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2015 (8) TMI 224 - ITAT DELHI

2015 (8) TMI 224 - ITAT DELHI - TMI - Reopening of assessment - validity of reassessment - notice u/s 148 was not issued/served upon the assessee within the statutory period of limitation as per assessee - Held that:- On careful consideration of the facts in the light of submission of the appellant, it is evident that the ld. AO had sent the notice u/s 148 dated 18.3.2011 at the previous address of the appellant, which was changed 6 years ago by the appellant. Necessary information was specifica .....

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otice sent at wrong address was to return back. Strangely the AO has also acknowledged these facts in the impugned order. Thus if the notice dated 18.3.2011 had returned before 31.3.2011, why the AO not applied mind in the matter to find out the correct address, by looking at data base of his assesses. The argument that it was the appellant, who had at some point of time given this address, is of no relevance, as the AO was in possession of the new address, which was duly informed by the appella .....

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Addition u/s 68 - CIT(A) deleted the addition - Held that:- The appellant had furnished all relevant information to substantiate the identity, genuineness and creditworthiness of the share applicants by filing conformation, their PAN/ITR Details, copy of bank statements, ROC documents for allotment of shares. Appellant had duly discharged the onus and it was the responsibility of the AO to have made necessary verification in respect of the evidences furnished by the Appellant. Since the l .....

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njustified. See CIT vs. Lovely Exports P. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided in favour of assessee. - I.T.A .No.-3548/Del/2013 - Dated:- 31-7-2015 - SMT DIVA SINGH AND SH. N. K. SAINI, JJ. For The Appellant : Sh. T. Vasanthan, Sr. DR For The Respondent : Sh. S. K. Saraf, CA ORDER PER DIVA SINGH, JM The present appeal has been filed by the Revenue assailing the correctness of the order dated 25/3/2013 of CIT(A), XV, New Delhi pertaining to 2004-05 assessment year on the fo .....

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ion received from Investigation Wing regarding accommodation entry providers. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the re-assessment order as bad in law on the basis that the AO has issued the notice u/s 148 at old address, but ignored fact that the notice was served validly. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the re-assessment order as bad in law despite the fact that the AO has passed the spea .....

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creditors. 5. The appellant craves to add, alter, amend, modify add or forego any ground of appeal at any time before or during the hearing of this appeal. 2. The relevant facts of the case as emanating from the assessment order dated 30th December 2011 u/s 143(3)/147 of the Income Tax Act 1961 are that the assessee declared an income of ₹ 14,140/- by way of its return on 1/11/2004. The said return was processed u/s 143(1). The assessee s case was reopened u/s 147/148 based on the informat .....

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ress mentioned in the ITR (Income Tax Return). Since in response to the same no reply was received therefore, notice u/s 142(1) etc was sent dated 08/08/2011 to the assessee requiring the assessee to attend the assessing officer office on 18/8/2011. 2.2 On the said date the assessee was represented through its counsel and requested for copy of notice u/s 148. The said oral request recorded in the assessment order was followed up by letter dated 29/8/2011 received by speed post requesting the Ass .....

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Investigation, New Delhi) were communicated to the assessee:- Value of Entry taken Date of entry From whom taken Instrument No. ₹ 4,00,000 27/9/2003 M/s Saurabh Petrochem (P) Ltd. (A/c NO. 3381, Jailaxmi Coop. Bank, Fatehpuri, Delhi) 268111 3,00,000 27/9/2003 M/s Profan Finance & Investments (A/c No. 3355, Jailaxmi Coop. Bank, Fatehpuri, Delhi) 376237 5,00,000 6/11/2003 M/s Great Master Voice (India ) Pvt. Ltd.(A/c No. 3547, Jailaxmi Coop, Bank, Fatehpuri, Delhi) 402559 5,00,000 6/11/2 .....

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ered with the remark no such firm . However, letter dated 1/12/2011 was received from the assessee on 5/12/2011 again raising these objections. Accordingly, notice u/s 142(1) dated 7/12/2011 was again forwarded to the assessee along with enclosures. In responses thereto, the assessee attended the proceedings on 14/12/2011 and objected to the reopening on the grounds that the notice u/s 148 was not issued/served upon the assessee within the statutory period of limitation. The assessee further on .....

