2021 (1) TMI 285 - AT - Income Tax

Reopening of assessment u/s 147 - Delay in issuing notice - time limit for issue of notice - no ntoice within this time stipulated under section 151 - HELD THAT - Notice sent by email is not to correct address of the assessee; that there is no evidence to clinch the issue that such notice was dispatched anytime on or before 31/3/2017 inasmuch as not only there is discrepancy in the dates of dispatch as pleaded by the postal Department in their letter as well as the AO; and that even if we go by the Russian of the learned Assessing Officer such notice was dispatched by speed post only on 1/4/2017 and not before. The speed post booking list maintained by the Department is of no use in this matter because there is discrepancy with respect to the SPA number and also the SPA numbers that followed this particular entry are not in the immediate proximity of this particular ED481673181IN and also that they are corrected SPA numbers with 9 numericals. Viewing from any angle there is no convincing material before us to believe that the notice was dispatched at any time earlier to 1/4/2017, let alone the letter dated 5/12/2017 issued by the postal Department to say that the notice was handed over to the postal Department to be sent by speed post only on 30/6/2017 is not to be believed. On this factual situation, while applying the law laid down in the case of Kanubhai M Patel 2010 (7) TMI 704 - GUJARAT HIGH COURT , we find that it is only 1/4/2017 that has to be taken as the date of dispatch because that is the date on which the notice is shown to have been handed over to the postal department for service. No material to rebut this conclusion is emanating from any independent source. For these reasons we hold that there is no notice that was issued in this matter well within this time stipulated under section 151 of the Act and the proceedings are barred by limitation. On this score the assessee is entitled to seek the crashing of proceedings under section 147 of the Act. We therefore, hold that the assessment order under section 147/143(3) of the Act cannot be sustained. Appeal of assessee allowed.

Summary

Issues:
1. Jurisdiction of the Assessing Officer for framing the assessment under section 147/143(3) of the Act.
2. Validity of the notice under section 148 of the Act.
3. Application of mind and independent inquiry by the Assessing Officer.
4. Cross-examination of persons on whose statements reliance was made.
5. Addition of unexplained expenditure under section 69C of the Act.

Analysis:
1. The assessee challenged the assessment order before the Ld. CIT(A) on various grounds, including the jurisdiction of the Assessing Officer for framing the assessment under section 147/143(3) of the Act. The Ld. CIT(A) granted partial relief to the assessee, holding that the verification of bank statements revealed discrepancies in certain entries. The Ld. CIT(A) considered the contentions raised by the assessee but upheld the jurisdiction of the Assessing Officer, granting relief only in specific instances.

2. The issue of the validity of the notice under section 148 of the Act was extensively discussed. The notice was dispatched on 31/3/2017, but discrepancies arose regarding the actual dispatch date and delivery. The assessee argued that the notice was not dispatched within the stipulated time, as claimed by the Revenue. The Tribunal analyzed the evidence, including postal department letters and speed post records, concluding that the notice was not issued within the prescribed time limit, rendering the proceedings barred by limitation.

3. Concerns were raised regarding the application of mind and independent inquiry by the Assessing Officer during the assessment. The assessee contended that proper scrutiny and examination were lacking, affecting the validity of the assessment. However, the Tribunal primarily focused on the issue of the notice's validity and jurisdiction, leading to the allowance of the appeal based on these grounds.

4. The matter of cross-examination of persons on whose statements reliance was made was briefly mentioned in the context of the overall challenge to the assessment proceedings. However, the Tribunal's decision primarily centered on the notice's validity and the jurisdiction of the Assessing Officer, ultimately leading to the allowance of the appeal based on these critical issues.

5. Lastly, the addition of unexplained expenditure under section 69C of the Act was raised as a ground of challenge by the assessee. The Tribunal did not delve deeply into this specific aspect due to the favorable outcome on the jurisdiction and notice validity issues. Consequently, the Tribunal allowed the appeal based on the findings related to the notice's validity and the Assessing Officer's jurisdiction, rendering further discussion on other grounds unnecessary.