2024 (10) TMI 341 - AT - Income Tax

Validity of appeal as memo in form 36 was not verified as required by Rule 47(1) of the Income Tax Rules, 1962 - Ex-parte assessment order passed without service of proper notice to the assessee and in the name of a different entity - Addition of bogus accommodation entries - no response on behalf of the assessee to the notice issued u/s 148 as well as section 142(1) the AO framed the assessment u/s 144 r.w. section 147 HELD THAT - The appeal u/s 253(1) to the Tribunal shall be made in form no.36 and the grounds of appeal shall be duly verified and appended thereto by the person specified in Rule 45(3) of Income Tax Rules 1962. Rule 45(3) prescribes that the form of appeal (Form No.35) shall be verified by the person who is authorized to verify the return of income u/s 140 of the Act as applicable to the assesse. Thus, form no. 35 shall be signed and verified by the person who is authorized to verify the return of income u/s 140 of the Act. Section 140 of Income Tax Act prescribes the person who is authorized/competent to verify the return of income and as per clause(c) of section 140 the Managing Director of a company is the person competent to verify the return of income of company and also memo of appeal in form 36 in view of section Rule 47(1) r.w. Rule 45(3) of the Income Tax Rules 1962. In case the managing director is not available to verify or there is no managing Director then by any Director of the company. In case in hand the form 36 is verified by the Authorized Representative (CA) of the assesse company and not by the Managing Director or Director of the assesse company. Form number 36 has not been verified by the person who is prescribed as per section 140 r.w. Rule 47(1) and Rule 45(3) of the Income Tax Rule 1962 and consequently the present appeal of the assesse is not valid appeal. Accordingly the appeal of the assessee is dismissed in limine being not a valid appeal. Appeal of the assessee is dismissed.

Summary

Issues:
Validity of ex-parte assessment order due to lack of proper notice and incorrect entity name, sustainability of addition on alleged bogus accommodation entries, verification of appeal memo in form 36.

Analysis:
1. The appeal was against an order by the Commissioner of Income Tax (Appeal) for A.Y. 2012-13. The assessee challenged the ex-parte assessment order, arguing it was invalid due to lack of proper notice and being in the name of a different entity. The AO reopened the assessment based on information from a search and seizure action, proposing an addition of Rs. 25,00,000 on share capital. The AO proceeded with assessment under section 144 due to no response from the assessee, which was upheld by the CIT(A).

2. Before the Tribunal, the AR argued on various points, including the validity of the assessment order being in the name of a different entity. The DR contended that it was a best judgment assessment due to lack of response from the assessee, who failed to provide evidence regarding the share capital from a tainted entity.

3. The Tribunal noted that the appeal memo in form 36 was not verified as required by Rule 47(1) of the Income Tax Rules, 1962. The form should be signed by the person authorized to verify the return of income under section 140, typically the Managing Director of a company. However, in this case, the form was verified by the Authorized Representative (CA) of the assessee company, not the Managing Director or Director. As per the rules, this rendered the appeal invalid, and it was dismissed. The assessee was given the option to file a fresh valid appeal within 30 days.

4. Therefore, the Tribunal dismissed the appeal of the assessee due to the lack of proper verification of the appeal memo in form 36, as required by the Income Tax Rules. The decision highlighted the importance of compliance with procedural requirements in tax appeals to maintain their validity and enforceability.