2019 (12) TMI 1438 - AT - Income Tax

Validity of assessment - assessee had challenged the non service of notice u/s. 143(2) - addition u/s 68 - HELD THAT - Once a notice has been sent on a proper address and said notice has not returned back, then it is deemed to have been affected in time to the assessee. The Hon'ble Jurisdictional High Court in the case of CIT vs. Madhsy Films Pvt. Ltd. 2008 (3) TMI 19 - HIGH COURT OF DELHI in the context of notices issued u/s. 143(2) held that, where notice has been issued to the assessee u/s. 143(2) and has been sent by the speed post on the given address as per the return of income and if the same has not been received back, then it is presumed that it has reached the assessee. Similar view has been taken in the case of CIT vs. Yamu Industries Ltd. as 2007 (5) TMI 237 - DELHI HIGH COURT . Accordingly, we hold that here in this case notice has not only been sent on the address mentioned in the return of income but also been duly served under the law within statutory time limit and accordingly the ground raised by the assessee is dismissed. Addition u/s 68 - As assessee got the money as confirming party and not on behalf of someone else or as some kind of advance. It fairly evident from the records that assessee has received the amount from M/s. Samyak Projects Pvt. Ltd. which is nothing but income of the assessee, because M/s. Aravali Heights Infratech P. Ltd. had entered into an agreement with M/s. Yathartha Constructions vide MOU where M/s. Samyak Projects Ltd. acquire the right to develop the said land along with purchase of share resulting in 100% control in both the companies. Onus in the confirming party had agreed to transfer the interest in land to M/s. Samyak Projects Ltd. to a total consideration of ₹ 81.88 crores. Thus, in the entire deal assessee gets an amount of ₹ 35,91,73,500 which definitely is an income of the assessee which has not been shown. Thus, the finding arrived by the Ld. CIT (A) cannot be tinkered and accordingly this issue is decided against the assessee and the grounds raised on this issue are dismissed. Deposits in accounts of the assessee neither any evidence has been filed before the authorities below in support of any cash withdrawal which has been claimed to have been re-deposited nor any proper supporting documents or the explanation about the source of deposit has been filed. In absence of any rebuttal or explanation, the amount of deposits of ₹ 1,67,84,000/- has rightly been taxed as unexplained. Ld. CIT (A) has observed that the assessee has not been able to provide any evidence in support of his claims and merely giving a generalized statement that the cash deposits are from the cash withdrawal made earlier is not sufficient evidence. The assessee has not been able to correlate the cash withdrawn and subsequent deposits. In absence of any cogent reason and evidence, the authorities below are justified in holding cash deposits as unexplained. Accordingly, this ground is also dismissed. CIT(A) has already directed the Assessing Officer to verify from the computation of income filed alongwith the return of income whether the same has been offered to tax or not. Accordingly, the appeal of the assessee is dismissed.

Issues Involved:
1. Validity of the assessment proceedings due to non-service of mandatory notice under section 143(2).
2. Validity of the assessment framed without following principles of natural justice and using material not confronted to the assessee.
3. Confirmation of addition of ?17,91,73,500 as unexplained credit under section 68.
4. Confirmation of addition of ?17,91,73,500 as income from M/s. Samyak Projects Ltd.
5. Allegation of double taxation of ?17,91,73,500.
6. Taxability of ?35,91,73,500 as income from extinguishment of rights over property.
7. Addition of ?2,84,88,000 as unexplained cash credits.
8. Addition of ?45,00,000 as unexplained cash credits on account of work contract receipts.

Detailed Analysis:

1. Validity of the Assessment Proceedings:
The assessee argued that the assessment proceedings were invalid due to non-service of the mandatory notice under section 143(2). The CIT(A) noted that the notice was sent to the address provided in the return of income, and the claim of the assessee about the change of address was not substantiated with evidence. The Tribunal upheld the CIT(A)'s finding, emphasizing that the notice sent through speed post to the address mentioned in the return of income was deemed served under the law.

2. Principles of Natural Justice:
The assessee contended that the assessment was framed without following the principles of natural justice and based on material not confronted to the assessee. The Tribunal found that the show cause notice was served, and the assessee did not respond. Therefore, the assessment was completed under section 144, which was justified under the circumstances.

3. Addition of ?17,91,73,500 as Unexplained Credit:
The Assessing Officer added ?17,91,73,500 as unexplained credit under section 68, which was confirmed by the CIT(A). The assessee argued that the amount was received as part of a larger transaction and was not taxable in the year under consideration. The Tribunal upheld the CIT(A)'s decision, noting that the amount was received from M/s. Samyak Projects Ltd. and was not offered as taxable income by the assessee.

4. Income from M/s. Samyak Projects Ltd.:
The assessee claimed that the amount received from M/s. Samyak Projects Ltd. was not taxable as income. The CIT(A) and the Tribunal found that the amount was received as part of a transaction involving the transfer of development rights and was taxable as income in the hands of the assessee.

5. Double Taxation Allegation:
The assessee argued that the amount of ?17,91,73,500 was subject to double taxation. The Tribunal rejected this argument, noting that the amount was taxable in the hands of the assessee as income generated from the transaction.

6. Taxability of ?35,91,73,500:
The CIT(A) held that the entire amount of ?35,91,73,500 received by the assessee was taxable as income from the extinguishment of rights over the property. The Tribunal agreed, noting that the amount was received as part of the transaction and was not an advance or loan.

7. Addition of ?2,84,88,000 as Unexplained Cash Credits:
The assessee argued that the amount deposited in the bank was only ?1,67,84,000 and was from earlier withdrawals. The CIT(A) and the Tribunal found no evidence to support this claim and upheld the addition of ?1,67,84,000 as unexplained cash credits.

8. Addition of ?45,00,000 as Unexplained Cash Credits:
The CIT(A) directed the Assessing Officer to verify whether the amount of ?45,00,000 was already offered to tax. The Tribunal upheld this direction, finding no reason to interfere.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the findings of the CIT(A) on all grounds. The assessment proceedings and the additions made by the Assessing Officer were found to be valid and justified.

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