TMI Blog2022 (12) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Since, the AO has failed to carry out necessary enquiries to ascertain the transaction between the assessee and his brother-in-law, we are of the considered view that a benefit of doubt should be given to the assessee to the extent of sum of Rs. 8,50,000/- that the assessee had given loan to his brother-in-law and the same has been returned back by his brother-in-law in the year 2008 - We are of the considered view that the assessee could able to explain source for cash deposits to the extent of Rs. 8,50,000/-. In so far as, balance amount of Rs. 5,69,000/-, no proper explanation was furnished by the assessee which can be considered as acceptable. Although, assessee claims that he had given loan to his brother-in-law out of his past savings amounting to Rs. 3,50,000/-, no credible evidence was with the assessee to justify his case. Assessee could not be able to explain source for cash deposits of Rs. 5,69,000/- and thus, we are of the considered view that there is no error in the reasons given by the Assessing Officer to make addition towards cash deposit to the tune of Rs. 5,69,000/-. To sum up, out of cash deposits of Rs. 14,19,000/-, the assessee could able to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns recorded, as per which income chargeable to tax had been escaped assessment, on account of cash deposits into bank account and consequently notice u/s. 148 of the Act dated 13.03.2015 was served to the assessee. In response to the notice u/s. 148 of the Act, the assessee had filed his return of income on 07.01.2016. The case was taken up for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has made cash deposits to the tune of Rs. 14,19,000/- in the savings bank account maintained with BHEL Employees Co-op Bank Ltd, Trichy branch. The AO called upon the assessee to explain the source for cash deposits. In response, the assessee submitted that, out of retirement benefits of Rs. 8,50,000/- along with sum of Rs. 3,50,000/- out of his savings, he had given loan of Rs. 12,00,000/- to his brother-in-law in the year 1999 as hand loan, for the purpose of construction of house. His brother-in-law has repaid a sum of Rs. 13,50,000/- in the financial year relevant to assessment year 2009-10 and said amount has been deposited into his savings bank account. The AO, however was not convinced with explanation furnished by the assessee and according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, on merits of the issue submitted that the assessee has explained source of cash deposits out of re-payment of loan by his brother-in-law and for this purpose furnished a confirmation letter from the party. But, the AO has made additions by stating that the assessee could not file necessary evidences, even though, the assessee has filed confirmation letter from the party. He further submitted that when the assessee has furnished certain evidences including confirmation from the party, it is the duty of the Assessing Officer to verify the confirmation letter filed by the party by exercising his power including powers conferred u/s. 131 of the Act. Since, the AO has failed to discharge his duty in examining the issue with necessary enquires, addition made by the AO cannot be sustained. 6. The Ld. DR, on the other hand referring to reasons for re-opening of assessment submitted that, the AO has formed reasonable belief of escapement of income on the issue of cash deposits found in the bank account of the assessee, when the assessee was not able to furnish necessary evidence to prove cash deposits. Further, before issue of notice u/s. 148 of the Act, the AO has called u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income on the basis of fresh materials which suggest escapement of income. Further, at the stage for issuance of notice, what is to be seen is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. In this case, there is a new material with the AO to form a reasonable belief of escapement of income. Therefore, we are of the considered view that there is no merit in arguments taken by the Ld. Counsel for the assessee on legality of re-opening of assessment, and thus, we reject ground taken by the assessee on re-opening of assessment. 8. Having said so, let us come back to addition made by the AO on cash deposits. The assessee has made cash deposits of Rs. 14,19,000/- in his saving bank account maintained with BHEL Employees Co-op Bank Ltd. The assessee claims that source for cash deposits is out of his retirement benefits received from BHEL in the year 1999. The assessee further claimed that out of his retirement benefits of Rs. 8,50,000/- along with another amount of Rs. 3,50,000/- out of his savings, he had given a sum of Rs. 12,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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