2014 (10) TMI 142 - AT - Income Tax

Reopening of assessment u/s 148 Change in postal address or not - Statutory notices were issued and duly send to the address of the assessee by the AO before the limitation period to re-open - Held that - Assessee contended that there is no change in the postal address of the assessee and tried to convince us that mandatory statutory notices before re-opening of assessment were not served upon the assesse - the assessee itself has admitted that it has received the re-assessment order and also the appeal notices of the appellate proceedings in the very same postal address where the AO has sent the statutory notices envisaged under the Act before re-opening the assessment. The assessee has not leveled any malafide motive on the part of the AO to deliberately not to have issued the statutory notices before the re-opening of the assessment order and we find no reason why the AO should make up such report that the statutory notices as per the Act, was issued and sent in the postal address of the assessee and it was returned back with remark left no such person . When the assessee had admitted to have received the re-assessment order and other appellate notice in the said address where the AO has also sent the Section 148/ 147 notices, there is no reason to disbelieve the AO s report that in fact statutory notices were issued and sent in the said address to be served upon the assessee before the limitation period - The conduct of the Assessee company to file on the last day of limitation some papers before the AO, strengthens the belief of the AO assesse deliberately avoided the said notice and does not give any scope to suspect the report of the AO, that notices u/s 148/ 147 was duly issued to the Assessee company, and it cannot claim any lapse on the part of the AO and cannot take any benefit out of it - the AO has made detailed enquiry in the remand report regarding the genuineness of the share applicants by sending notice u//s 133(6) and summons u/s 131 and also had send an inspector to serve the notice - merely because transactions happened through banking channel does not ipso facto establish genuineness and creditworthiness of the transactions. The AO in the second remand report has tried his level best to contact the share applicant however, he failed to do so because the share applicants could not be traced in the addresses furnished by the assessee - proper enquiry has been conducted by the AO, before the CIT(A) confirmed the addition - statutory notices were issued and duly send to the address of the assessee by the AO before the limitation period to re-open the assessment and we find that on 30.12.2010 i.e., the last day on which the limitation got over, the assessee had filed its reply to the statutory notices and also has admitted of receiving the re-assessment order and notices of the appellate proceedings thus, the ground of non-service of statutory notices before re-opening proceedings cannot be countenanced. It is it difficult to subscribe to the contention that by producing merely the name and PAN details of the share applicants the burden on the assessee is discharged - By merely furnishing the said details would not prove the genuineness and creditworthiness of the share applicants there was no infirmity in the reasoning given by the CIT(A), and proper enquiry has been made by the AO during the remand proceedings and there is no reason for us to interfere in the order Decided against assessee.

Issues Involved:
1. Ignoring of evidence by CIT(A)
2. Ignoring of case laws by CIT(A)
3. Arbitrary addition of Rs. 39,01,750/- by Assessing Officer (AO)
4. Validity of reopening the assessment under Section 148
5. Service of statutory notices
6. Genuineness and creditworthiness of share applicants

Detailed Analysis:

1. Ignoring of Evidence by CIT(A):
The appellant contended that the CIT(A)-XI, New Delhi ignored the evidence filed by the assessee, which was forwarded to the Assessing Officer for his comments. The rejection of the appeal was deemed arbitrary, unjust, and against the facts and law of the case.

2. Ignoring of Case Laws by CIT(A):
The appellant argued that CIT(A)-XI, New Delhi ignored the case laws quoted by the assessee and relied upon case laws not referenced by the Assessing Officer nor confirmed by the assessee at any stage. This was considered against the principles of natural justice.

3. Arbitrary Addition of Rs. 39,01,750/- by Assessing Officer (AO):
The addition of Rs. 39,01,750/- by the AO was contested as arbitrary, unjust, and without merit. The AO reopened the case under Section 148 read with Section 142(1) after recording reasons and issued a notice on 19.03.2010. The notice was returned unserved, leading to service by affixture. The AO proceeded ex-parte due to non-compliance by the assessee and computed the income at Rs. 39,01,750/-.

4. Validity of Reopening the Assessment under Section 148:
The assessee claimed to have filed a regular return on 31.10.2003, declaring an income of Rs. 2,759/-. The AO reopened the assessment based on information from the DIT(Inv.) that the assessee received accommodation entries totaling Rs. 39,01,750/-. The AO issued a final notice, but the assessee did not respond, leading to an ex-parte assessment.

5. Service of Statutory Notices:
The assessee argued that the statutory notice under Section 148 was not properly served. The AO reported that notices were sent to the address obtained from AIS and ROC Website, which were returned unserved. The AO also sent notices to the director's address, which were presumed served. The AO conducted detailed inquiries, including sending notices under Section 133(6) and summons under Section 131, which were returned undelivered.

6. Genuineness and Creditworthiness of Share Applicants:
The assessee provided details of share applicants, including PAN and banking transactions. The AO, however, could not trace the share applicants and questioned their creditworthiness based on their low income levels. The assessee failed to demonstrate the genuineness and creditworthiness of the share applicants, leading to the addition under Section 68 of the IT Act.

Judgment:
The tribunal found that the assessee admitted to receiving the re-assessment order and other notices at the same address where statutory notices were sent. The tribunal upheld the AO's actions, finding no reason to disbelieve the AO's report on the issuance of statutory notices. The tribunal also noted that the AO made detailed inquiries during the remand proceedings, which the assessee failed to substantiate. The tribunal confirmed the addition of Rs. 39,01,750/- and dismissed the appeal of the assessee, finding no infirmity in the CIT(A)'s reasoning.

Conclusion:
The appeal filed by the assessee was partly allowed, with the tribunal confirming the order of the CIT(A) and dismissing the grounds raised by the assessee regarding the service of statutory notices and the genuineness of the share applicants. The order was pronounced in the open court on 26.09.2014.

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