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2020 (12) TMI 927 - AT - Income TaxReopening of assessment u/s 147 - as argued in this case Joint Commissioner did not approve the reasons for reopening, the notice u/s. 148 of the Act is bad in law - HELD THAT - We do not agree with the said contention of the Ld. AR because as per clause 28(C) of section 2 of the Act which defines the Joint Commissioner means also the person appointed as Additional Commissioner for the purpose of this Act. Since the AO has issued the notice u/s. 148 of the Act after getting approval of the Additional Commissioner which the statute recognizes as also the Joint Commissioner by virtue of section 2(28C) of the Act, the issuance of notice by AO cannot be held as bad. So, the legal issue raised by the assessee is dismissed. Unexplained investment in flat in the name of the assessee - HELD THAT - AO has noted that the assessee had purchased a flat for ₹ 3,98,945/- which included a deposit of ₹ 1,50,000/- made by draft by the mother of the assessee to the builder. As noted that the assessee's consistent stand was that ₹ 1,50,000/- has been given by her mother Smt. Asha Sharma directly to the builder in the form of draft. In such a scenario, the assessee has discharged her burden to show the source of ₹ 1,50,000/-. Thereafter, if the AO had any doubt about the source of this amount, then the AO was at liberty to proceed against Smt. Asha Sharma which the AO has not done. Therefore, since the assessee has discharged her onus to show the source of ₹ 1,50,000/- no addition could have been legally made against the assessee as per the law in force in AY 1998-99, therefore, the Ld. CIT(A) erred in confirming the addition, therefore, I direct the deletion of addition of ₹ 1,50,000/-. This ground of appeal of assessee is allowed.
Issues:
1. Validity of notice u/s. 148 of the Income-tax Act, 1961 for assessment year 1998-99. 2. Addition of unexplained opening capital under section 69 of the Act. 3. Addition of unexplained investment in flat. Issue 1: Validity of notice u/s. 148: The appeal raised concerns about the validity of the notice u/s. 148 issued by the Assessing Officer (AO) for the assessment year 1998-99. The legal contention was that the notice was issued after approval from the Additional Commissioner of Income-tax, while the law required approval from the Joint Commissioner. The definition of "Joint Commissioner" was central to the debate, which encompassed both Joint Commissioner and Additional Commissioner under section 2(28C) of the Act. The Tribunal dismissed the argument, stating that the notice was valid as the Additional Commissioner's approval was equivalent to that of the Joint Commissioner as per the statutory definition. Issue 2: Addition of unexplained opening capital: Regarding the addition of unexplained opening capital under section 69 of the Act, the AO added a sum as unexplained based on discrepancies in the assessee's balance sheet. The CIT(A) upheld the addition, noting the lack of evidence to substantiate the sources of the funds. However, the Tribunal found merit in the assessee's contention that investments in Indira Vikas Patra were not considered. The matter was remanded back to the AO for verification, with directions to accept the investment in Indira Vikas Patra if proven, thereby partly allowing the appeal on this ground. Issue 3: Addition of unexplained investment in flat: The AO made an addition for an unexplained investment in a flat, which was upheld by the CIT(A). The Tribunal, after reviewing the facts, concluded that the assessee had adequately explained the source of the deposit made by her mother to the builder. As the assessee had fulfilled the burden of proof regarding the source of the deposit, the addition was deemed unjustified. Consequently, the Tribunal directed the deletion of the addition related to the unexplained investment in the flat. In conclusion, the Tribunal partly allowed the appeal for statistical purposes, addressing the issues related to the validity of the notice u/s. 148, unexplained opening capital, and unexplained investment in the flat.
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