2019 (4) TMI 283 - AT - Income Tax

Assessment u/s 147 - assessee is a non existing company or a bogus company - Validity of the reassessment proceedings - addition u/s 68 - in the instant case has taken recourse of the provision of section 147 as against 153(C) - HELD THAT - AO in the instant case, after obtaining the report of the investigation wing has applied his mind and taken one approval of the higher authorities. He has also disposed of the objections. Since, the rereopening was based on specific information. No notice u/s 153C is also required. The various arguments advanced by the Ld. Counsel for the assessee in the instant case are without any merit and therefore, the legal ground raised by the assessee challenging the validity of the reassessment proceedings is dismissed. So far as the merit of the case is concerned find from the copy of the Assessment Order framed u/s 153C/153A in the case of M/s. VIP Leasing & Finance Private Limited, that the assessment in that case has been completed u/s. 153C and 153A. The address of the assessee has been given at 209, 2nd Floor, Sunder Kiran Building, WEA, Karol Bagh, New Delhi with PAN No. AAACV0475F. The audited accounts and the paper book in the case of M/s. VIP Leasing & Finance Private Limited disclosed the name of the assessee in the schedule of investment at Sr. No. 132 according to which an amount of ₹ 30 lacs has been invested in shares of the assessee company. There are also various investments in shares of different companies. No adverse inference has been drawn in the order passed u/s 153C/153A. The assessee in the instant case has filed the copy of the assessment order in the case of share applicant i.e. M/s. VIP Leasing & Finance Private Limited. Since the assessment has been framed u/s. 153C and 153A, it cannot be said that the assessee is a non existing company or a bogus company. Since this vital evidence was not considered by the AO or CIT(A) although the same was very much available with the department during the course of the assessment proceedings, therefore, deem it proper to restore this issue to the file of the Assessing Officer with a direction to verify the assessment record of M/s. VIP Leasing & Finance Private Limited from their Assessing Officer and decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. - Appeal filed by the assessee partly allowed for statistical purpose

Summary

Issues Involved:
1. Validity of the reassessment proceedings under sections 147/148 of the IT Act.
2. Addition of ?30 lacs to the income of the assessee under section 68 of the IT Act.

Detailed Analysis:

1. Validity of the Reassessment Proceedings:
The assessee challenged the reassessment proceedings on the grounds that the Assessing Officer (AO) did not apply his mind independently and relied solely on the information from the investigation wing. The assessee also argued that the AO did not provide the mandatory four-week period to respond to the objections raised against the notice under section 148, thus rendering the reassessment proceedings null and void. Additionally, the assessee contended that the sanction for reopening was granted mechanically without due application of mind. The Tribunal found no infirmity in the reassessment proceedings, noting that the AO had applied his mind and obtained necessary approvals. The Tribunal upheld the validity of the reassessment proceedings, dismissing the legal ground raised by the assessee.

2. Addition of ?30 lacs under Section 68:
The AO added ?30 lacs to the assessee's income, citing that the assessee failed to substantiate the identity and creditworthiness of the share applicant, M/s. VIP Leasing & Finance Pvt. Ltd., and the genuineness of the transaction. The CIT(A) upheld this addition. However, the assessee argued that the share applicant’s identity and creditworthiness were substantiated through various documents, including the assessment order under sections 153C and 153A for M/s. VIP Leasing & Finance Pvt. Ltd., which disclosed an investment of ?30 lacs in the assessee company. The Tribunal noted that the assessment order for M/s. VIP Leasing & Finance Pvt. Ltd. was not considered by the lower authorities despite being available, and no adverse inference was drawn against the investor company in its assessment. The Tribunal directed the AO to verify the assessment records of M/s. VIP Leasing & Finance Pvt. Ltd. and decide the issue afresh, providing the assessee an opportunity to be heard. Consequently, the grounds raised by the assessee on merit were allowed for statistical purposes.

Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes, with the Tribunal upholding the validity of the reassessment proceedings but remanding the issue of the addition under section 68 for fresh consideration by the AO.