2015 (2) TMI 356 - AT - Income Tax

Reassessment - annulment of reassessment proceedings - Non service of notice - Held that - The presumption of service as argued by the Ld. Sr. D.R. would have come to the help of the Revenue only if the notices u/s 148/143(2) would have been sent on the correct address of the assessee. Undisputedly, these notices were sent on the wrong address of the assessee, despite this fact that the new address was very much available on the record of the Assessing Officer on which earlier notices u/s 143(2) dated 22.10.2007 and u/s 115WE(2) dated 22.10.2007 for AY 2006-07 were sent by the same AO and assessment u/s 143(3) was also framed by the same AO for the said AY 2006-07 showing the new address. It is now well established preposition of law that in absence of service of notices u/s 148/143(2) of the Act, the reassessment framed u/s 147 r.w.s. 143(3) of the Act will be null and void. Under these facts and circumstances, the Ld. CIT(A) was justified in holding the assessment impugned as null and void. - Decided against Revenue.

Summary

Issues:
1. Validity of assessment due to service of notices under sections 148 and 143(2) of the Income Tax Act.
2. Addition of Rs. 50,80,000 under section 68 of the Act on account of share capital being considered as bogus/accommodation entry.

Issue 1 - Validity of Assessment:
The Revenue challenged the first appellate order on grounds related to the validity of the assessment. The contention was that the ld. CIT(A) erred in allowing the appeal of the assessee and annulling the assessment due to the absence of service of notices under sections 148 and 143(2) of the Income Tax Act. The Revenue argued that notices were sent via speed post to the address available on record and were not returned unserved, implying service. However, the assessee claimed that the notices were sent to a wrong address, rendering the reassessment proceedings void. The appellate tribunal noted that the new address of the assessee was available with the Assessing Officer, and the notices were indeed sent to the wrong address. As per legal precedent, the absence of service of notices under sections 148/143(2) renders the reassessment null and void. Therefore, the tribunal upheld the CIT(A)'s decision annulling the reassessment order.

Issue 2 - Addition under Section 68:
The AO had made an addition of Rs. 50,80,000 under section 68 of the Act, considering the share capital as bogus/accommodation entry based on information from the investigation wing. However, since the reassessment was deemed null and void due to the lack of notice service, the issue of the addition under section 68 became irrelevant and infructuous. Consequently, the tribunal disposed of this issue without further adjudication.

In conclusion, the tribunal upheld the CIT(A)'s decision annulling the reassessment order due to the invalid service of notices under sections 148 and 143(2) of the Income Tax Act. As a result, the addition made under section 68 became irrelevant, leading to the dismissal of the Revenue's appeal.