2021 (1) TMI 54 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 68/69 - assessee has taken an accommodation entries from eight companies - non disposal of objection filed to the notice under section 148 by assessee - HELD THAT - In absence of disposal of objection filed to the notice under section 148 of the Act through speaking order, the entire reassessment proceedings is in disregard to the principle laid down by Hon'ble Supreme Court of India in the case of G.K.N. vs. Driveshafts (India) 2002 (11) TMI 7 - SUPREME COURT - Therefore, we declare the notice under section 148 of the Act is contrary to the law, null and void and assessment subsequently framed is also cancelled similarly the impugned order passed by the learned First Appellate Authority is also sustainable in the eyes of law, we cancel the orders passed by the Revenue authorities by deleting the addition in dispute and accepting the appeal filed by the assessee. Approval in terms of section 151 - As perused that the notice under section 148 of the Act is dated 27.03.2015 whereas the Joint Commissioner of Income Tax, Range-23, New Delhi has given the approval on 28.03.2015 as per page 5 of the paper book. We declare this approval is also not as per law and the AO issued notice under section 148 of the Act prior to the approval by the competent authority, same is also not valid. Addition under section 69 being purchases made by the assessee even though same is quoted from relevant documents which the assessee has produced in the shape of paper book and has also all the necessary documentary evidence before the Assessing Officer including ledger account, bill and bank statement and payment made by cheque reflected in the books of accounts of the assessee and Assessing Officer on the same has not brought on record any negative evidence and wrongly said that the bogus transaction which is contrary to the evidence filed by the assessee and the addition in dispute is also liable to be cancelled and we cancel the same. Appeal filed by the assessee is allowed.

Summary

Issues:
1. Validity of re-assessment proceedings under section 147 of the Income Tax Act, 1961.
2. Failure to issue mandatory notice under section 143(2) of the Act.
3. Addition of amount under section 69C of the Act.
4. Justification of lower authorities' orders.

Analysis:

Issue 1:
The appeal challenged the re-assessment proceedings under section 147, questioning the validity of reasons recorded and approval under section 151. The Assessing Officer issued notice based on information regarding accommodation entries. The assessee disputed the transactions, providing documentary evidence. The Tribunal found that the AO failed to dispose of objections through a speaking order, violating the principle laid down by the Supreme Court. Consequently, the reassessment proceedings were deemed null and void, and the appeal was allowed.

Issue 2:
The appellant contended that the failure to issue and serve a mandatory notice under section 143(2) rendered the re-assessment proceedings void. The Tribunal observed that the AO did not pass a speaking order disposing of objections, as required by law. This failure vitiated the reassessment process, leading to the cancellation of the assessment and the appeal being allowed.

Issue 3:
Regarding the addition under section 69C of the Act, the Assessing Officer doubted the authenticity of purchases made by the appellant. Despite the documentary evidence provided by the assessee, the AO made additions based on suspicion. The Tribunal found that the AO did not present any contradictory evidence, leading to the cancellation of the addition under section 69C.

Issue 4:
The lower authorities confirmed the additions made by the Assessing Officer, which the appellant challenged as unjustified. The Tribunal reviewed the documentary evidence submitted by the assessee, including case laws supporting their claims. After thorough examination, the Tribunal concluded that the appellant succeeded on legal and merit grounds, leading to the cancellation of the impugned order and allowing the appeal.

In conclusion, the Tribunal declared the notice under section 148 as null and void, canceled the assessment, and allowed the appeal filed by the assessee. The judgment emphasized the importance of following legal procedures and providing substantial evidence to support assessments under the Income Tax Act, 1961.