2023 (12) TMI 409 - AT - Income Tax

Validity of reopening of assessment u/s 147 - as alleged no compliance of mandatory requirement of law to issue notice u/s 143(2) against return of income filed makes the impugned Assessment Order null and void - addition u/s 68 - HELD THAT - It is to be noted that the A.O. had already issued notice u/s 143(2) of the Act to the assessee on 12/09/2017 which was issued to the assessee after the lapse of time limit given to the assessee to file the return of income in response to notice issued u/s 148 of the Act on 30/03/2017. Now, the assessee wants to do the things indirectly which cannot be done directly. In our opinion, there is no credential to the letter filed by the assessee dated 02/11/2017 requesting the A.O. to treat the original return filed on 16/03/2011 as return field in response to notice u/s 148 of the Act. The law assists the person who is vigilant and not to the person who sleep over the matter. It is a well settled principle that a person having done wrong cannot take advantage of his own wrong and plead for bar of any law to frustrate the lawful trial by a Competent Court. The principle of Latin Maxim Nullus Commodum Capera Potest De Injuria Sua Propria applies to the assessee. Thus, the notice issued u/s 143(2) of the Act issued on 12/09/2017 is a valid notice given to the assessee so as to frame the assessment u/s 143(3) read with Section 147 of the Act. Decided against assessee. Application of independent mind on the material or not? - Relevant assessment year as escaped assessment. In the present case, the A.O. has cause or justification to know that the income had escaped assessment. After going through the facts and circumstances of the case, and the reasons recorded by the A.O., found that the income had been escaped from the assessment and at the stage of reopening, the final outcome of the proceedings is irrelevant. At the initiation stage, what is required is reason to believe but not the established facts of escapement of income. At the stage of issuance of notice u/s 148 of the Act, the only question is whether there was relevant materials on record on which reasonable person could frame a requisite belief whether the material conclusively proved the escapement or not is the concerned at that stage. Because at that point of time the formation of belief by the A.O. is within the realm of subjective satisfaction. Being so, we do not find merit in the Ground No. 3 of the assessee, accordingly, Ground No. 3 of the assessee is dismissed. Sanction u/s 151 of IT Act as provided with the copy of the reason recorded shows mechanical satisfaction by sanctioning authority - There is no application for admission of additional grounds. Without prejudice to the same, u/s 151(1) of the Act no notice u/s 148 of the Act shall be issued by the A.O. after expiry of four years from the end of the relevant Assessment Year unless the PCIT or Chief Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons recorded by the A.O, that it is fit case for issuance of such notice. No infirmity in the order of the authority prescribed u/s 151 (1) of the Act. Thus, the Ground No. 4 is dismissed. Addition u/s 68 - Assessee had failed to prove the three conditions wiz - (i) The identity of the creditor, (ii) The capacity such creditor to additions the amount (iii) The genuineness of the transaction, in our considered opinion, the CIT(A) committed no error in confirming the addition made by the A.O. u/s 68. Assessee appeal dismissed.

Summary

Issues Involved:
1. Validity of assessment under Section 147/143(3) without notice under Section 143(2).
2. Issuance of notice under Section 143(2) before filing return in response to notice under Section 148.
3. Reassessment proceedings initiated without independent application of mind by the AO.
4. Validity of sanction under Section 151 of the IT Act.
5. Jurisdictional validity of the assessment.
6. Addition under Section 68 regarding realization from sale of investments.
7. Addition under Section 68 regarding share application money and unexplained cash credits.

Summary:

Issue 1 & 2: Validity of Assessment without Notice under Section 143(2)
The Assessee argued that the assessment under Section 147/143(3) was invalid as no notice under Section 143(2) was issued against the return filed on 02/11/2017 in response to notice under Section 148. The Tribunal found that the notice under Section 143(2) issued on 12/09/2017 was valid, as the Assessee failed to file the return within the stipulated time. The Tribunal dismissed Grounds 1 & 2, stating that the Assessee cannot take advantage of its own wrong.

Issue 3: Reassessment Proceedings without Independent Application of Mind
The Assessee contended that the reassessment proceedings were initiated without the AO's independent application of mind. The Tribunal held that only a prima facie opinion of income escapement is required for reopening the assessment, and the AO had sufficient material to form such an opinion. Ground 3 was dismissed.

Issue 4: Validity of Sanction under Section 151
The Assessee argued that the sanction under Section 151 showed mechanical satisfaction by the sanctioning authority. The Tribunal found no infirmity in the sanction process, as the required satisfaction was duly recorded. Ground 4 was dismissed.

Issue 5: Jurisdictional Validity of Assessment
The Tribunal noted that the Assessee failed to establish how the reopening of the assessment violated Section 147 read with Section 148. Ground 5 was dismissed.

Issue 6 & 7: Addition under Section 68
The Assessee challenged the addition of Rs. 7,54,01,000/- and Rs. 8,18,01,000/- under Section 68, arguing that the amounts were from the sale of investments and share application money, respectively. The Tribunal found that the Assessee failed to prove the identity, capacity, and genuineness of the creditors and transactions. The Tribunal upheld the addition, noting that the Assessee did not provide sufficient evidence to support its claims. Grounds 6 & 7 were dismissed.

Conclusion:
The appeal of the Assessee was dismissed in its entirety. The Tribunal upheld the validity of the assessment and the additions made under Section 68, finding no merit in the Assessee's grounds.