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as the notice u/s 142 (1), dated 28/11/2011 issued at its Nehru Place address received back undelivered with remark No such firm . 3. On merits the assessing officer was the view that nothing has been placed on record to show why a person is investing its money in assessee company having meager amount of income. It was also noticed that it could not be said whether in subsequent years any dividends were earned or not. Thus where no dividends are earned it was questioned why would anyone invest .....

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e fact that the alleged investors were found to be declaring meager income in their tax returns were considered questionable. Accordingly in view of these facts addition of the said amount was made. 4. The said action was assailed in appeal before the CIT(A) on various grounds on merit as well as on the jurisdiction issue including the following three grounds :- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the re-assessment order as bad in law despite th .....

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d in quashing the re-assessment order as bad in law on the basis that the AO has issued the notice u/s 148 at old address, but ignored the fact that the notice was served validly. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the re-assessment order as bad in law despite the fact that the AO has passed the speaking assessment order. 5. The facts of the case are found summed up by the CIT(A) in Para 4 of his order and are reproduced hereunder:- 4. Brief fa .....

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ed 8/8/2011 was issued at 1004A, Chiranjiv Tower, Nehru Place, New Delhi-19, the returned address of the appellant which was acknowledged by the appellant. The appellant objected to Assumption of jurisdiction u/s 148 and requested for dropping of proceedings u/s 148 yet furnished required documents/information, though under protest. The Ld. AO passed the Re-assessment order u/s 143 (3)/147 on 30/12/2011, wherein addition of ₹ 32,00,000/- was made on account of unexplained cash credit u/s 4 .....

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self was issued at wrong address 110 D Kamla Nagar, Delhi , and hence was claimed to be invalid. It was also pointed out that the notice was void ab initio on the ground that no Assessment Year has been mentioned thereon. 6.1 On the basis of the same it was pleaded that notice was never served upon the assessee within the prescribed period. It was submitted that the address at Kamla Nagar was changed by the assessee company way back in 2005 i.e. more than 6 years prior to the issuance of notice .....

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hapter 6 of the manual of office procedure Volume II, issued by the Central Board of Direct Taxes which explain the importance of issuance and service of notices which pointed out the following requirements to be met. 1.2 Any order passed by an income tax authority can be declared null and void if there was no valid service of the relevant statutory notice. Hence it is imperative to ensure the following: (i) Timely issue of the correct notice in the prescribed format (ii) Timely and valid servic .....

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ment year correctly mentioned? (viii)Is the person addressed given a reasonable time to respond? (ix)Are the date, time and venue of hearing given? (x)Is the notice signed and seal affixed? 3. Service of notice 3.1 As per the provisions of section 282 a notice may be served either by post or as if it were a court summons under the Civil Procedure Code. 4. Service by post 4.1 The procedure for service by post is given in section 27 of the General Clauses Act. Requirements for valid service by pos .....

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es and pleadings it was submitted that the assessee had informed that the correct address of the assessee is 1004A , Chiranjiv Tower, Nehru Place, New Delhi the said address had been updated in the PAN Date Base and by the following documents change of address was demonstrated., it was submitted by the following documents:- S. No Particulars. 1 Copy of Form 18 and Challan of ROC dt 21/6/2005 2 Copy of ITR (Form 1) AY 2005-06 3 Copy of Form 18 and Challan of ROC dt 16/8/2007 4 Copy of PAN applica .....

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hat where the fact that the notice had been sent to the wrong address is even coming out from the assessment order itself as the assessing officer himself conceded that notice u/s 148 had been issued at the address mentioned in the Income Tax Return for 2004-05 assessment year. Thus, the observation of the AO that no reply was received in response thereto again affirms that notice was never served upon the assessee as having been sent admittedly to a wrong address the occasion to respond does no .....

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o the requirements of Section 148, which need to be met before making the reassessment it was submitted the AO as per the following decisions is required to serve upon the appellant the notice in the prescribed form and manner which evidently was not the reassessment was claimed to be bad in law: - CIT VS. Eshan Holding Pvt. Ltd. (ITA No. 1171/2008) R. K. Upadhyaya Vs. Shanabhai P. Patel 1987 AIR 1378 S(SC) CIT VS. Rajesh Kumar Sharma ITA 1547/2006 (Delhi) (13 Aug 2007) ACIT and Anr Vs. Hotel Bl .....

