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2020 (4) TMI 21 - AT - Income TaxReopening of assessment u/s 147 - unexplained cash - relevant assessment year - HELD THAT - Cash was found in possession of assessee on 13-04-2009 which is relevant to the AY.2010-11 and not to the AY.2009-10. Therefore, the presumption that the income has escaped assessment for the AY.2009-10 itself is not validly made. For this reason itself, the reopening of the assessment is not valid. Since re-opening of the assessment is not for valid reasons, the consequent re-assessment proceedings would also be void ab initio . Therefore,Grounds raised by the assessee and set aside the assessment made by the AO. AY.2010-11 - since there is no material filed by the assessee before the Tribunal to prove that the assessee had more cash than ₹ 45,000/- as estimated by the AO as on 13-04-2009, find no reason to interfere with the order of Ld.CIT(A), confirming the addition of ₹ 5,50,000/- made during the year. AY.2009-10, the assessee has claimed refund of taxes paid i.e., ₹ 5,95,000/- paid as self-assessment tax and there is a liability of assessee for the AY.2010-11 since the amount has been brought to tax in the AY.2010-11. The Department is therefore directed to adjust the self-assessment tax paid by the assessee for the AY.2009-10 towards tax liability of the assessee for the AY.2010-11, and the balance amount shall be refunded to the assessee as per law.
Issues:
- Re-opening of assessment for AYs 2009-10 and 2010-11 - Validity of notice u/s 148 - Addition of unexplained cash and creditors - Protective assessment in AY 2009-10 - Assessment proceedings and appeals Re-opening of assessment for AYs 2009-10 and 2010-11: The case involved re-opening of assessments for the assessment years 2009-10 and 2010-11 due to unexplained cash found with the assessee during General Elections. The Assessing Officer (AO) re-opened the assessments under section 147 of the Income Tax Act and issued notices under section 148. The assessee challenged the re-opening of assessments, arguing that the reasons for re-opening for both years cannot be the same. The Tribunal found that the cash found with the assessee in April 2009 belonged to the previous year relevant to AY 2010-11, not AY 2009-10, rendering the re-opening for 2009-10 invalid. Validity of notice u/s 148: The Tribunal considered the validity of the notice issued under section 148 for both assessment years. The assessee contended that the notice was invalid as it was issued without processing the return of income filed under section 139(1) of the IT Act. The Tribunal held that the notice for AY 2009-10 was invalid due to the incorrect presumption that income had escaped assessment for that year, leading to the subsequent re-assessment being void ab initio. Addition of unexplained cash and creditors: The AO added the unexplained cash found with the assessee to the income for AY 2009-10 and AY 2010-11. Additionally, the AO directed the assessee to provide confirmation letters from creditors, which were not submitted, resulting in the addition of the creditor amounts to the income for AY 2009-10. The CIT(A) confirmed these additions, but the Tribunal held that the protective assessment made in AY 2009-10 was not valid due to the incorrect year association of the unexplained cash. Protective assessment in AY 2009-10: The AO made a protective assessment of the unexplained cash for AY 2009-10 and substantively for AY 2010-11. However, the Tribunal found this protective assessment invalid for AY 2009-10 due to the cash belonging to the following year. As a result, the Tribunal set aside the assessment made by the AO for AY 2009-10. Assessment proceedings and appeals: The Tribunal considered the arguments of the assessee and the Department regarding the assessment proceedings and the additions made by the AO. While the Tribunal set aside the assessment for AY 2009-10, it upheld the addition of unexplained cash for AY 2010-11. The Tribunal directed the Department to adjust the self-assessment tax paid for AY 2009-10 towards the tax liability for AY 2010-11 and refund the balance amount to the assessee. Ultimately, the appeal for AY 2009-10 was allowed, and the appeal for AY 2010-11 was dismissed.
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