2015 (6) TMI 980 - AT - Income Tax

Reopening of assessment - assessee having not been provided the copy of the reasons recorded for re-opening of assessment u/s. 147, but only the gist thereof - Held that - The omission of the last sentence is not a reason itself, but only the concluding sentence, stating of the foregoing as being the reasons for belief as to escapement of income. Inasmuch as the same does not bear any reason, we do not find that it could be said that the assessee had not been conveyed the reasons as to escapement of income, or had been so either in part or only the gist thereof, as alleged. That the same are only reasons leading to the belief as to the escapement of income is evident and implied. What are these then and for and toward what are they being given, or given as, etc. would be the queries arising out of the assessee s clearly unreasonable and unconvincing stand. Further, even assuming, without admitting, a debate, it would preclude section 254(2). The said ground is accordingly rejected. Non-application of mind by the Assessing Officer (AO) in the matter, who has stated to have reopened simply on the basis of the findings of the DDIT(Inv.) - Held that - there was material available with the AO on the basis of which a reasonable belief that income chargeable to tax had escaped assessment could be formed (paragraph 2.12). The same is a finding of fact, and for which the tribunal tranverses, as apparent from the discussion, through the said materials, issuing its final findings at paragraph 2.15. The assessee has also, vide ground 3(iii) referred to the tribunal s observation that assessment had been reopened on the basis of section 132(4) statement made at the time of search which was on oath (at paragraph 2.14). It is stated that in so stating, the tribunal has overlooked that there was a survey at the vendor s premises prior to the relevant search. How would, we wonder, that contradict or impugn the said observation by the tribunal in any manner? What the tribunal states is again a matter of fact, borne out by the reasons recorded and the material on record. Two, the fact that the search was preceeded by a survey, on the contrary, is defeating of the assessee s case inasmuch as, clearly, material was found in survey leading to the search. The statement by the tribunal, it must be appreciated, was made while considering the assessee s plea of there being no material for forming, prima-facie, a reasonable belief as to escapement of income. Whether, rather, there is material on record establishing the said survey is itself not known, for the assessee to have raised the plea, which though we have found as irrelevant. The ground is without basis Each of the arguments raised by the assessee stand duly considered by the tribunal. Finding/s of fact, rendered upon appreciation of evidences, could not be revisited in rectification proceedings. We, accordingly, find no ground for the same. Denial of opportunity to cross-examine the AO s witnesses and, thus, a violation of the principle of natural justice - Held that The argument is misplaced. For all we know, the cross-examination may not have been asked for, being in the nature of deposition/s. The tribunal has considered the argument (refer para 3.10), and in its view the disallowance had not been affected only on the basis of the said statements and, two, that all the material had been duly confronted to the assessee. It also clearly states that the rendering of the services by the companies could not be accepted on the basis of affidavits. The said ground is, again, without merit. - Decided against assessee

Summary

Issues:
1. Failure to provide copy of reasons recorded for re-opening of assessment u/s. 147.
2. Allegation of non-application of mind by the Assessing Officer in reopening assessment.
3. Disallowance of expenditure booked in favor of certain concerns due to lack of substantiation.
4. Denial of opportunity to cross-examine the AO's witnesses.

Issue 1:
The first ground raised by the assessee pertains to the non-provision of the verbatim copy of the reasons recorded for re-opening of assessment u/s. 147. The Tribunal clarified that the assessee had been supplied with the verbatim copy of the reasons, and the omission of the last sentence did not invalidate the communication of the reasons. The Tribunal emphasized that the requirement is procedural to inform the assessee of the Revenue's case against it. The ground was rejected based on the Tribunal's findings that the assessee had been adequately informed of the reasons for the re-opening of assessment.

Issue 2:
The second issue raised by the assessee was regarding the alleged non-application of mind by the Assessing Officer in reopening the assessment solely based on the findings of the DDIT(Inv.). The Tribunal examined the materials available with the AO and concluded that there was sufficient material to form a reasonable belief that income had escaped assessment. The Tribunal also addressed the contention related to the survey preceding the search, highlighting that the material found during the survey led to the search, thus dismissing the ground raised by the assessee.

Issue 3:
Concerning the disallowance of expenditure booked in favor of certain concerns, the assessee contended that the tribunal had not considered the overwhelming evidence presented. However, the Tribunal found that the expenditure had not been substantiated and that the concerns were shell companies providing accommodation entries. The Tribunal detailed its analysis of the evidence and concluded that the expenditure had not been proven by the assessee, leading to the dismissal of this ground.

Issue 4:
The final issue raised by the assessee was the denial of an opportunity to cross-examine the AO's witnesses, alleging a violation of natural justice. The Tribunal addressed this argument, stating that the disallowance was not solely based on witness statements and that all material had been presented to the assessee. It further emphasized that the services rendered by the companies could not be accepted based on affidavits. The Tribunal found this ground to be without merit and dismissed it accordingly.
This judgment by the Appellate Tribunal ITAT Mumbai addressed various issues raised by the assessee in a petition under the Income-tax Act, 1961. The Tribunal meticulously analyzed each ground, providing detailed explanations and legal references to support its findings. Ultimately, the Tribunal dismissed the Miscellaneous Application filed by the assessee, upholding the order passed by the Tribunal in the appeal.