2022 (6) TMI 941 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - unexplained cash credits - Assessee submitted that the deposit represents return-back of advance made by the assessee for the purchase of agricultural land - HELD THAT - Assessee had, entered into a sale agreement which was cancelled and the money so received by the assessee was deposited in ICICI Bank Account. However, it could be seen that pursuant to sale agreement dated 08.04.2010, the assessee has paid a sum of Rs.20 Lacs to the seller which fall in this year and therefore, the assessee was obligated to prove the source of payment. No doubt, the assessee being a retired employee may have accumulated savings and certain cash-in-hand, however, the onus to prove the source of payment with cash flows was not completely discharged by the assessee. Pertinently, the assessee had deposited another Rs.13.40 Lacs in another Bank Account held with Indian Overseas Bank which also could not be fully explained. CIT(A) has sustained addition to the extent of Rs.20 Lacs which would mean that the assessee was able to explain the source to a certain extent. Therefore, on the given factual matrix, we deem it fit to restore the matter back to the file of Ld. AO with another opportunity to the assessee to prove the source of remaining Rs.20 Lacs. The assessee is directed to substantiate the same. Needless to add that sufficient opportunity of hearing shall be granted to the assessee. AR has submitted that reasons to reopen the case have not been provided to the assessee. However, it could be seen that the assessee has asked for reasons only during September, 2021 which is much even after the date of impugned order. The case was reopened as early as during the year 2014. The assessee did not file return of income for the year under consideration. Therefore, in such a case, the only direction that could be given to Ld. AO is to provide the copy of reasons record, if available on record. Assessee appeal stand allowed for statistical purposes.

Issues:
1. Validity of reassessment under section 147
2. Addition of Rs.20,00,000 as unexplained cash credits
3. Failure to prove the source of cash deposits
4. Reopening of the case without providing reasons to the assessee

Detailed Analysis:

1. Validity of reassessment under section 147:
The appeal pertains to the Assessment Year 2011-12 and challenges the reassessment conducted by the Assessing Officer under section 147 of the Income Tax Act. The appellant contested the jurisdiction of the Commissioner of Income Tax (Appeals) and argued that the reassessment was without jurisdiction. The appellant raised additional grounds questioning the validity of the reassessment. The legal representatives presented arguments both for and against the reassessment proceedings and the quantum additions made. The Tribunal examined the grounds raised and provided a detailed analysis in this regard.

2. Addition of Rs.20,00,000 as unexplained cash credits:
The primary issue in this case revolves around the addition of Rs.20,00,000 as unexplained cash credits by the Assessing Officer. The appellant claimed that the cash deposits were sourced from a land purchase advance received back on cancellation of the agreement. However, the Assessing Officer found discrepancies in the explanations provided by the appellant regarding the source of these deposits. The Tribunal carefully reviewed the evidence presented by the appellant and the findings of the lower authorities to determine the validity of the addition of Rs.20,00,000 as unexplained cash credits.

3. Failure to prove the source of cash deposits:
Apart from the main issue of the addition of Rs.20,00,000, the appellant also failed to adequately prove the sources of other cash deposits made in different bank accounts. The Tribunal scrutinized the explanations provided by the appellant regarding the sources of these deposits and assessed the credibility of the evidence presented. The Tribunal's decision took into account the appellant's submissions and the Assessing Officer's findings on the matter.

4. Reopening of the case without providing reasons to the assessee:
One of the contentions raised during the proceedings was the failure to provide reasons for reopening the case to the assessee in a timely manner. The appellant argued that the reasons for reopening were not provided promptly, leading to a lack of opportunity to address the issues effectively. The Tribunal considered the timeline of events, including the issuance of the notice under section 148 and the subsequent requests for reasons, to determine the impact of the delayed provision of reasons on the validity of the reassessment.

In conclusion, the Tribunal analyzed each issue comprehensively, considering the legal arguments, factual evidence, and procedural aspects involved in the case. The decision highlighted the need for the appellant to substantiate the sources of cash deposits and provided directions for further proceedings, while also addressing the concerns raised regarding the validity of the reassessment and the procedural aspects of the case.

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