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2021 (4) TMI 739 - AT - Income TaxValidity of reopening of assessment u/s 147 - no valid notice issued/served u/s 148 - HELD THAT - Notice u/s 148 of the Act was handed over to the notice server and the area inspector on the very same date and the notice was served through affixture on the same date instead of first attempting to serve the same in person or through post. therefore, find merit in the arguments of the learned counsel for the assessee that no notice u/s 148 of the Act was ever served to the assessee and even if it is accepted that such a notice is served through affixture even then also the same is not valid service being served after office hours and the notice so affixed does not bear the name of any witness of the localities other than the Ward Inspector who accompanied the notice server. The chronology of events that has taken place clearly shows that no notice u/s 148 was ever served upon the assessee before 31.03.2015 and therefore, find force in the arguments of the learned counsel for the assessee that since no notice u/s 148 of the Act was served on the assessee before 31.03.2015, therefore, such reassessment proceedings are not in accordance with law and has to be quashed. - Appeal of the assessee is allowed.
Issues Involved:
1. Validity of the reopening of assessment under Section 147/148 of the Income Tax Act. 2. Validity of service of notice under Section 148. 3. Validity of notice under Section 143(2). 4. Validity of reassessment proceedings. 5. Merits of the addition of ?30 lakhs under Section 68 and ?60,000 under Section 69C. Detailed Analysis: 1. Validity of the Reopening of Assessment under Section 147/148: The primary issue was whether the reopening of the assessment by the Assessing Officer (AO) was valid. The AO initiated reassessment proceedings based on information from the Investigation Wing that the assessee had obtained accommodation entries of ?30 lakhs on account of share capital. The AO recorded reasons and obtained approval from the competent authority. However, the Tribunal found that the Additional Commissioner of Income Tax (Addl. CIT) had given approval in a mechanical manner without independent application of mind, which was not in accordance with law. The Tribunal cited the case of CIT vs. N.C. Cables Ltd., where mere appending of the expression 'approved' was deemed insufficient, and the approval had to be meaningful and not ritualistic. 2. Validity of Service of Notice under Section 148: The assessee contended that the notice under Section 148 was not served within the limitation period and was served through affixture without resorting to service by post. The Tribunal found merit in the argument that the notice was served through affixture after office hours and did not bear the name of any witness other than the Ward Inspector. The Tribunal concluded that no notice under Section 148 was ever served on the assessee before 31.03.2015, rendering the reassessment proceedings invalid. 3. Validity of Notice under Section 143(2): The assessee argued that the notice under Section 143(2) was issued beyond the limitation period, which expired on 30.09.2009. The Tribunal noted that the AO had not addressed this objection and the CIT(A) had wrongly invoked Section 292BB to justify the validity of the notice. The Tribunal referred to various decisions, including ASSTT. CIT V. HOTEL BLUE MOON, which held that non-issue or invalid issue of notice under Section 143(2) is not a curable defect and the assessment has to be quashed. 4. Validity of Reassessment Proceedings: The Tribunal found that the reassessment proceedings were invalid due to two primary reasons: the mechanical manner in which the Addl. CIT gave approval and the non-service of notice under Section 148 before the specified date. The Tribunal quashed the reassessment proceedings on these grounds, making other arguments academic in nature and not adjudicated. 5. Merits of the Addition of ?30 Lakhs under Section 68 and ?60,000 under Section 69C: The Tribunal did not adjudicate on the merits of the addition due to the quashing of the reassessment proceedings. The assessee had provided share application forms, confirmations, bank statements, and balance sheets to support the transactions, and argued that the AO did not conduct any enquiry from the said party nor rejected the evidences placed before him. However, since the reassessment proceedings were quashed, the Tribunal did not delve into the merits of the addition. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the reassessment proceedings due to the invalid approval given by the Addl. CIT and the non-service of notice under Section 148 before the specified date. The decision was pronounced in the open court on 16.04.2021.
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