2014 (6) TMI 404 - AT - Income Tax

Validity of assessment u/s 147 of the Act Notice u/s 148 of the Act not served Burden to prove - Addition of income from undisclosed sources - Held that - The AYs involved are 2004-05 and 2005-06 - The notice for reopening u/s 148 of the Act was given on 30.3.2011 that is beyond a period of 04 years - Revenue has not demonstrated that the provision of law has been complied with - on the sole ground the reopening has to be quashed as bad in law - assessee submitted that the notice u/s 148 has not been served on him - Revenue has not been able to specifically point out as to which is the particular remittance made by M/s Komori Corporation, which has not been accounted for by the assessee - In spite of the repeated attempts by the assessee requesting for the details the assessee has not been furnished with the same - the assessee has discharged the onus that lay on it by furnishing all the necessary documentary evidences and whereas the Revenue has failed in its duty to discharge the burden that lay on it thus, the addition is liable to be set aside Decided in favour of Assessee.

Issues Involved:
Reopening of assessment for Assessment Year 2004-05 and 2005-06 based on undisclosed income, validity of the notice u/s 148, sufficiency of reasons for reopening, application of mind by the Assessing Officer, compliance with procedural requirements, addition of income from undisclosed sources, burden of proof on the assessee, and the merits of the case.

Reopening of Assessment:
The appeals were filed challenging the reopening of assessments for both AYs. The primary contention was that the Assessing Officer (AO) erred in making an addition of income from undisclosed sources without sufficient evidence. The appellant argued that the reopening was invalid and against the facts of the case. The counsel for the assessee highlighted that the notice u/s 148 was not served, and necessary sanctions were not obtained before reopening the assessments. The AO's lack of independent application of mind was also questioned.

Validity of Reopening and Notice u/s 148:
The AO justified the reopening based on information received from another Assessing Officer. The reasons for reopening were scrutinized, and it was found that the AO had adequate grounds to believe that income had escaped assessment. However, the compliance with procedural requirements, specifically under S.151(2) of the Act, was not demonstrated by the Revenue. The notice u/s 148 was issued beyond the prescribed period, raising concerns about the validity of the reopening.

Merits of the Case and Burden of Proof:
On the merits, the assessee provided confirmation letters, reconciliation statements, ledger accounts, and other documents to support that all receipts from M/s Komori Corporation were duly accounted for. Despite the appellant's efforts to obtain specific details, the Revenue failed to pinpoint any unaccounted remittances. The Tribunal held that the burden of proof lay on the Revenue, which it failed to discharge. Consequently, the additions made in both AYs were deleted, and the appeals of the assessee were allowed.

Conclusion:
The Tribunal found in favor of the assessee, ruling that the reopening of assessments lacked compliance with procedural requirements and the Revenue failed to establish any undisclosed income. The burden of proof was deemed unfulfilled by the Revenue, leading to the deletion of the additions made in both AYs. The judgment emphasized the importance of proper application of mind by the AO and adherence to statutory procedures in assessment proceedings.

This detailed analysis covers the issues involved in the legal judgment comprehensively, addressing the validity of the reopening, sufficiency of reasons, burden of proof, and the final decision rendered by the Tribunal.

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