2022 (9) TMI 654 - AT - Income Tax

Reopening of assessment u/s 147 - Addition u/s 68 - unexplained cash deposits in bank account - HELD THAT - CIT(A) has noted from the relevant facts before her that reopening was resorted to not merely on the information that no return had been filed by the assessee and cash was found to be deposited in the bank account of the assessee, but she noted that thereafter necessary inquiry was sought to be made by the Revenue from the assessee seeking explanation of the cash deposited. And since no response was forthcoming from the assessee, it is only thereafter that the AO recorded reasons for forming belief of escapement of income. No infirmity in the order of the CIT(A). The information that there was no return filed by the assessee and there was substantial cash found deposited in the bank account of the assessee was sufficient for formation of belief of escapement of income, when the assessee did not explain the source of the same to the Revenue in the investigation conducted prior to the issuance of notice under section 148 - CIT(A) has relied upon judicial decisions in this regard, therefore see no reason to interfere in the order of the ld.CIT(A) dismissing the assessee s ground for holding the assessment order passed, as has been invalid on the ground of insufficiency of material for forming the belief of escapement of income. As no notice under section 143(2) was issued, the assessment order passed was invalid - In the present case since no return has been filed by the assessee, we are in agreement with the ld.DR that no notice under section 143(2) of the Act was required to be issued to the assessee . The non issuance of notice u/s 143(2) of the Act in the present case where no return was filed by the assesee, does not render the reassessment proceedings as invalid ,we hold. This ground raised by the assessee is also dismissed. Addition to the salary income of the assessee and on account of unexplained cash credit under section 68 - As appellant has not filed any specific written submission either in the assessment proceedings or in the appellate proceedings, hence both the additions made are confirmed and related grounds of appeal are dismissed. Assessee appeal dismissed.

Issues Involved:
1. Validity of the reassessment proceedings under section 148 of the Income Tax Act.
2. Issuance of notice under section 143(2) of the Act.
3. Issuance of notice under section 148 to a deceased person.
4. Addition of salary income.
5. Addition of unexplained cash credits under section 68 of the Act.

Detailed Analysis:

1. Validity of the reassessment proceedings under section 148 of the Income Tax Act:
The assessee challenged the reassessment proceedings on the grounds of insufficient material to form a reasonable belief of escapement of income. The reassessment was based on the assessee not filing a return of income despite cash deposits of Rs.11.51 lakhs in his bank account. The CIT(A) upheld the reassessment, noting that the AO had sufficient information and had made inquiries before issuing the notice under section 148. The Tribunal found no infirmity in the CIT(A)'s order, agreeing that the information on cash deposits and the lack of response from the assessee justified the belief of income escapement.

2. Issuance of notice under section 143(2) of the Act:
The assessee argued that the reassessment was invalid due to the non-issuance of a notice under section 143(2). The Tribunal clarified that such a notice is required only when a return is filed in response to a notice under section 148. Since the assessee did not file a return, the issuance of notice under section 143(2) was not necessary. The Tribunal upheld the CIT(A)'s decision, dismissing this ground.

3. Issuance of notice under section 148 to a deceased person:
The assessee contended that the reassessment was invalid as the notice under section 148 was issued to a deceased person. The CIT(A) noted that the family did not inform the department about the assessee's death, unlike in the cited case of Alamelu Veerappan Vs ITO. The Tribunal agreed with the CIT(A) that the reassessment was valid, as the department was unaware of the death and had not been informed by the legal heirs.

4. Addition of salary income:
The AO added Rs.4,94,820/- as salary income based on the previous year's return. The CIT(A) confirmed the addition, noting the lack of submissions from the assessee. The Tribunal upheld this decision, as the assessee neither provided any explanation nor was represented during the proceedings.

5. Addition of unexplained cash credits under section 68 of the Act:
The AO added Rs.11.51 lakhs as unexplained cash credits under section 68 due to the lack of explanation for the cash deposits. The CIT(A) confirmed the addition, citing the absence of any specific submissions from the assessee. The Tribunal upheld this decision, given the continued lack of representation or written submissions from the assessee.

Conclusion:
The appeal of the assessee was dismissed on all grounds. The Tribunal upheld the reassessment proceedings, the validity of notices issued, and the additions made by the AO, citing the absence of cooperation and representation from the assessee's side. The order was pronounced on 12th September 2022 at Ahmedabad.

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