Court validates reassessment & notice, supports addition under Section 68 due to transaction issues. Appeal dismissed.

The court upheld the re-assessment proceedings under Section 147, deemed the notice under Section 143(2) as valid due to the assessee's cooperation, and justified the addition of Rs. 4,84,000 under Section 68 based on insufficient creditworthiness and genuineness of the transaction by the purchasers. As a result, the appeal was dismissed with no grounds for interference or substantial question of law identified.

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Issues:
1. Validity of re-assessment proceedings under Section 147
2. Absence of notice under Section 143(2)
3. Merits of addition of Rs. 4,84,000 under Section 68

Issue 1: Validity of re-assessment proceedings under Section 147:
The assessee challenged the re-assessment proceedings initiated under Section 147. The court noted that the AO had tangible material justifying the reassessment based on information from the Directorate of Investigation. The court referenced the case law CIT v. M/s Kelvinator of India Ltd to support the legality of the reassessment. The court concluded that the reasons to believe constituted tangible material, and thus rejected the challenge to the initiation of re-assessment proceedings.

Issue 2: Absence of notice under Section 143(2):
The assessee argued the absence of notice under Section 143(2) vitiated the proceedings. However, the court invoked Section 292BB, which deems notice to be valid if the assessee has cooperated in the inquiry or proceeding. As the assessee had cooperated in both assessment and reassessment proceedings, the court held that the notice was deemed to be valid. The court emphasized that the non-issuance of notice did not affect the assessment proceedings after due service of notice under Section 147.

Issue 3: Merits of addition of Rs. 4,84,000 under Section 68:
Regarding the addition of Rs. 4,84,000 under Section 68, the court referred to CIT v. Lovely Exports to establish the requirements for introducing Section 68. The court highlighted the need to establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. The court found that the purchasers did not respond to notices, had insubstantial means, and could not reasonably afford the investments. The court considered the transaction's genuineness as a factual finding against the assessee. Consequently, the court dismissed the appeal, finding no grounds for interference and no substantial question of law.

In conclusion, the court upheld the re-assessment proceedings, deemed the notice under Section 143(2) as valid, and found the addition under Section 68 justified based on the lack of creditworthiness and genuineness of the transaction by the purchasers. The appeal was dismissed accordingly.

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