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2017 (6) TMI 1320 - AT - Income TaxReopening of assessment u/s 147 - as argued reasons recorded are vague and scanty, without application of mind by the AO, and without necessary approval of the Joint Commissioner of Income-tax - HELD THAT - We agree with the contention of the Ld. Senior DR about the practice of discussing the matters with higher authorities. Further, the decisions relied upon by the Ld. counsel of the assessee are distinguishable on facts as in the present case there was statements of the person looking after the affairs of the assessee company, admitted of having engaged in accommodation entry. Thus, in our opinion, in the instant case, the Addl. CIT has applied his mind to the material and then arrived at a conclusion. Reasons recorded by the Assessing Officer are neither scanty nor vague nor recorded in mechanical manner and Reasons recorded are with due application of mind AND Reasons recorded are with necessary approval of the Additional CIT We hold that the reassessment proceeding are in terms of section 147 to 151 of the Act. Accordingly, ground No. 1 challenging the validity of reassessment is dismissed. Objections raised by the assessee agitating the jurisdiction were not disposed off by the Assessing Officer, before passing the impugned order - HELD THAT - Assessing Officer issued notice u/s. 143(2) 142(1) on 14.08.2007, after a gap of almost one year from issue of notice u/s 148 of the Act, but the assessee didn t comply said notice. The Assessing Officer issued a final show cause notice on 04.12.2007 proposing to assessee the income as mentioned in the notice. The assessment was to be completed on 31.12.2007 and the assessee asked reasons recorded on 20.12.2007, which were provided. The assessee vide letter dt. 24.12.2007 furnished reply of the queries raised about income of the assessee and in that letter the assessee raised the issue that reason were not acceptable. In the facts circumstances, we find that the assessee raised objections not as per the decision of the Hon ble Supreme Court in GKN Driveshaft India Ltd. 2002 (11) TMI 7 - SUPREME COURT . Since in the year under consideration, no objections have been filed effectively by the assessee, therefore, disposing off such objections specifically also does not arise. Accordingly, the ground of the assessee is dismissed. Incriminating material was not made available for rebuttal of show cause notice issued proposing the addition and no crosss-examination was provided, which is in violation of natural Justice and thus the order of the Assessing Officer is a nullity - HELD THAT - No letter retracting that statement was filed either before the Assessing Officer or before the appellate authorities. Moreover, the statements relied upon by the Assessing Officer are the statements of the directors and authorized signatory of the assessee company, no question of providing cross-examination arises as they are not third-party witnesses. Further, the Assessing Officer has made addition under section 68 of the Act not only on the basis of the statements but due to failure on the part of the assessee in discharging its onus of establishing identity and creditworthiness of the persons who paid money and genuineness of the transaction carried out. The assessment proceedings are to be completed by the Assessing Officer in limited time period but the assessee sought adjournment again and again delayed in replying to queries of the Assessing Officer. In view of the circumstances, the ground of the assessee that it is deprived of natural Justice for not providing cross-examination and proper show cause notice is not sustainable in law. Accordingly, the ground No. 3 of the appeal is dismissed. Addition u/s 68 - HELD THAT - Contradictory claims regarding the filing of the documentary evidences in support of identity and creditworthiness of the payer and genuineness of the transaction, in the interest of Justice, we feel it appropriate to restore the issue to the file of the Assessing Officer for deciding the merit of the issue of addition under section 68 of the Act, afresh with the direction to the assessee to produce all the above documents, before the Assessing Officer. The Assessing Officer may carry out the enquiries which deemed fit in the facts and circumstances of the case including enquiries from the banks of parties transacted. The assessee shall be afforded sufficient opportunity of hearing. Accordingly the ground No. 4 of the appeal is allowed for statistical purposes.
Issues Involved:
1. Validity of reassessment proceedings under sections 147 to 151 of the Income Tax Act. 2. Non-disposal of objections raised by the assessee. 3. Violation of natural justice due to lack of corroboration, cross-examination, and proper show cause notice. 4. Legitimacy of additions under section 68 treating unexplained income. 5. Legality of consequent demands of Income Tax, interest, and penalties. Issue-wise Detailed Analysis: 1. Validity of Reassessment Proceedings: The assessee challenged the reassessment proceedings on the grounds that the reasons recorded were vague, lacked application of mind, and were without necessary approval from the Joint Commissioner of Income Tax. The Tribunal found that the Assessing Officer (AO) had recorded detailed reasons, including statements from the Director and her son admitting involvement in providing accommodation entries. The Tribunal held that the reasons were neither vague nor recorded in a mechanical manner and were with due application of mind and necessary approval from the Additional CIT. Therefore, the reassessment proceedings were valid under sections 147 to 151 of the Act. 2. Non-disposal of Objections: The assessee contended that objections to the reassessment proceedings were not disposed of by the AO. The Tribunal found that the objections raised by the assessee were general and not specific. Furthermore, the objections were raised at the fag end of the assessment period, and no effective objections were filed as per the decision of the Hon’ble Supreme Court in GKN Driveshaft India Ltd. vs. ITO. Hence, the ground challenging the non-disposal of objections was dismissed. 3. Violation of Natural Justice: The assessee argued that the reassessment order was passed in violation of natural justice, as incriminating material was not provided for rebuttal, and no cross-examination was allowed. The Tribunal noted that the statements relied upon by the AO were from the Director and the authorized signatory of the assessee company, who admitted to providing accommodation entries. Since these were not third-party statements, the question of cross-examination did not arise. Moreover, the assessee failed to discharge its onus under section 68 of the Act by not providing sufficient evidence of identity, creditworthiness, and genuineness of the transactions. Therefore, the ground of violation of natural justice was dismissed. 4. Legitimacy of Additions under Section 68: The assessee claimed that the AO did not make any inquiry into the transactions and rejected the explanations without assigning any reason. The Tribunal observed that the assessee failed to provide evidence supporting the identity, creditworthiness, and genuineness of the transactions. The Tribunal restored the issue to the file of the AO for deciding afresh, directing the assessee to produce all relevant documents and allowing the AO to carry out necessary inquiries. 5. Legality of Consequent Demands: The assessee challenged the legality of consequent demands of Income Tax, interest, and penalties. Given that the Tribunal restored the issue of additions under section 68 for fresh consideration, the legality of the consequent demands would depend on the outcome of the reassessment proceedings. Separate Judgments: The Tribunal delivered a consolidated order for both assessment years 2000-01 and 2001-02, addressing identical issues except for the amount of addition. The findings and directions for both years were consistent, resulting in the appeals being allowed partly for statistical purposes.
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