2024 (7) TMI 1228 - AT - Income Tax

Reopening of assessment u/s 147 - Reason to believe - period of limitation - HELD THAT - Reasons taken by the department for re- opening of the case itself were unverified and vague. Moreover, the assessee fully participated in the proceedings before the CIT (A) and all the relevant information pertaining to the credits in her bank account were duly furnished. Based on above observation and time limit discussed, it is found that re-opening was time barred hence liable to be quashed. On merits also the assessee was able to discharge her onus beyond doubt. In the result, grounds taken by the assessee is allowed. Appeal of the assessee is fully allowed.

Summary

Issues Involved:
1. Estimation of cash deposits by the Assessing Officer (AO).
2. Confirmation of the assessment order by the CIT(A) without verifying facts.
3. Re-opening of the case based on unverified and vague reasons.
4. Time-barred re-opening of the case.

Detailed Analysis:

1. Estimation of Cash Deposits by the AO:
The AO estimated the cash deposits based on incorrect departmental information, calculating the deposits as Rs. 7,70,000/- plus Rs. 1,07,25,000/- (Rs. 35,75,000/- x 3 times), whereas the actual total cash deposited during the year was Rs. 35,75,000/-. The appellant provided a bank statement and certificate confirming the actual deposits, which were Rs. 12,50,000/- from Pawar Prashant Dattatraya, Rs. 12,50,000/- from Rorgude Ratan Gangaram, and Rs. 10,75,000/- from family resources.

2. Confirmation of the Assessment Order by the CIT(A):
The CIT(A) confirmed the AO's assessment without applying his mind or verifying the facts and information submitted by the assessee. The appellant argued that the CIT(A) failed to apply natural justice, as the assessment order was confirmed without proper verification.

3. Re-opening of the Case Based on Unverified and Vague Reasons:
The AO issued a notice under section 148 of the Income Tax Act, 1961, based on the information that the assessee deposited cash to the tune of Rs. 1,07,25,000/-. The re-opening of the case was based on unverified and vague reasons, as the actual cash deposited was only Rs. 35,75,000/-. The appellant provided evidence, including a bank deposit certificate from Union Bank of India, confirming the actual cash deposit amount.

4. Time-Barred Re-opening of the Case:
The re-opening of the case was found to be time-barred as per the provisions of sections 147 and 149 of the Income Tax Act, 1961. The AO's reasons for re-opening were unverified, and the appellant fully participated in the proceedings, providing all relevant information. Based on the time limit prescribed in the statute, the re-opening was deemed time-barred and liable to be quashed.

Conclusion:
The appeal of the assessee was fully allowed. The tribunal found that the reasons for re-opening the case were unverified and vague, and the re-opening was time-barred. On merits, the assessee successfully discharged her onus beyond doubt. Consequently, the orders of the authorities below were set aside. The judgment was pronounced in the open court on the 22nd day of July, 2024.