2023 (10) TMI 1031 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - reasons to believe - addition u/s. 69 - HELD THAT - As is discernible from the assessment order, the A.O. had categorically stated that notice u/s. 148 was issued to the assessee. As no material is discernible from the record that could support the aforesaid claim of the assessee that notice u/s. 148 suffered from any infirmity, which would suffice to render the assumption of jurisdiction for framing of the impugned assessment u/s. 144 r.w.s. 147 as invalid and void ab initio; thus, the same is rejected. Assessee has assailed the validity of the reasons to believe, on the basis of which proceedings u/s. 147 of the Act had been initiated in his case. Although it is the claim of the assessee that the AO on a fallacious basis, had assumed jurisdiction and wrongly initiated proceedings u/s 147 on the basis of his observation that bank deposits constituted the undisclosed income of the assessee, we are unable to concur with the same. Assessee had made cash deposits in his savings bank account in Punjab Sind Bank and also received interest income on the said deposits during the year, but had not filed his return of income, therefore, the said facts were sufficient for the A.O to form a bona fide believe that the income of the assessee chargeable to tax had escaped assessment within the meaning of Section 147 of the Act. Addition u/s 69 - As the assessee had neither filed any explanation as regards the cash deposits made in his bank account during the year under consideration; or as regards the interest income earned on the same, therefore, find no reason to intervene with the well-reasoned view taken by the lower authorities who had rightly held the same as his unexplained investment u/s. 69 - Decided against assessee.

Summary

Issues:
The judgment involves issues related to the validity of jurisdiction assumed by the Assessing Officer for framing assessment, the sufficiency of reasons to initiate proceedings under section 147 of the Income-tax Act, and the addition made on account of unexplained cash deposits.

Validity of Jurisdiction:
The appellant challenged the jurisdiction of the Assessing Officer (ACIT-1(1), Bhilai) for framing assessment, citing lack of pecuniary jurisdiction over the case. The appellant referred to CBDT Instruction No.1/2011 and Instruction No.6/2011, claiming that the assessment was invalid. However, the Tribunal dismissed this ground, stating that the instructions are based on the "income declared" by the assessee in the return of income. As the appellant had not filed any return of income for the relevant year, the instructions could not be applied in this case.

Notice Issued under Section 148:
The appellant contended that the notice issued under section 148 of the Act was invalid, as reasons were recorded on a different date. The Tribunal rejected this argument, noting that the Assessing Officer had issued a notice under section 148 on the specified date. No evidence was presented to support the claim of infirmity in the notice, leading to the dismissal of this ground of appeal.

Sufficiency of Reasons for Escapement of Income:
The appellant challenged the reasons recorded for initiating proceedings under section 147, alleging a fallacious assumption regarding bank deposits constituting undisclosed income. However, the Tribunal found that the appellant had made substantial cash deposits and earned interest income without filing a return of income. This provided a valid basis for the Assessing Officer to believe that taxable income had escaped assessment. Consequently, this ground of appeal was dismissed.

Addition on Account of Cash Deposits:
The appellant disputed the addition of Rs. 13,49,538 under section 69 of the Act, arguing that the cash deposits were explained from available cash. As the appellant failed to provide any explanation or evidence regarding the deposits and interest income, the Tribunal upheld the addition as unexplained investment under section 69. The Tribunal found no justification to interfere with the lower authorities' decision, leading to the dismissal of this ground of appeal.

General Ground:
The general ground of appeal was dismissed as not pressed by the appellant.

In conclusion, the Tribunal upheld the assessment order, dismissing the appellant's appeal on various grounds related to jurisdiction, notice issuance, sufficiency of reasons, and addition of unexplained cash deposits. The appeal was deemed devoid of merit and dismissed accordingly.