2013 (8) TMI 818 - AT - Income Tax

Limitation u/s 149 of the Income tax act for issue of notice u/s section 148 Date of issue of the notice is relevant Held that - Relying upon the judgment in the case of Kanubhai M.Patel (HUF) Vs. Hiren Bhatt Or His Successors To Office and Others 2010 (7) TMI 704 - Gujarat High Court , it is held that date of issue would be the date on which the same were handed over for service to the proper officer which, in the facts of the present case, were postal authorities In the instant case, the notice was handed over to the postal authorities on 1st April, 2008 which was beyond the period of limitation of six years provided in Section 149 Barred by limitation. Incorrect mention of address in the Notice u/s 148 of the Income Tax Act Held that - The notice has to be sent at the address of the assessee given in its record with the Income-tax Department and not with some other address which might have been given by the Investigation Wing. The notice was issued in March, 2008 and the assessment was completed in December, 2008 and, in the assessment order, the Assessing Officer himself has given a different address than what was given in the notice under Section 148 - Notice was issued at the incorrect address and the same cannot be said to be valid issue of notice if the same is wrongly addressed Decided against the Revenue. Sufficiency of reasons to be recorded for issuance of Notice u/s 148 Held that - Relying upon the judgment in the case of Sarthak Securities Co. P. Ltd 2010 (10) TMI 92 - DELHI HIGH COURT , it was held that only information received by the Assessing Officer was that M/s Aayushi Stock Brokers (P) Limited is found to be providing accommodation entries in the form of bogus share transactions, bogus share capital etc - Detail given is only with regard to name of the bank, ledger account number and amount. Even the nature of transactions is not given, much less to establish that the above transactions are in the nature of accommodation entries - Assessee has only sold the shares through M/s Aayushi Stock Brokers (P) Limited and the sale proceed has duly been considered while computing the income of the assessee for the assessment year under consideration - Reasons did not satisfy the requirement of Section 147 Decided against the Revenue.

Summary

Issues Involved:
1. Validity of reopening of assessment under Section 148 read with Section 149 of the Income-tax Act, 1961.
2. Limitation period for issuing notice under Section 148.
3. Correctness of the address used for issuing the notice.
4. Sufficiency and specificity of reasons recorded for reopening the assessment.

Issue-wise Detailed Analysis:

1. Validity of Reopening of Assessment under Section 148 read with Section 149:
The assessee challenged the validity of the notice issued under Section 148, arguing that it was barred by limitation and issued at the wrong address. Additionally, the reasons provided for reopening the assessment were deemed vague and lacked specific application of mind by the Assessing Officer. The Tribunal agreed with the assessee, noting that the reasons recorded did not satisfy the requirements of Section 147. The notice was quashed, rendering the subsequent assessment order invalid.

2. Limitation Period for Issuing Notice under Section 148:
The notice under Section 148 was handed over to postal authorities on 1st April 2008, beyond the six-year limitation period from the end of the relevant assessment year (2001-02). The Tribunal cited the Hon'ble Gujarat High Court's decision in Kanubhai M. Patel (HUF) Vs. Hiren Bhatt, which held that the date of issue is when the notice is handed over for service, not merely signed. Since the notice was posted after the limitation period, it was deemed invalid.

3. Correctness of the Address Used for Issuing the Notice:
The notice was issued to an incorrect address different from the one recorded in the Income-tax Department's records. The Tribunal emphasized that the notice must be sent to the address given in the department's records, not an address provided by the Investigation Wing. The incorrect address further invalidated the notice.

4. Sufficiency and Specificity of Reasons Recorded for Reopening the Assessment:
The reasons for reopening the assessment were based on information from the Investigation Wing, alleging that the assessee received bogus accommodation entries from M/s Aayushi Stock Brokers (P) Limited. However, the Tribunal found the reasons vague, lacking specific details of the transactions. The Tribunal referred to the Hon'ble Delhi High Court's decisions in Signature Hotels P. Ltd. and Sarthak Securities Co. P. Ltd., which required that reasons must show a clear nexus to the alleged escapement of income. The Tribunal concluded that the reasons recorded did not meet these standards, thus failing to justify the reopening of the assessment.

Conclusion:
The Tribunal quashed the notice issued under Section 148 and the subsequent assessment order, as the notice was issued beyond the limitation period, to an incorrect address, and based on vague reasons. Consequently, the Revenue's appeal was dismissed, and the cross-objection of the assessee was allowed.