Affixture service and Rule 46A evidence control sustain reassessment and unexplained credit addition

Service of notice under section 148 by affixture at the assessee's last known address was treated as valid where the record supported an inference of avoidance of service, so the reassessment was sustained. The addition for unexplained cash credit or investment was also upheld because the assessee did not comply with statutory notices, the assessment was completed ex parte, and the creditor's confirmation was produced before the first appellate authority without compliance with Rule 46A. In the absence of acceptable evidence explaining the source of the credited amount, the burden of proof remained undischarged and the addition stood.

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Issues: (i) whether service of notice under section 148 by affixture was valid and whether the reassessment proceedings were sustainable; (ii) whether the addition of Rs. 3,30,000 as unexplained cash credit/investment could be sustained when additional evidence was sought to be produced without compliance with Rule 46A.

Issue (i): whether service of notice under section 148 by affixture was valid and whether the reassessment proceedings were sustainable.

Analysis: The notice server had affixed the notice at the last known address with the endorsement that the premises were vacant and the assessee was not residing there. The surrounding record, including service of notice under section 142(1) at the same address later, supported the inference that the assessee was avoiding service. Relying on the presumption of effective service where notice is refused or not accepted, the Tribunal held that affixture in the facts of the case amounted to proper service.

Conclusion: The service of notice under section 148 was held to be valid and the reassessment proceedings were sustained.

Issue (ii): whether the addition of Rs. 3,30,000 as unexplained cash credit/investment could be sustained when additional evidence was sought to be produced without compliance with Rule 46A.

Analysis: The assessee did not comply with the statutory notices and the assessment was completed ex parte. The confirmation from the creditor was filed before the first appellate authority without an application for admission of additional evidence as required under Rule 46A, so it was rightly not admitted. In the absence of acceptable evidence explaining the source of the amount credited in the bank account, the onus to explain the nature and source of the sum remained undischarged.

Conclusion: The addition of Rs. 3,30,000 was upheld.

Final Conclusion: The appeal failed on both the validity of service of notice and the merits of the addition, leaving the assessment undisturbed.

Ratio Decidendi: Where notice is affixed at the last known address in circumstances showing avoidance of service, due service may be presumed, and an unexplained credit or investment remains taxable when the assessee fails to discharge the burden of proof and seeks to rely on additional evidence without complying with Rule 46A.

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