2021 (3) TMI 725 - AT - Income Tax

Reopening of assessment u/s 147 - CIT(A) treating the notice under section 148 of the Act to be defective entirely on technical grounds - HELD THAT - There was repeated non-compliance by the AO to the letters issued by the Ld. CIT(A). In such a situation like the present one, the Ld. CIT(A) has rightly decided the appeal on the basis of materials available on record before him. In view of the facts and circumstances of the case narrated above, we affirm the order of the Ld. CIT(A). - Decided against revenue.

Issues:
1. Validity of notice under section 148 of the Income Tax Act.
2. Compliance with procedural requirements for reassessment.
3. Treatment of appeal based on technical grounds.
4. Adequacy of evidence provided by the assessee during re-assessment proceedings.

Issue 1: Validity of notice under section 148 of the Income Tax Act:
The appeal by the Revenue challenges the decision of the Ld. CIT(A) regarding the validity of the notice under section 148 of the Income Tax Act. The Revenue argues that the notice was served in person, with the recipient's signature available on record, and questions the Ld. CIT(A)'s decision to treat the notice as defective solely on technical grounds. The Ld. CIT(A) emphasized the importance of proper service of notice under section 148 within the limitation period, highlighting the need for compliance with statutory requirements.

Issue 2: Compliance with procedural requirements for reassessment:
The case involves a reassessment for the assessment year 2009-10 initiated based on information regarding alleged bogus purchase bills. The AO estimated the profit and brought a certain amount to tax due to the lack of direct and indirect evidence provided by the assessee during re-assessment proceedings. The Ld. CIT(A) sought verification from the AO regarding the service of notice under section 148 and the request to treat the original return as filed in response to the notice. Non-compliance by the AO led the Ld. CIT(A) to decide the appeal based on available materials, ultimately canceling the reassessment.

Issue 3: Treatment of appeal based on technical grounds:
The Ld. CIT(A) allowed the appeal filed by the assessee, emphasizing the responsibility of the person making a claim to provide evidence. In this case, the AO failed to disprove the claim regarding the defective notice under section 148 despite opportunities provided. The Ld. CIT(A) concluded that the claimant's assertions were valid due to the lack of establishment of service of notice and compliance. Consequently, the reassessment made by the AO was canceled, and the appeal was allowed based on the technical grounds raised by the assessee.

Issue 4: Adequacy of evidence provided by the assessee during re-assessment proceedings:
During the re-assessment proceedings, the assessee submitted ledger accounts, purchase bills, bank statements, and purchase register for the relevant financial year. However, the AO noted the absence of direct evidence such as stock register and indirect evidence like delivery challans and lorry receipts. The lack of comprehensive evidence led to the AO estimating the profit and bringing a portion of the disputed purchases to tax. The adequacy of evidence provided by the assessee played a crucial role in the reassessment process and subsequent appeal proceedings.

In conclusion, the ITAT Mumbai affirmed the decision of the Ld. CIT(A) and dismissed the appeal filed by the Revenue, highlighting the importance of complying with procedural requirements, providing adequate evidence, and addressing technical grounds in tax assessment and appeal processes.

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