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is reproduced hereunder for ready reference): - (a) Share application form received from the Share Applicants containing the Complete details of applicants which includes, Name of the applicants, Address, PAN, No. of Shares applied, Mode of Payment of Share Application Money, details of Bank of Share Holders, Branch, Cheque No, Date and Occupation of Applicants. (b) Confirmation/Affidavit from the Share Applicants containing the complete details of amount invested, Cheque number, date, Bank par .....

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opy of Bank Statement of Appellant for A.Y 2005-06 during which 3 Share Applicants were refunded their Share Application money of ₹ 15,00,000/-. (j) Copy of Confirmation of 3 Share Applicants to whom shares were not allotted and who were refunded their Share Application money during the A.Y 2005-06. 8. These documents it was stated were again filed before the CIT(A). Attention was invited to the observations made by the Assessing Officer at Para 3 page 4 which it was stated demonstrates th .....

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d company as has been written about above by the AO. 2. Out of ₹ 32,00,000/-of share application received shares of ₹ 17,00,000/- have been allotted to four applicants and ₹ 15,00,000/- were returned to three applicants in the very next assessment year 2005- 06 by account payee cheques. The fact though already on record was completely ignored by the AO for making such illegal addition. 3. Even the income returned by the company after A.Y 2003-04 have been quoted for alleging th .....

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ss stood established. In view thereof relying upon various decisions it was pleaded that even on merit, the addition has been wrongly made. 10. Considering these facts the CIT(A) quashed the proceedings vide paras 6 to 6.4 and thereafter proceedings to consider the issue on merit and taking the evidences into consideration even deleted the additions on merit. 11. Aggrieved by this, the Revenue is in appeal before the Tribunal. 12. The ld. Sr. DR referring to the record stated that the notice was .....

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sent to the return indicated in the ITR of the assessee is sufficient compliance. On merit also it was submitted that the nature of evidence relied is not sufficient proof as mere movements of funds through banking channels cannot make the transactions legitimate. 13. The ld. AR on the other hand carried us through the documents filed in the Paper Book running into 156 pages connecting these with the detailed arguments advanced before the CIT(A) and recorded in the said order reiterated the same .....

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for updating the database of the department if the tax officials themselves do not consider it necessary to consult it. Had the assessee not updated the address it was submitted that the assessee may have been faulted for not keeping the department informed and as the last known address on record the tax authorities may have had a case. In the facts of the present case the impugned order was justified on facts. Even on merits it was argued no infirmity has been pointed out by the Sr. DR the gen .....

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ed the facts of the case in the light of the submission made by the appellant in the light of the applicable law. Accordingly, my decision on various grounds of appeal is as under: 6.2 Vide Grounds no. 1 to 9 of the appeal, the appellant has challenged the reassessment proceedings on legal grounds. I find that for the purpose of initiating the proceedings for reassessment the notice u/s 148 was to be issued on or before 31.3.2011. On careful consideration of the facts in the light of submission .....

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ut whether the appellant continues to be at the same address at which it had filed the return 5 years ago. Neither did he check the address from the current return nor from PAN data base. It is thus evident that the notice sent at wrong address was to return back. Strangely the AO has also acknowledged these facts in the impugned order. I fail to understand if the notice dated 18.3.2011 had returned before 31.3.2011, why the AO not applied mind in the matter to find out the correct address, by l .....

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6.3 Further, on perusal of the copy of the notice I find that the same shows that the notice u/s 148 is silent about the assessment year for which the proceedings were to be reopened. In view of the above, I hold the notice u/s 148 as invalid. 6.4 In view of the above the impugned order resulting from the proceedings which have been held by me as bad in law, is being quashed. 6.5 Regarding the merit of addition u/s 68 raised by Ground No. 10 and 11, I find that the appellant had furnished all r .....

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the evidences furnished by the Appellant in support of the genuineness, credit worthiness of the cash credits. It appears that the AO had decided that by repeating the template of assessment orders in similar cases in which a few pages are devoted to academic discussion about what constitutes an accommodation entry, etc. and by making certain general remarks such as how can someone invest in a company whose returned income is low, etc. his statutory duty as the AO was over and, therefore, he ju .....

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