2017 (6) TMI 1035 - AT - Income Tax

Validity of re-assessment order - no notice u/s 143(2) have been issued and served upon assessee subsequent to the filing of the return accepted by AO - Held that - Since the assessee did not file valid return of income within the stipulated period as directed in the notice under section 148, therefore, there is no question of issuing any notice under section 143(2) of Income Tax Act to the assessee. The proviso to Section 143(2) deals with the period of service of notice from the end of the month in which the return is furnished. Since no valid return is filed, therefore, there is no question of compliance of proviso to Section 143(2) of the Act. The assessee filed return of income belatedly at the fag end of completion of re assessment proceedings on 13.02.2013. Therefore, there is no question of service of notice upon assessee under section 143(2) of the Act when assessment was completed in March,2013 itself. - Deided against assessee. Addition u/s 69 - proof of agricultural income - Held that - Assessee has been able to prove earning of genuine agriculture income which were only source of income for assessee which have been deposited in the bank account of the assessee. Therefore, there was no justification to make the addition of ₹ 8,71,000/- against the assessee on account of peak of investment in the bank account. In this view of the matter, set aside the orders of authorities below and delete the addition. This ground of appeal of the assessee is allowed. Addition as bank interest on bank deposit - This income is not shown in the return of income despite assessee earned it during the year under consideration - Held that - As we have deleted the substantial addition of ₹ 8,71,000/- therefore, no taxable income is left for consideration. Accordingly, the addition made by Assessing Officer of ₹ 2990/- is confirmed in principle. However, since no taxable income is left, therefore, Assessing Officer will not make it taxable in the computation of income because the addition would be below taxable income. This ground is accordingly, disposed off in terms above.

Issues involved:
1. Challenge to re-opening of assessment under section 147 of the Income Tax Act.
2. Validity of re-assessment order due to the absence of notice under section 143(2) of the Act.
3. Addition of ?8,71,000 under section 69 of the Act.
4. Addition of ?2,990 as bank interest on bank deposit.
5. Charging of interest under sections 234A and 234B of the Act.

Issue 1: Challenge to re-opening of assessment under section 147:
The appellant did not press ground No. 1 challenging the re-opening of the assessment under section 147 of the Income Tax Act. The ground was dismissed as not pressed. The notice under section 148 was issued, and the appellant failed to explain the source of deposits and purpose of withdrawals made during the period under consideration. The appellant claimed the deposits were from agricultural income but could not provide sufficient evidence. The Assessing Officer treated the unexplained investment as income under section 69 of the Act, which the appellant challenged before the CIT(Appeals, but the appeal was dismissed.

Issue 2: Validity of re-assessment order without notice under section 143(2):
The appellant challenged the validity of the re-assessment order due to the absence of notice under section 143(2) of the Act. The appellant argued that the assessment under section 147/143(3) without issuing notice under section 143(2) is legally unsustainable. However, the tribunal found that in this case, the notice under section 148 was issued, and the appellant filed the return belatedly. As per the proviso to Section 143(2), no notice shall be served after the expiry of twelve months from the end of the month in which the return is furnished. Since the appellant filed the return late, the tribunal dismissed this ground of appeal.

Issue 3: Addition of ?8,71,000 under section 69 of the Act:
The appellant challenged the addition of ?8,71,000 under section 69 of the Act. The appellant claimed to be an agriculturist and provided various documents to support earning agricultural income. The tribunal found that the appellant had established the genuineness of the agreement with the landowners for cultivation. Evidence from the stamp vendor and confirmation from the trading company supported the appellant's claim. The tribunal concluded that the appellant proved the earning of genuine agriculture income, and therefore, set aside the addition of ?8,71,000.

Issue 4: Addition of ?2,990 as bank interest on bank deposit:
The appellant did not show bank interest of ?2,990 in the return of income despite earning it during the year under consideration. However, since the substantial addition of ?8,71,000 was deleted, the tribunal confirmed the addition of ?2,990 in principle but noted that no taxable income was left for consideration. Therefore, the Assessing Officer was directed not to make it taxable in the computation of income.

Issue 5: Charging of interest under sections 234A and 234B:
The charging of interest under sections 234A and 234B was deemed consequential in nature and required no further adjudication. The tribunal partly allowed the appeal of the assessee, disposing of this ground accordingly.

In conclusion, the tribunal addressed various issues related to the re-opening of assessment, validity of the re-assessment order, additions made under different sections of the Income Tax Act, and the charging of interest. The tribunal considered the evidence presented by the appellant regarding agricultural income and set aside the substantial addition made by the Assessing Officer, providing detailed reasoning for each decision.

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