2018 (6) TMI 417 - AT - Income Tax

Reopening of assessment - Held that - Assessee had raised the objection against reopening of the assessment. The AO was required to dispose of those objections before framing the assessment. We, therefore, deem it proper to set-aside the assessment order and restore the objection raised by the assessee to the file of Assessing Officer to be disposed of. The AO thereafter would frame the assessment denovo, if he does not accept the objection raised by the assessee. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Validity of issuance of Notice u/s. 148 and initiation of reassessment proceedings u/s. 147.
2. Sustaining addition under the head 'Advance Money for Plot at Shell City' by invoking provisions of section 68.
3. Confirming addition made in the name of 'Sunny Co-operative Housing Society' by invoking provisions of section 68.
4. Confirming addition on account of unexplained share application money.

Detailed Analysis:

1. Validity of Issuance of Notice u/s. 148 and Initiation of Reassessment Proceedings u/s. 147:
The assessee argued that the learned CIT(A) erred in upholding the validity of the notice issued u/s. 148 and the initiation of reassessment proceedings u/s. 147. The assessee contended that the assessment framed suffers from illegality as the objections raised against the reopening were not disposed of by the AO, which is a requirement as per the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited vs. ITO and others, (2003) 259 ITR 19 (S.C.). The Tribunal noted that the objections raised by the assessee were not addressed by the AO before framing the assessment. Therefore, the assessment order was set aside, and the objections were restored to the AO to be disposed of before framing the assessment de novo if the objections were not accepted.

2. Sustaining Addition under the Head 'Advance Money for Plot at Shell City' by Invoking Provisions of Section 68:
The assessee challenged the addition of ?1,02,97,300/- out of ?1,14,49,500/- made by the AO under the head 'Advance Money for Plot at Shell City' by invoking section 68 of the Income-Tax Act, 1961. The AO made the addition on the grounds that the assessee failed to prove the identity, capacity, and genuineness of the transactions. The Tribunal noted that the AO had not conducted any investigation from the customers despite the assessee's request and relied solely on the list of plot holders, their applications, and account copies. The Tribunal set aside the assessment order and restored the objections to the AO for proper disposal.

3. Confirming Addition Made in the Name of 'Sunny Co-operative Housing Society' by Invoking Provisions of Section 68:
The assessee contested the addition of ?10,00,000/- made by the AO in the name of 'Sunny Co-operative Housing Society' under section 68. The AO made the addition as the assessee failed to produce the person for examination and to prove the identity, capacity, and genuineness of the transactions. The Tribunal observed that the assessee had submitted confirmations and bank account copies during the assessment proceedings. The Tribunal set aside the assessment order and directed the AO to dispose of the objections before framing the assessment de novo.

4. Confirming Addition on Account of Unexplained Share Application Money:
The assessee disputed the addition of ?1,00,000/- made by the AO on account of unexplained share application money in the name of Shri Premchand Borasi. The AO made the addition as the assessee failed to prove the identity, capacity, and genuineness of the transactions. The Tribunal noted that the assessee had submitted all documentary evidence to prove the identity, genuineness, and creditworthiness of the share applicant. The Tribunal set aside the assessment order and restored the objections to the AO for proper disposal.

Conclusion:
The Tribunal allowed both appeals filed by the assessee for statistical purposes. The assessment orders were set aside, and the objections raised by the assessee were restored to the AO to be disposed of before framing the assessments de novo if the objections were not accepted. The order was pronounced in the open court on 07.06.2018.