The Income Tax Appellate Tribunal (ITAT), Amritsar bench has held that reopening of assessment u/s 147 of Income Tax Act 1961 would invalidate in the presence of evidence for verification of cash deposit.
The Assessing Officer reopened assessment u/s 147 of the Income Tax Act, 1961 on the basis that the assessee had deposited cash in his bank a/c held with Punjab National Bank Bank, Kapurthala amounting to Rs. 27,34,000/-. A notice u/s 148 was issued to the assessee which remained uncompiled, the Assessing Officer proceeded to frame assessment u/s 144 r.w.s. 147 of the Act treating the cash deposit in bank a/c of Rs.27,34,000/- as unexplained income and further interest thereon of Rs. 2,809/- was also treated as unexplained income of the assessee.
Ld. CIT(A) partly allowed the appeal by reducing the addition to the extent of Rs.7,14,766/- and the remaining addition of Rs. 20,10,000/- made by the Assessing Officer was sustained.
The appellant contended that the assessment opened merely having information about cash deposits would not be sufficient to form the belief that the income had escaped assessment. In the absence of material which shows the deposit, there was no reason to form a belief by the AO that the income had escaped assessment.
The Assessing Officer has recorded that verification letters were issued to the assessee seeking an explanation regarding the source of the cash deposit for which no explanation was given by the assessee.
Shri Kul Bharat, judicial member observed that the evidence regarding receipt of the lease amount which was considered the source for the deposit was not believed by the authorities and the revenue has failed to bring any material to suggest that the land remained uncultivated. In the absence of such evidence, the evidence filed by the assessee should have been enquired into and verified by the authorities.
The Tribunal restored the issue related to the balance addition amounting to Rs.15,89,700/- to the Assessing Officer for decision after verifying the evidence filed by the assessee. The appeal filed by the assessee was partly allowed. The appellant was represented by Sh. J. S. Bhasin and the respondent were represented by Sh. Manpreet Singh Duggal.
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