2021 (12) TMI 91 - AT - Income Tax

Reopening of assessment u/s 147 - Allegation v/s reason to believe - Fixed Deposits made in the name of Satyasai Educational Trust was not of the Trust but of the assessee - HELD THAT - There is no dispute to the fact that the amount of the fixed deposit made in the assessment year 1999-2000. But similar addition in A.Y. 1999-2000 was made in the name of the Trust, Satya Sai Education Trust and was already taxed - CIT(A) in the order adjudicating the appeal of the assessee has categorically held that for Assessment years 2000-2001 and 2001-2002, the fixed deposits were of the Trust and not of this Assessee. Therefore, the impugned addition made by the A.O. and confirmed by the learned CIT(A) is not sustainable, being double addition, has no legs to stand, as such, the same needs to be deleted. Further, the impugned fixed deposits were already assessed in the hand of the Trust much prior to the date of this Assessment, therefore, the contention of ld D.R. that the addition made in the hand of the Trust was on protective basis, hence he added it is added on substantive basis in the name of the assessee is not acceptable. The ld DR did not controvert the very relevant part that on maturity, the amount of FD was received and credited to the account of the Trust not to the assessee When the fixed deposits were of the Trust and treated as income of the Trust, the same amount made in the name of the assessee is directed to be deleted because this amounts to double taxation. In view of above, delete the addition and allow the ground Nos. 1 to 4 of appeal of the assessee. Addition being agricultural income - HELD THAT - We find no positive substance in the contention of the ld A.R., therefore, same is confirmed.

Summary

Issues Involved:
1. Jurisdiction and authority of the Reassessment order.
2. Double taxation of the income.
3. Reliance on statements without examining evidence.
4. Consequential additions to income.

Detailed Analysis:

1. Jurisdiction and Authority of the Reassessment Order:
The assessee contended that the Reassessment order was without jurisdiction and authority of law, and thus should be quashed. The Tribunal noted that the reassessment proceedings were initiated based on allegations by a trustee, S.K. Balabantaray, that the Fixed Deposits (FDs) of ?28,00,000 in the name of Satyasai Educational Trust were actually the assessee's income. The Tribunal found that the Assessing Officer (A.O.) initiated the reassessment based solely on these allegations without concrete evidence, rendering the reassessment proceedings legally unsustainable.

2. Double Taxation of the Income:
The assessee argued that the amount of ?28,00,000 had already been taxed in the hands of the Trust and could not be taxed again as the assessee's income. The Tribunal observed that the disputed amount had indeed been included and taxed in the Trust's income for the relevant assessment year. Moreover, for subsequent assessment years (2000-2001 and 2001-2002), similar additions were deleted by the CIT(A) and confirmed by the ITAT, as the amounts were determined to belong to the Trust. Consequently, the Tribunal concluded that taxing the same amount again in the hands of the assessee would constitute double taxation and thus directed the deletion of the addition of ?28,00,000.

3. Reliance on Statements Without Examining Evidence:
The assessee claimed that the A.O. and CIT(A) erred by relying on the statement of S.K. Balabantaray without considering the evidence and explanations provided by the assessee. The Tribunal noted that the reassessment was based on unsubstantiated allegations by S.K. Balabantaray, who had been removed from the Trust and had a history of misusing Trust funds. The Tribunal found that the A.O. did not possess concrete evidence to support the reassessment and thus deemed the addition of ?28,00,000 as legally unsustainable.

4. Consequential Additions to Income:
The Tribunal addressed the consequential additions of ?51,083 as interest income on the ?28,00,000 and ?60,000 as agricultural income. Since the primary addition of ?28,00,000 was deleted, the consequential interest income addition of ?51,083 was also directed to be deleted. However, the Tribunal found no substantial grounds to delete the addition of ?60,000 as agricultural income and thus confirmed this addition.

Conclusion:
The Tribunal allowed the appeal in part, deleting the addition of ?28,00,000 and the consequential interest income of ?51,083, while confirming the addition of ?60,000 as agricultural income. The Tribunal's decision was based on the principles of avoiding double taxation and ensuring that reassessment proceedings are backed by concrete evidence. The order was pronounced on 19/5/2021.