2017 (3) TMI 569 - AT - Income Tax

Reopening of assessment - non-service of notice - amount received as a result of sale proceeds of investments in shares of different companies - Held that - Assessing Officer had issued the notice to the appellant at the address which was last known to him. The return for the A.Y. 2003-04 was filed at the address C-107, ABC Complex, 20 Veer Savarkar Block, Shakarpur Delhi 110092, but after sometime the return for A.Y. 2009-10 was filed at another address. Therefore, the AO rightly issued notice at the address lastly given by the assessee. During the course of hearing, the assessee was specifically asked for submission of correct address as per database of the IT department. In this regard the AR of the appellant submitted on the next day of hearing the PAN Database where the address is written as Blossom Advertisers Pvt. Ltd. Gali No. 7, Balbir Nagar, Delhi. It is clear from the above that the Assessing Officer was justified to issue the notice at the given address, and hence, the notice shall be deemed to be served on the assessee. Therefore, the contention of assessee regarding invalidity of assessment on the basis of non-service of notice u/s. 148 is rejected. AR of the assessee had filed the details of investments held as on 31.03.2002 with the submission that money in question was received as a result of sale proceeds of investment, which results that an asset held by the appellant has been converted into money at cost and hence, there will be no effect in the balance sheet and there cannot be any accommodation entry regarding sale of an asset which was already held by the assessee. It was also the contention of the assessee that once the prior investments are sold and payments realized by cheques, how such sale could be doubted without doubting the purchase of assets already held by the assessee. The ld. Authorities below have failed to examine this aspect of the case nor have given any finding on the same, particularly when the assessee had submitted the details of prior investments held by it and documentary evidences relating to their sale before the authorities below. In presence of these facts, we deem it expedient in the interest of justice to restore the matter to the file of Assessing Officer for passing the assessment de novo after verifying the alleged sale of shares with reference to their purchase. The AO shall examine the holding of investments (shares), date and cost of purchase, mode of acquisition alongwith their distinctive numbers, position of balance sheet after their sale etc. - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Validity of the order of the authorities.
2. Invocation of the provisions of section 148.
3. Invocation of the provisions of section 69A and the resultant addition.
4. Addition of ?21,35,625.
5. Non-adherence to various decisions of jurisdictional High Court and ITAT.

Issue-wise Detailed Analysis:

1. Validity of the Order of the Authorities:
The appellant contended that the order of the authorities was "bad in law and against facts of the case." The primary argument centered around the non-service of notice under section 148, which the appellant claimed was never received. The Assessing Officer (AO) issued the notice to an old address, which was returned undelivered. The AO then served the notice by affixture. The Tribunal found that the AO issued the notice to the last known address as per the PAN database, thus deeming the notice as served. Therefore, the contention regarding the invalidity of the assessment based on non-service of notice was rejected.

2. Invocation of the Provisions of Section 148:
The appellant argued that the notice under section 148 was "bad in law, without jurisdiction and is void." The appellant claimed that the notice was never served, and even if it was, it was sent to an incorrect address. The Tribunal noted that the AO had sent the notice to the address last recorded in the PAN database, thereby justifying the service of notice. The Tribunal rejected the appellant's argument that the reopening of the case was solely based on information from the Investigation Wing without the AO applying his mind.

3. Invocation of the Provisions of Section 69A and the Resultant Addition:
The appellant challenged the addition made under section 69A, arguing that the amounts received were from the sale of investments, not unexplained money. The appellant provided evidence of the sale of shares, including sale bills, confirmations, and affidavits from the purchasers. The Tribunal found that the authorities below did not adequately examine the appellant's evidence regarding the sale of shares. Therefore, the Tribunal deemed it necessary to remand the matter back to the AO for a fresh assessment, requiring verification of the sale and purchase of shares.

4. Addition of ?21,35,625:
The appellant argued that the addition of ?21,35,625 was unwarranted as the amounts were received from the sale of investments. The Tribunal noted that the authorities below did not properly examine the appellant's claims and documentary evidence. Consequently, the Tribunal directed the AO to reassess the matter, verifying the details of the investments and their sale. If the AO finds that the amounts were indeed received from the sale of shares, the appellant's version should be accepted.

5. Non-adherence to Various Decisions of Jurisdictional High Court and ITAT:
The appellant contended that the authorities below did not follow the decisions of the jurisdictional High Court and ITAT. The Tribunal acknowledged the appellant's argument and emphasized the need for the AO to reassess the case in light of the relevant judicial precedents. The Tribunal directed the AO to consider the appellant's evidence and the applicable legal principles while making a fresh assessment.

Conclusion:
The Tribunal found merit in the appellant's arguments regarding the need for a fresh assessment. The Tribunal remanded the matter back to the AO for a de novo assessment, requiring verification of the sale and purchase of shares. The AO was directed to examine the holding of investments, the date and cost of purchase, the mode of acquisition, and the position of the balance sheet after the sale. The appeal was allowed for statistical purposes, and the AO was instructed to provide the appellant with a reasonable opportunity of being heard.

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