2020 (4) TMI 252 - AT - Income Tax

Validity of reopening u/s.147 - addition u/s.69A on account of gifts - HELD THAT - Assessing Officer to establish the fact of escapement of income at the stage of issue of notice the only question which is required to be seen is, whether there was any relevant material on which a reasonable person could have formed the requisite believe and whether material would conclusively prove the escapement of income is not a concern at that stage. In this case, also not only the material coming on record before the Assessing Officer was relevant but also had live link nexus with the income escaping assessment because the donor was found to be; firstly, accommodation entry provider; and secondly, he has admitted that he has given bogus gift to various beneficiaries in lieu of cash and in the list of such beneficiary not only the assessee s name had appeared but also the PAN and the gift also garb co-related to the relevant entries in the bank account. Thus, we hold that reasons recorded were sufficient to clothe the Assessing Officer to acquire the jurisdiction, to reopen the assessment. The ground that, Assessing Officer had not obtained the satisfaction u/s.151 before issuance of notice is also not correct because Assessing Officer has specifically stated that satisfaction was obtained from the Addl. CIT wherein he has stated that he is satisfied with the reasons recorded by the Assessing Officer. Thus, this ground is also not tenable. Thus, the reopening of the assessment u/s.147 r.w.s. 148 is valid and the order of the Ld. CIT (A) on this count is upheld. Addition on account of gift - A Donor cannot have natural love and affection to hundreds of people where gifts were given without any occasion and that to be in several lakhs. Another important factor is that the donor has stated to have gifted huge amount of gifts to various persons and Assessing Officer has even noted 9 such persons also on the basis of information. Once, he has confirmed that he is actually an entry provider and admitted that he has given bogus gifts in lieu of cash, then mere filing of memorandum of gift and affidavit of the donor cannot lead to a conclusive inference that gift is genuine. Mere identification of the donor and movement of the gift through banking channels definitely cannot prove the genuineness of the gift when the credibility of the donor itself is dubious coupled with the fact that his completely a stranger then in our opinion genuineness of the gift does not stand establish. Various courts have held that in the case of the gift mere identity and payment through account payee cheque does not establishes the genuineness of the gift which has been held so by the Hon ble Jurisdictional High Court in the case of Sajan Dass Sons 2002 (11) TMI 24 - DELHI HIGH COURT . Accordingly, the gift of ₹ 5 lac is confirmed. - Decided against assessee. .

Issues Involved:
1. Validity of reopening under Section 147.
2. Jurisdiction of the Assessing Officer.
3. Validity of notice under Section 148.
4. Satisfaction under Section 151.
5. Addition of ?5 lacs under Section 69A.
6. Denial of opportunity for cross-examination.
7. Time-barred assessment proceedings.

Detailed Analysis:

1. Validity of Reopening under Section 147:
The assessee challenged the reopening of the assessment under Section 147 on various grounds, including the lack of jurisdiction, invalid notice under Section 148, lack of satisfaction under Section 151, and absence of credible information. The Tribunal upheld the reopening, stating that the Assessing Officer had sufficient material and credible information from the Investigation Wing about the assessee receiving a bogus gift of ?5 lacs from an entry provider. The Tribunal cited the Supreme Court's decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd., emphasizing that the Assessing Officer only needed a prima facie reason to believe that income had escaped assessment, not conclusive proof at the stage of issuing the notice.

2. Jurisdiction of the Assessing Officer:
The assessee contended that the Assessing Officer, Ward-25, New Delhi, had no jurisdiction over the case. The Tribunal noted that the assessee did not raise this objection during the assessment proceedings. The CIT(A) had also held that the Assessing Officer had sufficient information to form a 'reason to believe' that income had escaped assessment, following the Supreme Court's decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd.

3. Validity of Notice under Section 148:
The assessee argued that the notice under Section 148 was issued after the expiry of the period of limitation laid down in Section 149. The Tribunal did not find merit in this argument, as the notice was issued within the permissible time frame, and the Assessing Officer had credible information to justify the reopening.

4. Satisfaction under Section 151:
The assessee claimed that the Assessing Officer did not obtain the necessary satisfaction under Section 151 before issuing the notice under Section 148. The Tribunal found that the Assessing Officer had indeed obtained the satisfaction from the Addl. CIT, who had endorsed the reasons recorded by the Assessing Officer. Therefore, this ground was also dismissed.

5. Addition of ?5 lacs under Section 69A:
On merits, the Tribunal upheld the addition of ?5 lacs under Section 69A, noting that the assessee failed to prove the genuineness and creditworthiness of the gift. The donor was a stranger to the assessee, and the explanation provided was not convincing. The Tribunal emphasized that mere identification of the donor and payment through banking channels do not establish the genuineness of the gift, especially when the donor was found to be an entry provider involved in giving bogus gifts to numerous persons.

6. Denial of Opportunity for Cross-Examination:
The assessee argued that the Assessing Officer did not provide an opportunity for cross-examination of the donor. The Tribunal noted that the assessee did not request cross-examination during the assessment proceedings. Moreover, the Assessing Officer had credible information from the Investigation Wing, and the lack of cross-examination did not invalidate the reopening.

7. Time-Barred Assessment Proceedings:
The assessee contended that the assessment proceedings were time-barred. However, the Tribunal did not find any merit in this argument, as the notice under Section 148 was issued within the permissible time frame, and the reopening was justified based on the material available with the Assessing Officer.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the validity of the reopening under Section 147, the jurisdiction of the Assessing Officer, the validity of the notice under Section 148, and the addition of ?5 lacs under Section 69A. The Tribunal emphasized the importance of credible information and reasonable belief in the reopening of assessments and rejected the assessee's contentions on various grounds. The order was pronounced in the open Court on 9th December 2019.

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