in the property was of Ram Bakh and in the sale deed only the name of the assessee is there as second party. In the Affidavit of Assessee s father has claimed that impugned property (Plot) belonged to HUF and got mutated in the names of assessee and his father. Hence, the claim of 54F which was made in the assessment proceedings cannot be given to the assessee as the property has been purchased by Ram Baksh the father of the assessee and not the assessee. AO was rightly directed to rework the capital gains accordingly, which does not need any interference on my part, hence, uphold the action of the CIT(A) and reject the ground raised by the assessee. As regards sustaining of addition of ₹ 1,00,000/- is concerned, it is noted that the only issue which stands out is the opening cash in hand as seen from the Cash Flow Statement is of ₹ 3,50,088/- out of which the assessee has claimed to have deposited initial cash in bank of ₹ 1,60,000/- and assessee did not have any satisfactory explanation with regard to source of ₹ 1,00,000/- out of opening cash of ₹ 3,55,088/-. It is an admitted fact that assessee is a pure agriculturist and not having any other income. AO was rightly directed to sustain the addition of ₹ 1,00,000/- and delete the balance, which does not need any interference on my part, hence, uphold the action of the Ld. CIT(A) and reject the ground raised by the assessee. The case laws cited by the Ld. Counsel for the assessee do not support the case of the assessee being distinguished on facts. - Appeal of the Assessee is dismissed.

Summary

Issues:
1. Validity of assessment by AO and violation of natural justice.
2. Legality of proceedings initiated under section 148.
3. Disallowance of capital gain addition and calculation method.
4. Reopening of case based on cash deposit and addition of unexplained cash credit.
5. Sustainment of addition of cash amount and explanation provided.
6. Right to file additional grounds during appellate proceedings.

Issue 1 - Validity of Assessment and Natural Justice:
The Assessee challenged the assessment by the AO as null and void, alleging a violation of natural justice. The AO initiated proceedings under section 147 based on discrepancies in cash deposits and sale deeds. The Assessee contended that the AO lacked tangible material and the assessment was solely based on AIR information. However, the Tribunal upheld the initiation of proceedings, noting the approval by the Ld. Pr. CIT and the tangible material provided by the Assessee in response to query letters. The Tribunal dismissed this ground, ruling in favor of the AO's actions.

Issue 2 - Legality of Section 148 Proceedings:
The Assessee raised concerns about the legality of proceedings initiated under section 148. The Tribunal found the approval by the Ld. Pr. CIT to be in order and upheld the initiation of proceedings against the Assessee, rejecting the Assessee's challenge on this ground.

Issue 3 - Disallowance of Capital Gain and Calculation Method:
The AO disallowed a portion of the capital gain claimed by the Assessee, citing discrepancies between sale consideration and cash deposits. The Tribunal found that the property in question belonged to the Assessee's father, not the Assessee, based on registration and sale deeds. Consequently, the Tribunal upheld the direction to rework the capital gains, ruling against the Assessee on this issue.

Issue 4 - Reopening of Case and Addition of Unexplained Cash Credit:
The AO reopened the case based on cash deposit discrepancies and added unexplained cash credit to the Assessee's income. The Tribunal upheld the AO's decision, noting the lack of satisfactory explanations for the cash deposits, leading to the addition of unexplained cash credit in accordance with section 68 of the Income Tax Act.

Issue 5 - Sustainment of Cash Addition and Explanation Provided:
The Assessee contested the sustainment of a cash addition of a specific amount. The Tribunal found that the Assessee failed to provide a satisfactory explanation for a portion of the opening cash in hand, leading to the sustainment of the cash addition. The Tribunal upheld this decision, rejecting the Assessee's challenge on this ground.

Issue 6 - Right to File Additional Grounds:
The Assessee reserved the right to file additional grounds during the appellate proceedings. However, the Tribunal dismissed the Assessee's appeal, upholding the decisions made by the AO and the Ld. CIT(A) regarding the various issues raised by the Assessee.

In conclusion, the Tribunal dismissed the Assessee's appeal, upholding the decisions regarding the validity of assessment, legality of section 148 proceedings, disallowance of capital gain, addition of unexplained cash credit, sustainment of cash addition, and the right to file additional grounds.