2023 (7) TMI 652 - AT - Income Tax

Reopening of assessment u/s 147 - Reasons to believe - cash deposited unexplained - HELD THAT - No merit in the contention of the assessee that the reopening is illegal and is not based upon the reasons recorded by the Assessing Authority. Undisputedly, additions are made on the basis of cash deposited by the assessee and the assessee has failed to point out where the AO did not consider the facts available at the time of reopening of the assessment. Therefore, ground of the assessee s appeal are dismissed. Addition of unexplained cash deposits - The assessee also filed affidavit of said Shri Duli Chand wherein he has admitted that he had received Rs. 15 lakh as advance in lieu of agreement to sell his land which he had given to the assessee for purchase of land. The stand of the assessee is that the sum received from Shri Duli Chand for propose sale of land was deposited by him in his bank account and since the deal could not be materialized the same was returned back to Shri Duli Chand - the averments made in the affidavit of Shri Duli Chand could not be rebutted by the Revenue - Decided in favour of assessee.

Summary

Issues Involved:
The issues involved in this judgment are (1) Jurisdiction of Assessing Officer, (2) Addition of unexplained cash deposits, (3) Reopening of assessment, and (4) Treatment of amount received from Shri Duli Chand as income.

Jurisdiction of Assessing Officer:
The case involved a reassessment by the Assessing Officer based on cash deposits in the assessee's bank account. The AO made an addition of Rs. 16,36,441 as unexplained income. The assessee challenged this addition, arguing that the AO did not consider the evidence provided regarding the source of Rs. 15,00,000 received from Shri Duli Chand. The Tribunal found no merit in the contention that the reopening was illegal, as the additions were based on the cash deposits and the assessee failed to explain the source adequately. Thus, grounds 1 to 3 of the appeal were dismissed.

Addition of Unexplained Cash Deposits:
The Assessing Officer accepted the source of most cash deposits but added Rs. 16,36,141 as unexplained cash credit under section 68 of the Income-tax Act. The assessee submitted additional evidence, including an agreement and affidavit from Shri Duli Chand, to prove that the amount received was for a land deal and was returned to Shri Duli Chand. The CIT(A) rejected this claim, but the Tribunal, considering the evidence and the unrebutted affidavit of Shri Duli Chand, deleted the addition. Therefore, ground 4 of the appeal was allowed.

Reopening of Assessment:
The assessee contended that the reopening of the assessment was illegal as the additions were not related to the issues that initiated the proceedings under section 147. Citing various case laws, the assessee sought to quash the reopening. However, the Tribunal upheld the reopening, stating that the additions were based on the cash deposits, and the AO had considered the relevant facts during reassessment. Grounds 1 to 3 challenging the reopening were dismissed.

Treatment of Amount Received from Shri Duli Chand as Income:
The assessee claimed that the amount received from Shri Duli Chand was for a land deal and not income. Despite providing evidence and affidavits, the lower authorities sustained the addition. The Tribunal, after considering the evidence and the unrebutted affidavit of Shri Duli Chand, deleted the addition, finding the authorities' actions unjustified. Ground 4 of the appeal was allowed.

In conclusion, the Tribunal partially allowed the assessee's appeal, deleting the addition of unexplained cash deposits based on the evidence provided regarding the amount received from Shri Duli Chand for a land deal. The Tribunal upheld the reopening of the assessment and dismissed the grounds challenging it. Grounds 5 and 6 were considered general in nature and not adjudicated upon.