2024 (8) TMI 359 - AT - Income Tax

Reopening of assessment - unexplained money u/s 69A - cash repayments of loan by the assessee was came newly on records from Ld. ITO (Inv) and consequently to the knowledge of the Ld. AO - HELD THAT - During the course of proceedings before the tax authorities below the assessee could neither prove that the information of cash repayments were incorrect/wrong nor that facts came to the knowledge of the Ld. AO was not new, hence mere challenge of the assessee is bald and without any merit. Once the assessee fails to establish on record that, the information is not newly came on record or to the knowledge of Ld. AO, or the information is incorrect or else the transactions sought to trigger re-opening have duly considered in the returns of income previously filed by him, then reopening on the basis of prima facie material cannot be faulted with as it passes through the test of section 147 of the Act. This finds support from the decision of Raymond Woollen Mills Ltd. 1997 (12) TMI 12 - SUPREME COURT Respectfully following the same, we do not see any cogent reasons in not upholding the re-opening of assessment and in not dismissing the legal ground raised thereagainst. This answers the first ground of the present appeal. Addition u/s 69A - Besides making bald statements in the impugned orders the Revenue could hardly place any material on record to dismantle the appellant s plea that; the cash repayment of loan were exclusively out of excess of cash withdrawal nor it could able to demonstrate concretely with cogent evidence that the entire cash withdrawal were fully utilized for construction activities, thus leaving no cash balance with assessee for repayments. The addition in these cases in our considered view were merely based upon the conjectures guesswork, hence good reasons for reversing the actions of both the tax authorities in view of the decision of Umacharan Shaw Bros. 1959 (5) TMI 11 - SUPREME COURT Respectfully following the same without multiplying the authority on the issue of we set-aside the impugned orders and delete the additions.

Summary

Issues:
- Reopening of assessment under section 147
- Addition of unexplained money under section 69A

Analysis:
1. Reopening of Assessment under Section 147:
The appeals were filed against separate orders passed by the National Faceless Appeal Centre, which arose from the assessment orders passed by the Income Tax Officer for the assessment years 2015-16 and 2016-17. The main contention of the assessee was that the reopening of the assessment under section 147 was not in accordance with the provisions of the Income-tax Act. The tribunal noted that the assessee failed to establish that the information regarding cash repayments was not new or incorrect. Citing the decision in 'Raymond Woollen Mills Ltd. Vs ITO,' the tribunal upheld the reopening of the assessment, stating that it passed the test of section 147 of the Act.

2. Addition of Unexplained Money under Section 69A:
The additions made by the tax authorities were contested by the assessee on the grounds that the cash repayment of the loan was exclusively from excess cash withdrawal and that the entire cash withdrawal was utilized for construction activities. The tribunal found that the revenue did not provide concrete evidence to support the addition of unexplained money. Relying on the decision in 'Umacharan Shaw Bros. Vs CIT,' the tribunal concluded that the additions were based on conjectures and guesswork. Therefore, the tribunal set aside the impugned orders and deleted the additions. The appeals of the assessee were allowed based on this analysis.

In conclusion, the tribunal upheld the reopening of the assessment under section 147 but ruled in favor of the assessee regarding the addition of unexplained money under section 69A. The tribunal found that the additions were not supported by sufficient evidence and were based on conjectures, leading to the deletion of the additions.