2018 (11) TMI 696 - AT - Income Tax

Reopening of assessment - as per assessee no notice was served to the assessee - non intimation of change of address of the assessee - Held that - As noted that the assessee has filed revised Form No. 36 which shows the correct address now. The above address is different from the original address shown by the assessee in Form No. 35. The notice were sent by the CIT(A) at the old address. We are of the view that the assessee should have intimated the change of address to the CIT(A) by filing revised Form No. 35 which the assessee has admittedly not done. Further, we noted that the ld CIT(A) has disposed off the appeal stating that the assessee does not want to prosecute the appeal. According to us the ld CIT(A) does not have the power to dispose off the appeal other then on the merits. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Proper reopening of assessment u/s 148
2. Addition made u/s 68 of ?30 lakhs
3. Addition of ?54,000/- u/s 68 for alleged commission paid for accommodation entries

Analysis:

1. Reopening of Assessment u/s 148:
The appeal was filed against the order of the ld CIT(A) upholding the initiation of reassessment proceedings. The assessee contended that the proceedings were contrary to law as the mandatory procedures were not followed, information was collected without the assessee's knowledge, and assessment was based on conjecture. The Tribunal noted that the assessee did not appear before the ld CIT(A) due to incorrect address details. The Tribunal set aside the issue back to the ld CIT(A) to be decided on merits, directing the assessee to make all representations.

2. Addition of ?30 lakhs u/s 68:
The ld AO made an addition of ?30 lakhs u/s 68 on account of share capital, treating it as an accommodation entry. The ld CIT(A) confirmed this addition as the assessee did not appear before them. The Tribunal observed that the ld CIT(A) did not have the power to dispose of the appeal other than on merits. Therefore, the Tribunal set aside the issue back to the ld CIT(A) for a decision on merits, directing the assessee to present all relevant submissions.

3. Addition of ?54,000/- u/s 68 for alleged commission:
Another addition of ?54,000/- u/s 68 was made for alleged commission paid for obtaining accommodation entries. The ld CIT(A) confirmed this addition as well due to the non-appearance of the assessee. The Tribunal, however, found that the ld CIT(A) should have decided the issue on merits and not based on non-appearance. Consequently, the Tribunal allowed the appeal for statistical purposes, setting the matter back to the ld CIT(A) for a decision on merits after considering all submissions.

In conclusion, the Tribunal directed the ld CIT(A) to re-examine the issues on merits and ensure that proper procedures are followed, providing the assessee with an opportunity to present their case. The appeal was allowed for statistical purposes, emphasizing the importance of deciding matters based on merits rather than non-appearance.