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2019 (1) TMI 639 - AT - Income TaxReopening of assessee - Held that - Assessee has received ₹ 4,60,01,150/- as per MOU dated 1.12.2007 from NRI Ashok Sarin to start business. MOU dated 1.12.2007 has not been filed before the AO for verification and was only filed before the CIT(A). After perusing the finding of the CIT(A), CIT(A) has quashed the assessment and reduced the demand to NIL by passing a non-speaking order without verifying the assessment records. We are also of the view that this MOU dated 1.12.2007 which was filed before the Ld. CIT(A) has not been confronted to the AO for verification. As per the assessment record, assessee has also not appeared before the AO. We are of the view that impugned order is not sustainable in the eyes of law and the issue involved in the present appeal requires re-adjudication at the level of the AO for verification of the MOU dated 1.12.2007. Hence, we are directing the AO to verify the same and decide the issue in dispute afresh, under the law, after giving adequate opportunity of being heard to the assessee for substantiating the issue before the AO. - Appeal filed by the Revenue stands allowed for statistical purposes.
Issues involved:
1. Validity of assessment proceedings under sections 144/147 due to lack of valid service of notices. 2. Treatment of interest accrued as income from other sources. 3. Quashing of penalty imposed under section 271(1)(c). Issue 1: Validity of assessment proceedings under sections 144/147 due to lack of valid service of notices: The appeals were consolidated and heard together as the issues were inter-connected. The Assessing Officer (AO) initiated assessment proceedings under sections 144/147 due to the non-filing of a return by the assessee company for the assessment year 2008-09. The AO observed discrepancies in transactions involving a loan from an NRI and the company's failure to file returns. The AO issued notices under section 148, but the assessee failed to comply, citing pending court cases. The AO proceeded with the assessment, treating a certain amount as unexplained credit under section 68. The CIT(A) quashed the assessment proceedings, citing lack of valid service of notices on a director and discrepancies in the assessment process. The Tribunal noted that the CIT(A) allowed the appeal based on the arguments presented and the settlement of disputes between directors, leading to the quashing of the assessment. Issue 2: Treatment of interest accrued as income from other sources: The AO treated the interest accrued on a certain amount as income from other sources, adding it under section 68 for unexplained credit. However, the CIT(A) found that the interest component was not liable to be taxed separately as the principal amount was already considered for taxation. The Tribunal observed that the CIT(A) allowed the appeal based on the arguments presented and the settlement of disputes between directors, leading to the quashing of the assessment. Issue 3: Quashing of penalty imposed under section 271(1)(c): The CIT(A) canceled the penalty imposed under section 271(1)(c) on the grounds of the issues involved in the case. The Tribunal, after setting aside the issues for fresh adjudication at the AO level, also set aside the penalty for reconsideration. The Tribunal directed the AO to decide on the penalty afresh as per the law. Consequently, the appeal of the Revenue regarding the penalty was allowed for statistical purposes. In conclusion, the Tribunal found discrepancies in the assessment proceedings due to the lack of valid service of notices, leading to the quashing of the assessment. The treatment of interest accrued as income from other sources was also re-evaluated, and the penalty imposed under section 271(1)(c) was set aside for fresh consideration by the AO. The appeals filed by the Revenue were allowed for statistical purposes, emphasizing the need for proper verification and compliance with legal procedures in tax assessments.
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