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2023 (2) TMI 1054 - AT - Income TaxUnexplained cash credit - onus to prove - entire assessment on the assessee is due to a financial fraud by using the assessee's name where the assessee is totally unaware and uninvolved - HELD THAT - The onus is on the the assessee to substantiate the transactions which were undertaken by the assessee during previous year relevant to the impugned assessment year, and any failure on the part of the assessee will have its own consequences as provided under the 1961 Act. The assessee has filed a copy of online FIR as well legal notice , but this is not sufficient because if serious prejudice is caused to the assesee as claimed by her because of alleged fraudulent opening of bank account in her name by M/s Oven Commerce Private Limited , then she should have taken further steps to ensure that the Chargesheet are filed in the Court of law against culprits/accused and they are brought to justice, but merely filing FIR, legal notice or filing an affidavit at a very belated stage suffering from delay and latches will not be sufficient to discharge her onus, as the amount stood credited in her bank account , and she has to explain satisfactorily sources of credit in the said account. Thus, in our considered view, the assessee has failed to discharge her onus and the additions were rightly made by the AO and confirmed by ld. CIT(A), and we hold that the assessee fails to satisfactorily explain the sources of credit in her bank account maintained with ICICI Bank, Sigra , Varanasi as is required under the 1961 Act, and thus , we dismiss the appeal filed by the assesse on the merits of the addition . We order accordingly. Best judgment Assessment u/s 144 read with section 147 - non issuance of notice u/s 143(2) - AO duly complied with the mandate of provisions of Section 144 which deals with a different class of assessment viz. best judgment assessment. Had the assessee filed return of income in pursuance to notice dated 29.03.2016 issued by AO u/s 148, or even in compliance of terms of issue of notice u/s 142(1)dated 02.12.2016 , then Section 143(2) would have got triggered and then the AO would have been obligated to frame assessment u/s 143(3) read with Section 147, and not best judgment assessment u/s 144 read with Section 147 If the assessee did not file return of income in response to notice u/s 148 , then the AO will be competent to frame best judgment assessment and no notice u/s 143(2) would have been required. The second situation is clause (b) to Section 144(1), where there was failure on the part of the assessee to comply with the terms of notice issued by the AO u/s 142(1), and hence the AO shall be competent to frame best judgment assessment u/s 144 and no notice u/s 143(2) shall be required. We are seized presently to the situation which falls under clause (a) and (b) of Section 144(1). The third situation envisaged u/s 144(1) clause (c) is the situation where the assessee having filed return of income, fails to comply with all the terms of a notice issued by AO u/s 143(2), then again Section 144 would get triggered and the AO shall be competent to frame best judgment assessment and no further notice u/s 143(2) shall be required to be issued . Had the assessee filed return of income complying with the terms of notice u/s 142(1) or filed return of income in pursuance to notice issued by the AO u/s 148 , then AO would have been under an obligation to issue notice u/s 143(2) and assessments would have to be completed u/s 143(3) read with Section 147, but since there was failure of the assessee to comply with the terms of notice dated 02.12.2016 issued u/s 142(1) nor return of income was filed in pursuance to notice issued by the AO u/s 148 , as the return of income was never filed during reassessment proceedings, then in that case, we hold that there was no requirement of issuing any notice u/s 143(2) by the AO , and assessment was rightly framed by AO u/s 144 read with Section 147, which was done after complying with the conditions as are stipulated u/s 142(1) r.w.s. 144 r.w.s. 147, and hence we uphold the reassessment order dated 29.12.2016 passed by AO for assessment year 2009-10 , as valid and legal. Section 144 engrains principle of natural justice , before making best judgment assessment, which stood duly complied with by the AO in the instant case before us. Once the language of the statute is plain, simple, clear and unambiguous, full effect is to be given, and no part could be held to be surplus, as Parliament was fully aware while enacting law. Thus, we reject this contention of the assessee that reassessment is bad in law owing to non issuance of notice u/s 143(2). Decided against assessee.
Issues Involved:
1. Validity of the dismissal of the appeal by the CIT(A) without considering its merits. 2. Allegation of financial fraud involving the assessee's name. 3. Assessment framed without providing proper opportunity of being heard. 4. Validity of the assessment procedure under Sections 147 and 148 without proper service of notice. 5. Validity of the assessment procedure under Sections 147 and 148 without proper service of notice under Section 143(2). Issue-wise Detailed Analysis: 1. Validity of the dismissal of the appeal by the CIT(A) without considering its merits: The assessee contended that the CIT(A) dismissed the appeal without appreciating or considering its merits. The tribunal noted that the CIT(A) forwarded the assessee's submissions to the AO for comments and considered the remand report and the assessee's response before making a decision. The CIT(A) observed that the AO issued a notice under Section 148, which was duly served on the assessee, and there was no compliance from the assessee's side. The tribunal upheld the CIT(A)'s decision, indicating that the merits were indeed considered. 2. Allegation of financial fraud involving the assessee's name: The assessee claimed that the entire assessment was due to a financial fraud where her name was used without her knowledge. She alleged that M/s Oven Commerce Pvt. Ltd. fraudulently used her documents to open a bank account and conduct transactions. The CIT(A) and the tribunal noted that the bank account in question was opened with proper KYC procedures, and the transactions were consistent over two years. The tribunal found the assessee's claim unsubstantiated as she failed to produce concrete evidence to support her allegations of fraud. 3. Assessment framed without providing proper opportunity of being heard: The assessee argued that the assessment was framed without giving her a proper opportunity to be heard. The tribunal observed that the AO issued multiple notices under Sections 148 and 142(1), and a show-cause notice under Section 144, all of which were either not responded to or returned unserved. The tribunal concluded that the AO complied with the necessary procedural requirements, and the assessee was given ample opportunity to respond. 4. Validity of the assessment procedure under Sections 147 and 148 without proper service of notice: The assessee contended that the assessment was invalid due to improper service of notice under Section 148. The tribunal noted that the AO issued the notice under Section 148, which was duly served on the assessee's address. The tribunal found that the AO followed the prescribed procedures, including obtaining necessary approvals and recording reasons for reopening the assessment. The tribunal upheld the validity of the assessment procedure under Sections 147 and 148. 5. Validity of the assessment procedure under Sections 147 and 148 without proper service of notice under Section 143(2): The assessee argued that the assessment was invalid as no notice under Section 143(2) was issued. The tribunal clarified that since the assessee did not file a return of income in response to the notice under Section 148, the requirement to issue a notice under Section 143(2) did not arise. The tribunal upheld the AO's action of framing the assessment under Section 144, which is permissible in cases where the assessee fails to file a return in response to a notice under Section 148. Conclusion: The tribunal dismissed the appeals for both assessment years 2009-10 and 2010-11, upholding the validity of the assessments made by the AO. It found that the AO and CIT(A) followed the necessary legal procedures, and the assessee's claims of fraud and procedural lapses were unsubstantiated. The tribunal concluded that the assessments were validly framed under the provisions of the Income-tax Act, 1961.
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