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2022 (12) TMI 1122 - AT - Income TaxValidity of Reopening of assessment u/s 147 - notice issued to a non-existing company - non intimation of name of the company has been struck off from RoC - HELD THAT - As the name of the company has been struck off from RoC on 05.04.2008 itself, the assessee officially did not communicate to the AO about striking off name of the company. Further, it was only when the notice u/s.148 of the Act, was served to the Director of the assessee company by Notice Server, the Director has written endorsement in the notice about striking of name of the company from the RoC. From the above, it is very clear that the assessee did not inform the AO as required under the law about striking off name of the company from the RoC and hence, we are of the considered view that case law referred to by the assessee has no application to facts of the present case and thus, we are of the opinion that there is no merit in the legal ground taken by the assessee on the issue of notice u/s.148 of the Act, and consequent assessment proceedings and hence, the ground taken by the assessee for all three assessment years is rejected. Approval of competent authority as required u/s.151(2) of the Act, before issue of re-assessment notice u/s.148 - HELD THAT - In this case, for the AY 2003-04, DR fairly agreed that instead of JCIT, the CIT-III, Chennai, has approved issue of notice u/s.148 - for the AY 2003-04, the CITIII has granted approval instead of the Addl. CIT/JCIT as prescribed under the law and thus, notice issued u/s.148 of the Act, on 30.03.2010 for the AY 2003-04, is bad in law and consequent assessment proceedings is null and void. As regards AYs 2004-05 2005-06, DR placed evidences to prove that the Addl.CIT, Range-V, Chennai, has granted approval for issue of notice and in our considered view said approval is in accordance with law as prescribed u/s.151(2) of the Act and thus, re-assessment notice issued u/s.148 of the Act, and consequent assessment proceedings are valid and thus, we reject the ground taken by the assessee for the AYs 2004-05 2005-06. To sum up, notice u/s.148 of the Act, and consequent re-assessment proceedings for the AY 2003-04 is quashed and notice issued u/s.148 of the Act, and consequent re-assessment proceedings for the AYs 2004-05 2005-06 are upheld. Additions towards consideration paid for purchase of land as unexplained investment in the hands of the assessee on the basis of survey conducted and consequent statement recorded from Mr.Chelladurai, who claims to be an real estate agent - We find that the AO has treated difference between consideration paid for purchase of land as per books of accounts of the assessee and as per statement of Mr.Chelladurai as unexplained investment in the hands of the assessee. The assessee claimed that entire land transaction has been owned up and also income arises out of land transaction has been offered by M/s.Wescare (India) Ltd. We find that if at all the claim of the assessee is correct, then, the question of making further additions in the hands of the assessee towards very same land and consequent compensation / gain does not arise. But, facts remain that whether M/s.Wescare (India) Ltd., has considered the transaction in their books of accounts and also offered to tax compensation / profit arise out of land transactions is not clear. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for both the assessment years to re-examine the claim of the assessee in light of agreement between the parties and also claim of the assessee that M/s.Wescare (India) Ltd., had offered the income in their hands. Hence, we set aside the issue for both the assessment years to the file of the AO and direct the AO to re-examine the claim in light of various averments made by the assessee and decide the issue in accordance with law.
Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act on a non-existing company. 2. Approval of competent authority under Section 151(2) of the Income Tax Act for issuing re-assessment notice. 3. Addition of unexplained investment under Section 69 of the Income Tax Act. 4. Levy of interest under Sections 234A and 234B of the Income Tax Act. Detailed Analysis: 1. Validity of Notice Issued Under Section 148 of the Income Tax Act on a Non-Existing Company: The assessee argued that the notice issued under Section 148 was invalid because it was served on a company that had been struck off from the Registrar of Companies (RoC). The Tribunal examined the legal position, referencing the Supreme Court's decisions in Pr.CIT v. Maruthi Suzuki India Ltd. and CIT, Jaipur v. M/s.Gopal Shri Scrips Pvt. Ltd. The Tribunal noted that the assessee did not inform the Assessing Officer (AO) about the company's dissolution. Consequently, the Tribunal held that the notice issued and the subsequent re-assessment proceedings were valid because the AO was not informed of the company's dissolution as required by law. Therefore, the ground taken by the assessee was rejected for all three assessment years. 2. Approval of Competent Authority Under Section 151(2) of the Income Tax Act for Issuing Re-Assessment Notice: The Tribunal found that for the Assessment Year (AY) 2003-04, the approval for issuing the notice under Section 148 was granted by the Commissioner of Income Tax (CIT)-III, Chennai, instead of the Joint Commissioner of Income Tax (JCIT) as required by Section 151(2). This rendered the notice and subsequent proceedings null and void for AY 2003-04. However, for AYs 2004-05 and 2005-06, the approval was correctly obtained from the Additional Commissioner of Income Tax (ACIT), making the notices and proceedings valid. Consequently, the Tribunal quashed the notice and re-assessment proceedings for AY 2003-04 but upheld them for AYs 2004-05 and 2005-06. 3. Addition of Unexplained Investment Under Section 69 of the Income Tax Act: The assessee contended that the addition of Rs. 17,99,346 as unexplained investment was incorrect because the income from the land transaction was already offered for taxation by M/s. Wescare (India) Ltd. The Tribunal noted that the AO made the addition based on a statement from a real estate agent and other evidence. However, the assessee claimed that the transaction and resultant income were accounted for by M/s. Wescare (India) Ltd. The Tribunal found that this claim needed further verification. Therefore, it set aside the issue to the AO for re-examination in light of the agreement between the parties and the financial statements of M/s. Wescare (India) Ltd. 4. Levy of Interest Under Sections 234A and 234B of the Income Tax Act: The assessee argued that there was no obligation to file a return or pay advance tax, and hence, the levy of interest under Sections 234A and 234B was unjustified. However, the Tribunal did not provide a detailed analysis or ruling on this issue in the judgment. Conclusion: The appeal for AY 2003-04 was allowed, quashing the notice and re-assessment proceedings. For AYs 2004-05 and 2005-06, the appeals were allowed for statistical purposes, with the issues regarding unexplained investment being remanded to the AO for further examination. The Tribunal upheld the validity of the re-assessment notices for these years. The order was pronounced on December 23, 2022, in Chennai.
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