Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2008 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (4) TMI 736 - AT - Income TaxLegality of notice issued u/s 148 - Reopening of assessment - misrepresented the reasons recorded for initiating proceedings under s. 147 - Improper service of notice - legal contention of serving notice on his wife instead on himself - Jurisdiction of AO - Income from undisclosed sources or long-term capital gains - sale/purchase of shares - Bogus claim - Additions made in the absence of complete satisfactory documentary evidence - Charging of interest u/s 234A, 234B and 234C. Reopening of assessment by issuance of notice u/s 148 - Improper service of notice - Jurisdiction of AO - HELD THAT:- In my opinion, the ratio laid down by Full Bench in the case of Laxmi Narain Anand Prakash vs. CST [1980 (1) TMI 174 - ALLAHABAD HIGH COURT] is also applicable to the case in hand and thus the proceedings initiated u/s 148 are without service of proper notice and as such are illegal. The entire proceedings thus become void ab initio and are liable to be quashed. As a result, quash the proceedings being without jurisdiction and as a result of invalid service of notice. Therefore, the assessee succeeds on this limb of argument. Notice was served directly on assessee's wife without there being any effort which may be evident from any noting on the notice that any reasonable effort/attempt was made as required by law, before service of the notice to the assessee's wife. There is no evidence on record nor the wife of the assessee is legally authorised by the assessee to receive the notice. The learned CIT(A) has tried to justify the action of the AO by ignoring that the date on which it was served was the last day of limitation. So it is manifestly clear that the notice was improperly served on assessee's wife due to lack of time. Addition made by the AO in the absence of complete satisfactory documentary evidence - Income from undisclosed sources or long-term capital gains - HELD THAT:- In my considered opinion, the overwhelming evidences produced by the assessee go to prove that the assessee had purchased and sold 5,000 shares and had earned long-term capital gains as has been claimed and the same cannot be added as undisclosed income of the assessee. From the photocopy of these papers, enclosed in the paper book, it is conclusively proved that the assessee had actually purchased these shares through registered share broker and got them transferred in his name. After holding these shares for more than 12 months sold the same through M/s Maheshwari Sons who is a registered share broker of UP Stock Exchange Association Ltd. The purchase and sale rate on date of purchase are also proved from the quotations published in the newspaper as is evident from the copies enclosed. Therefore, it is proved that the sum is the sale consideration of the shares held. After deducting cost of ₹ 20,200 balance of ₹ 1,87,184 is the long-term capital gain which has arisen to the assessee. The entire evidences collected behind the back of the assessee cannot be considered as so sacrosanct as can counter the positive proof to disbelieve the assessee. Whatever has been stated in the evidences collected behind the back of the assessee is that "95 per cent of such business was done by M/s Maheshwari and Sons to give bogus entry". Still 5 per cent business done by them was genuine and why the assessee's case would not fall in that portion. The entire evidences produced by the assessee coupled with the fact that the said broker was not 100 per cent in bogus business, the claim of the assessee becomes plausible. Similar view was taken in the case of ITO vs. Rajiv Aggarwal [2004 (6) TMI 266 - ITAT DELHI]. Thus, in the totality of the observations coupled with the precedents relied, allow this ground and order to delete the entire addition. Charging of interest under ss. 234A, 234B and 234C - The charging of interest is mandatory but consequential relief is allowable. This ground is disposed of accordingly. Appeal of the assessee is partly allowed.
|