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2020 (12) TMI 1057 - AT - Income TaxReopening of assessment u/s 147 - unexplained bank deposits - HELD THAT - Since, as per the records available, it is not clear on the aspect of the receipt of this amount of ₹ 5,00, 000/- into the account of the assessee, we find it just and necessary to direct the AO to verify the fact with reference to the material. We clarify that this direction does not entitle the revenue to summon or call for any details from the assessee as the revenue has already had 120 months from the date of filing of return and 43 months from the date of issue of notice u/s 148 at their disposal to come out with the details of the deposit. Our above view in respect of ₹ 5,00,000 /- leads to examination of applicability of Explanation-3 to Section 147 of the IT Act inserted by the Finance (No. 2 of 2009 ) with regard to the ground no 7 of the appeal where it was contested that addition of ₹ 2. 2 cr. made by the Assessing officer for which no satisfaction has been recorded at the time of reopening or during the reassessment proceedings. With regard to the issue whether any addition made by the AO is legally valid in the absence of a valid addition made based on the reasons recorded is examined in the context of the judgment of the Hon ble Jurisdictional High Court in the case of Ranbaxy Laboratories ltd. Vs CIT 2011 (6) TMI 4 - DELHI HIGH COURT - We hold that the other addition made by the AO depends upon the view to be taken by the AO in respect of the addition of ₹ 5,00,000 /- as mentioned in the reasons. To sum up, we hereby hold that, a. The addition of ₹ 5,00,000/- as mentioned in the reasons recorded is being sent for verification owing to absence of proof of deposit in the assessee s bank account. b. The issue of the addition of ₹ 2.20 cr. made by the AO for which reasons have not been recorded since linked to the point (a.) above will have a contemporaneous effect on the outcome of the verification by the revenue.
Issues Involved:
1. Legality of the assumption of jurisdiction by ITO Ward-7(1). 2. Validity of the initiation of proceedings under Section 147. 3. Legality of the reopening of assessment under Section 147. 4. Addition of ?5,00,000 under Section 68. 5. Addition of ?2,20,00,000 under Section 68. 6. Admission of additional evidence under Rule 46A. 7. Provision of cross-examination and confrontation with adverse material. Issue-wise Detailed Analysis: 1. Legality of the Assumption of Jurisdiction by ITO Ward-7(1): - Ground No. 1: The assessee did not press this ground, hence it was not considered. 2. Validity of the Initiation of Proceedings under Section 147: - Ground Nos. 3 to 5: These grounds relate to the reopening of assessment under Section 147. The tribunal did not adjudicate these grounds separately as they became academic in nature due to the findings on other grounds. 3. Legality of the Reopening of Assessment under Section 147: - Ground Nos. 3 to 5: The tribunal noted that the reopening of assessment was based on information received from the Investigation Wing. The reasons recorded for issuing the notice under Section 148 included details of the alleged accommodation entry of ?5,00,000 from M/s. Aasheesh Capital Services Pvt. Ltd. 4. Addition of ?5,00,000 under Section 68: - Ground No. 6: The tribunal found that the Assessing Officer (AO) had added ?5,00,000 to the income of the assessee based on information from the Investigation Wing. However, the assessee provided certificates from various banks stating that the cheque in question was not cleared/deposited/collected. The tribunal directed the AO to verify the deposit of the cheque in the assessee's bank account, emphasizing that the revenue had sufficient time to provide these details. 5. Addition of ?2,20,00,000 under Section 68: - Ground No. 7: The tribunal examined the applicability of Explanation-3 to Section 147, which allows the AO to assess any other income that comes to notice during reassessment proceedings. The tribunal referred to the judgment in Ranbaxy Laboratories Ltd. Vs CIT, which held that the AO must assess the income for which reasons were recorded before assessing any other income. The tribunal concluded that the addition of ?2.20 crores depends on the verification of the ?5,00,000 addition. 6. Admission of Additional Evidence under Rule 46A: - Ground No. 6.1: The tribunal did not specifically address the admission of additional evidence under Rule 46A, but the certificates provided by the assessee were considered in the decision-making process. 7. Provision of Cross-Examination and Confrontation with Adverse Material: - Ground Nos. 6.2 and 7.1: The assessee argued that they were not provided cross-examination of relevant persons or confronted with adverse material. The tribunal's decision to direct verification of the ?5,00,000 deposit implicitly addresses these concerns. Conclusion: - Addition of ?5,00,000: Sent for verification due to the absence of proof of deposit in the assessee’s bank account. - Addition of ?2.20 crores: Dependent on the outcome of the verification of the ?5,00,000 addition. - Ground Nos. 3 to 5: Not adjudicated separately as they became academic in nature. - Appeal Outcome: The appeal of the assessee is allowed, subject to the directed verification. Order Pronounced in the Open Court on 21/10/2020.
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