Case Law Details
Parminder Singh Vs ITO (ITAT Delhi)
ITAT Delhi held that reopening of assessment without any link between the tangible material and formation of belief of AO that income has escaped assessment is unsustainable and bad-in-law and hence liable to be quashed.
Facts- The assessee filed his return of income declaring income of Rs.1,68,680/- under income from business and as agricultural income of Rs.46,000/-. The assessment was reopened by issue of notice u/s 148 as there were cash deposits of Rs.17,30,110/- in the bank account of the assessee. The reassessment was completed u/s 143(3) read with section 147 of the Act making an addition of Rs.10 lakhs representing the gifts received by the assessee from his father in law and mother in law which addition was sustained by the CIT(Appeals).
Conclusion- The reasons recorded for reopening of the assessee’s case are insufficient, vague, un-corroborative to form a belief that the income had escaped assessment as there was no link between the tangible materials and the formation of belief of the Assessing Officer that the income had escaped assessment. Thus, the reassessment made u/s 143(3) read with section 147 of the Act based on such reasons is bad in law and accordingly, the reassessment is quashed.
Held that in the course of reassessment proceedings the Assessing Officer recorded statement of both father in law and mother in law who have also confirmed the gifts given to the assessee who is the husband of their only daughter. However, this was disbelieved by the Assessing Officer as there were some discrepancies in the gift deeds for which the assessee filed affidavits from the donors before the Ld.CIT(A) which were totally ignored by him. The Assessing Officer never denied that the father in law and mother in law of the assessee were not in possession of agricultural land of 6.5 acres. Therefore, since the donors of the gifts are closely related to the assessee being father in law and mother in law and the sources were also explained the gifts cannot be disbelieved.
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