2009 (5) TMI 611 - AT - Income Tax

Summary

Issues Involved:
1. Validity and service of notice under section 143(2).
2. Fabrication of the proceedings sheet.
3. Denial of admission of fresh evidence under rule 46A.
4. Denial of inspection of records.
5. Merits of the addition of Rs. 1,51,11,635 under section 68.
6. Disallowance of other expenses amounting to Rs. 1,87,965.
7. Levy of interest under sections 234B and 234C.

Issue-wise Detailed Analysis:

1. Validity and Service of Notice under Section 143(2):
The assessee challenged the validity of the notice under section 143(2) and its service by affixture. The CIT(A) dismissed these objections, relying on section 124(3) of the Income-tax Act, which precludes questioning the jurisdiction of an Assessing Officer after one month from the date of service of the notice or the completion of the assessment, whichever is earlier. The Tribunal noted that the validity of the notice and its service are crucial and should be adjudicated before invoking section 124(3). The case was remanded to the CIT(A) for a detailed examination of the validity of the notice and its service, including the satisfaction of the Assessing Officer, direction for service by affixture, and the need for independent witnesses.

2. Fabrication of the Proceedings Sheet:
The assessee alleged that the proceedings sheet was manipulated. The CIT(A) did not address these objections adequately. The Tribunal directed the CIT(A) to re-examine these allegations, considering the legal precedents and providing a well-reasoned order.

3. Denial of Admission of Fresh Evidence under Rule 46A:
The CIT(A) rejected the additional evidence submitted by the assessee under rule 46A. The Tribunal found that the CIT(A) did not consider the illness of the assessee's mother as a sufficient cause. The Tribunal directed the CIT(A) to admit the additional evidence and adjudicate the issues afresh, considering the sufficiency of the cause and the interests of justice.

4. Denial of Inspection of Records:
The assessee's request for inspection of records was denied. The Tribunal directed the CIT(A) to allow the inspection of records to verify the veracity of the dates and entries in the proceedings sheet.

5. Merits of the Addition of Rs. 1,51,11,635 under Section 68:
The main addition by the Assessing Officer was Rs. 1,51,11,635 as unexplained credits. The assessee argued that the details of creditors were provided but not considered. The Tribunal directed the CIT(A) to re-examine the merits of the addition, considering the additional evidence and verifying the details of the creditors.

6. Disallowance of Other Expenses Amounting to Rs. 1,87,965:
The CIT(A) dismissed the grounds relating to the disallowance of other expenses as not pressed. The Tribunal found that these grounds need specific adjudication and directed the CIT(A) to provide a detailed finding on the disallowances.

7. Levy of Interest under Sections 234B and 234C:
The levy of interest under sections 234B and 234C was deemed consequential to the additions made during the assessment. The Tribunal noted that the interest is consequential and does not require specific adjudication.

Conclusion:
The Tribunal set aside all the issues to the files of the CIT(A) for fresh adjudication. The CIT(A) was directed to provide reasonable opportunities for the assessee to present additional evidence and to pass a well-reasoned, speaking order addressing all the objections and issues raised. The appeal was allowed for statistical purposes.