Jatin Harish Sotta Vs ITO (ITAT Mumbai)
ITAT Mumbai held that reopening of assessment under section 147 of the Income Tax Act on the basis of third party statement substantiated with tangible material is justifiable. Accordingly, matter restored back to CIT(A) with liberty to assessee to place supporting documents explaining source of cash deposits.
Facts- Based on some tangible information, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment, and accordingly issued notice u/s. 148 on 31.03.2019. No return was filed in response, nor were repeated notices issued under section 142(1) on 24.06.2019, 17.07.2019, 23.10.2019 and 12.11.2019 were complied with. In absence of any explanation for the cash deposits, assessment was completed ex parte u/s. 144 r.w.s. 147 of the Act, making addition of ₹2,86,80,200/–. CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- It is sina que non that the Assessing Officer must have a reason to believe that income chargeable to tax has escaped assessment; such belief must be based on tangible, credible material and not on conjecture or suspicion. The material before the AO in this case — a contemporaneous communication from the Investigation Wing coupled with a sworn statement recorded under section 131 — is of a character that goes well beyond idle suspicion. The statement of Shri Jitendra K. Palan is explicit that substantial cash deposits in his account were made on behalf of, and at the instance of, the assessee and were thereafter routed to entities belonging to the assessee. Such a nexus between the deposits and the assessee is a cogent and relevant material on which a belief may legitimately be founded. In short, the AO’s subjective belief was supported by objective, tangible data and hence the reopening complies with the statutory test.
