2015 (10) TMI 1513 - AT - Income Tax

Reopening of assessment - mode of service of notice - CIT(A) quashed reassessment - Held that - As the facts emerge the first notice was transmitted by ld. AO through speed post which is not been disputed by the assessee after inspection. It is thus clear that the notice was under transmission by handing over to the postal authority who acted as an agent of the recipient. The speed post notice has been returned mentioning the address as wrong or undelivered which is a standard practice of the postal Department. Assessee s AR in the initial hearings never indicated that 148 notice was not properly served. The lame objection is taken at the fag end of assessment which clearly smack of a design. Thus in the entirety of facts and circumstances of the case and case laws of CIT vs. Yamu Industries Ltd. (2007 (5) TMI 237 - DELHI HIGH COURT) and ITO vs. Shri Sarabh (Saurabh) Charan (2015 (10) TMI 1272 - ITAT JAIPUR) it is held that the ld. CIT(A) glossed over the relevant facts and committed an error in quashing the reassessment proceedings. Consequently the order of ld. CIT(A) quashing the reassessment is quashed - Decided in favour of revenue. As held in the case of Phool Chand Bajrang Lal (1993 (7) TMI 1 - SUPREME Court) that sufficiency of reasons cannot be gone into by the court at the time of recording of reasons as it is the beginning of the process of reassessment. Assessee attitude was totally non-cooperative in compliance and the alleged discrepancy about information cannot be held to be fatal to the recording of the reasons. - Decided in favour of revenue.

Summary

Issues Involved:
1. Validity of the assessment order passed under sections 147/144 due to alleged improper service of notice under section 148.
2. Dismissal of certain grounds by CIT(A) after quashing the assessment order.
3. Merits of the additions made in the assessment.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order under Sections 147/144:
The primary issue revolves around whether the notice under section 148 was validly served upon the assessee. The Investigation Wing of the Department, New Delhi, had identified the assessee as having received a sum of Rs. 5,01,000/- from a bogus entry operation. Based on this information, the AO issued a notice under section 148 on 22-03-2010 via speed post. The assessee did not file a return in compliance, leading to further notices under section 142. The assessee's representative attended hearings but later challenged the validity of the service of the notice under section 148, arguing that it was sent to an incorrect address. The CIT(A) quashed the assessment, citing improper service of the notice. However, the Tribunal noted that the notice was sent to the address on record and was not returned undelivered, thereby presuming valid service. The Tribunal held that the CIT(A) erred in quashing the reassessment proceedings, emphasizing that minor typographical errors in the address do not invalidate the notice if it was effectively communicated.

2. Dismissal of Certain Grounds by CIT(A):
The assessee contended that the CIT(A) erred in dismissing Grounds No. 4 to 7 after quashing the assessment order. The Tribunal observed that the CIT(A) had not adjudicated on the merits of the additions due to the quashing of the reassessment. The Tribunal decided that since the reassessment was upheld, it was necessary for the CIT(A) to adjudicate the merits of the additions. Therefore, the case was remanded back to the CIT(A) to decide on these grounds afresh.

3. Merits of the Additions:
The additions made by the AO included an estimated income of Rs. 1,20,000/- and an addition of Rs. 10,00,000/- under section 69 of the Act. The assessee challenged the correctness of the reasons for reopening the assessment and the nexus of these reasons with the assessee's case. The Tribunal noted that the sufficiency of reasons for reopening cannot be questioned at the initial stage of reassessment. The Tribunal found that the assessee's non-cooperative attitude and the objections raised were not sufficient to invalidate the reasons recorded for reopening. Consequently, the Tribunal dismissed the assessee's ground regarding the incorrectness of the reasons for reopening.

Conclusion:
The Tribunal allowed the Revenue's appeal, reversing the CIT(A)'s order quashing the reassessment. The Tribunal also partly allowed the assessee's cross-objection for statistical purposes, directing the CIT(A) to adjudicate the merits of the additions afresh. The order was pronounced in the open court on 26.6.2015.