2022 (9) TMI 83 - AT - Income Tax

Validity of reopening of assessment - re-assessment being made without disposing of the objections raised by assessee - HELD THAT - AO in assessment order has clearly mentioned that the copy of reasons recorded for reopening the case was supplied to the assessee and objections filed by it was disposed of by rejecting the same. CIT(A) has also given a finding that the information was received by AO from the Investigation Wing of the Department that the assessee was a beneficiary of taking accommodation entries in the garb of share application money from entry providers and thus on the basis of specific information received by AO from Investigation Unit AO had formed belief of escapement of income and thus reopening the re-assessment proceedings was justified. He accordingly upheld the validity of the re-assessment proceedings. As far as, the addition on the merit of Section 68 is concerned, we find that CIT(A) after considering the various case laws cited in the order and after relying on those case laws and facts of the case has upheld the addition made by AO. Before us, assessee has not placed any material on record to point out any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the Grounds of assessee are dismissed.

Summary

Issues:
1. Validity of reopening action under section 148
2. Expansion of proceedings beyond reasons recorded
3. Application of mind by Assessing Officer
4. Addition of unexplained share capital under section 68
5. Sustaining additions based on investigation report
6. Dismissal of appeal due to non-appearance of assessee

Validity of reopening action under section 148:
The appeal challenged the reopening action under section 148, alleging a violation of mandatory jurisdictional conditions. The CIT(A) upheld the reopening based on specific information from the Investigation Wing, justifying the belief of income escapement. The objections raised by the assessee were disposed of, and the CIT(A) found the re-assessment proceedings valid.

Expansion of proceedings beyond reasons recorded:
The appeal contended that the Assessing Officer expanded the proceedings beyond the initial amount mentioned in the reasons recorded. The CIT(A) upheld the addition of unexplained share capital under section 68 to a higher amount, citing previous years' transactions. The appeal argued against the expansion of proceedings to unconnected issues.

Application of mind by Assessing Officer:
The appeal raised concerns about the Assessing Officer's lack of application of mind, expanding proceedings without tangible material. The CIT(A) sustained the additions, noting the absence of evidence to challenge the findings. The appeal emphasized the need for a thorough examination of the investigation report and submitted evidence.

Addition of unexplained share capital under section 68:
The appeal contested the addition of unexplained share capital, highlighting discrepancies in the amount added and previous year transactions. The CIT(A) upheld the addition based on case laws and facts of the case, finding no merit in the appeal's arguments.

Sustaining additions based on investigation report:
The appeal objected to sustaining additions based on the investigation report without proper examination or analysis for relevance to the case. The CIT(A) dismissed the appeal due to the lack of material to challenge the findings, emphasizing the importance of supporting claims with documentary evidence.

Dismissal of appeal due to non-appearance of assessee:
The Tribunal noted the repeated non-appearance of the assessee during various hearing dates, indicating a negligent approach. Despite multiple opportunities, the assessee failed to cooperate or provide documentary evidence. Consequently, the Tribunal dismissed the appeal on merits, as the assessee did not actively pursue the case.

This comprehensive analysis covers the key issues raised in the appeal and the decisions made by the CIT(A) and the Tribunal, ultimately leading to the dismissal of the assessee's appeal.