2021 (11) TMI 525 - AT - Income Tax

Validity of reopening of assessment - assessee contented that notice was not served upon living member of the HUF and the addition made by the Assessing Officer was unjustified - whether assessment in the case of the assessee was made ex-parte u/s. 144 r.w.s. 147 of the act as no compliance was made during the course of assessment in spite of issuing a number of notices? - HELD THAT - It is undisputed fact that notice u/s. 148 of the act was served on the address available with the Assessing Officer. The assessee has not communicated any alternative address as provided in rule 127 of the I.T. Rule, 1962. Therefore, notice was served on the address for communication available with the income tax department as laid down in the rule 127 of the I.T. Rule, 1962. Since no one was on behalf of the assessee was available at the given address, therefore, notice was served by affixture according to the provision of sub-section (1) of section 282 of the Income Tax Act, 1961. In the light of the above facts and findings, we do not find any infirmity on this issue in the order of ld. CIT(A) that Assessing Officer has served the notice by affixture on the last known address of the assessee. Therefore, this ground of appeal of the assessee stands dismissed. Additions made by AO ex-parte u/s. 144 and time limit for issuing of notice u/s. 148 - HELD THAT - As observed during the course of assessment these issues could not be addressed because of non-compliance of the assessee on account of reason beyond the control of the assessee as both the members of the HUF were residing at USA. In the interest of justice, we opined that it would be appropriate to restore the issue of time limit for issuing notice to the file of the Assessing Officer to resolve after verification in accordance to the provision of section 149 of the act. We also set aside impugned additions made by the Assessing Officer to the file of the Assessing Officer for deciding de-novo after verification of the submission to be made by the assessee during the course of set aside proceedings upon granting reasonable opportunities to the assessee. The assessee is also directed to communicate if there is any other alternative address to the Assessing Officer during the course of set aside assessment proceedings. Accordingly, this appeal of the assessee is allowed for statistical purposes

Issues:
1. Reopening of assessment under section 147 of the Income Tax Act.
2. Proper service of notice under section 148 to the assessee.
3. Validity of additions made by the Assessing Officer.
4. Compliance during assessment proceedings.
5. Appeal before the CIT(A).

Reopening of Assessment under Section 147:
The appellant contested the reopening of assessment under section 147, arguing that the notice under section 148 was not properly served. The Assessing Officer had reopened the assessment based on information regarding a payment made by the assessee for the purchase of UTI M.F. The appellant claimed that no notice was served upon the Hindu Undivided Family (HUF) or its living members, rendering the reopening of assessment and subsequent order invalid. The Tribunal found that the notice under section 148 was served at the address available with the Assessing Officer, as per the provisions of the Income Tax Rule, and since no alternative address was provided by the assessee, the notice was served by affixture. Consequently, the Tribunal dismissed the ground of appeal related to the service of notice.

Proper Service of Notice under Section 148:
The appellant argued that due to the absence of living members of the HUF at the given residential address, the notice under section 148 was not effectively served. The Tribunal noted that the notice was served at the address on record and that the appellant did not update any alternative address for communication. As per Rule 127 of the Income Tax Rule, the notice was considered validly served by affixture. The Tribunal upheld the validity of the notice served by the Assessing Officer, rejecting the appellant's contention regarding improper service.

Validity of Additions Made by the Assessing Officer:
The Assessing Officer made additions to the total income of the assessee on account of unexplained investments and cash deposits. The appellant challenged these additions as unjustified. The Tribunal observed that the issues regarding the merit of the additions and the time limit for issuing notice under section 148 could not be addressed due to non-compliance by the assessee, who resided abroad. In the interest of justice, the Tribunal decided to set aside the additions made by the Assessing Officer and directed a de novo assessment after verification and granting reasonable opportunities to the assessee. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for compliance during assessment proceedings.

Compliance During Assessment Proceedings:
The appellant failed to comply with the notices issued during the assessment proceedings, leading to an ex-parte assessment under section 144 r.w.s. 147 of the Income Tax Act. The Tribunal highlighted the importance of compliance and noted that the failure to respond to the notices resulted in the assessment being conducted ex-parte. The Tribunal stressed the necessity of actively participating in assessment proceedings to avoid adverse consequences.

Appeal Before the CIT(A):
The assessee filed an appeal before the ld. CIT(A), who dismissed the appeal. Subsequently, the appellant approached the Tribunal challenging various aspects of the assessment order. The Tribunal carefully considered the contentions raised by both parties and made detailed observations on the issues of notice service, validity of additions, and compliance during the assessment process. Ultimately, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for proper verification and compliance in assessment proceedings.

This detailed analysis of the judgment addresses the key issues involved in the case, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.

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