2024 (10) TMI 187 - HC - Income Tax

Reopening of assessment u/s 148 - Addition u/s 68 - late father of the petitioner advanced loan during the year and source of which has remained unexplained - HELD THAT - There is no escapement of income since the amount was received by the late father of the petitioner on 04.09.2014 from Mr. Hardik Parekh and was paid by NEFT to Ms. Darshana Doshi on the same day. Similarly, the amount was received back on 19.09.2015 from Ms. Darshana Doshi and returned to Mr. Hardik Parekh. In such circumstances, there is no escapement of income of the late father of the petitioner is concerned. The reason given by the Assessing Officer for alleged escapement is therefore not sustainable since there is no unexplained amount in the bank statement on record since the assessee did not retain the amount and as such the ingredients of Section 68 are not attracted. We are of the opinion that the AO could not have come to the conclusion that it is a fit case for reopen the assessment. The petition therefore succeeds and is accordingly allowed.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2015-16.

Analysis:
The petitioner, a legal heir, challenged a notice issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2015-16. The notice was issued under the old regime for reassessment. The petitioner contended that notices issued against deceased persons are without jurisdiction, citing relevant legal precedents. The respondent alleged an escapement of income due to an unexplained loan amount advanced by the deceased. The petitioner argued that the loan was repaid within the same year, providing evidence from bank statements. The respondent claimed that the source of the advanced amount was unexplained, leading to the alleged escapement of income.

The court examined the facts and bank statements presented. It found that there was no escapement of income as the amount was received and repaid on the same day, with no unexplained funds in the bank statement. The court concluded that the Assessing Officer's reasoning for reopening the assessment was not valid as there was no unexplained amount, and the requirements of Section 68 were not met. Consequently, the court allowed the petition, quashed the notice under Section 148, and set aside any consequential actions. The court held that the Assessing Officer could not have determined it as a fit case for reopening the assessment.