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2017 (1) TMI 813 - AT - Income TaxValidity of reopening of assessment - Held that - The position of law is settled proposition that when the reassessment proceedings are pending based on a valid 148 notice, the subsequent proceedings under section 148 cannot be initiated unless earlier proceedings are brought to a logical end. In the present appeal, it is an undisputed fact that the first notice dated 27.07.1995 issued under the same section remains un-disposed of. It is also an undisputed fact that the second notice under section 148 was issued on the ground that income had escaped assessment because of the invalid/non-est return filed by the assessee. The Assessing Officer in the remand report has confirmed all the dates as mentioned of the order of CIT(A) and also confirmed that no assessment was made pursuance to first notice u/s.148 dated 27.07.1995. Thus we are inclined to quash the second notice under section 148 dated 10/03/1998 as invalid. The assessment order dated 27.03.2000 passed in pursuance such notice is thus annulled. - Decided in favour of assessee
Issues Involved:
1. Validity of reassessment proceedings under sections 147/148 of the Income Tax Act. 2. Confirmation of various additions related to unexplained investments, interest payments, and household expenditures. Detailed Analysis: 1. Validity of Reassessment Proceedings under Sections 147/148: The primary issue revolves around the legality of the reassessment proceedings initiated by the Assessing Officer (AO). The assessee was subjected to a search operation on 03.12.1993 and 04.12.1993. Subsequently, a notice under section 142(1) dated 19.12.1994 was issued, followed by a notice under section 148 dated 27.07.1995. The assessee filed a return on 05.12.1996. The AO, instead of passing an assessment order by the deadline of 31.03.1998, issued another notice under section 148 on 10.03.1998, which was contested by the assessee as invalid. The Tribunal observed that the reassessment proceedings pursuant to the first notice under section 148 were still pending when the second notice was issued. Citing the Gujarat High Court decision in Aditya Medisales Ltd. vs. DCIT, it was held that "when the reassessment proceedings are pending based on a valid 148 notice, the subsequent proceedings under section 148 cannot be initiated unless earlier proceedings are brought to a logical end." Consequently, the second notice issued on 10.03.1998 was deemed invalid, and the assessment order dated 27.03.2000 based on this notice was annulled. 2. Confirmation of Various Additions: Given the annulment of the assessment order, the Tribunal did not find it necessary to adjudicate the merits of the other grounds raised by the assessee, which included: - Addition of ?4,82,006/- for unexplained investment in shares. - Addition of ?9,33,091/- for interest paid in cash. - Addition of ?1,28,000/- for investment in house property. - Addition of ?2,50,000/- for unexplained advances to S.S. Nagri. - Additions of ?65,000/- and ?6,750/- for unexplained investment in shares. - Addition of ?4,044/- for unexplained donation. - Addition of ?2,50,000/- for unexplained investment in shares of Reliance Industrial Ltd. - Addition of ?50,000/- for unexplained household expenditure. The Tribunal's decision primarily focused on the procedural validity of the reassessment notices and the subsequent order, rendering other substantive issues moot. Conclusion: The Tribunal concluded that the second notice under section 148 was invalid, leading to the annulment of the reassessment order dated 27.03.2000. As a result, the appeal filed by the assessee was allowed, and no further adjudication on the merits of the individual additions was necessary. The order was pronounced on 10th January 2017 at Ahmedabad.
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