2015 (8) TMI 332 - HC - Income Tax

Court Upholds Income Tax Assessment, Dismisses Appeal on Delay Condonation & Creditor Additions

The court allowed the application for condonation of delay in refiling the appeal. The assessment under Section 143(3) of the Income Tax Act, 1961 was ... Validity of assessment framed u/s 143(3) - whether the assessment ought to have been made under Section 144 and not under Section 143(3) also appellants were not served with the necessary documents - Held that:- Notices were issued and questionnaires were served under Sections 142(1) and 143(2) of the Act on 07.02.1998. Even thereafter, an opportunity was granted to collect the photocopies but the appellants did not avail of the same. Notices under Section 142(1) and 143(2) were again served on 11.03.1998 and the hearing of the case was adjourned. The appellants were informed that if they did not attend, the case would be decided in their absence. The respondents did contend that the appellants did not produce certain documents. In the circumstances, it may well have been open to the appellants to proceed on the basis of Section 144 in view of provisions of Section 144(1)(b). Under Section 144(1)(b), the Assessing Officer is entitled to make a best judgment assessment if the assessee fails to comply with all the terms of a notice issued under Section 142(1). We will assume, therefore, that the Assessing Officer could have done so. However, despite the same, the Assessing Officer completed the assessment under Section 143(3) on the basis of the information provided by the assessee. No infirmity in the action taken by the Assessing Officer. - Decided against assessee Issues:1. Condonation of delay in refiling the appeal.2. Validity of assessment under Section 143(3) of the Income Tax Act, 1961.3. Upholding of assessment order by CIT (Appeals) without independent findings.4. Addition made without fair opportunity of being heard.5. Addition made under Section 68 based on credits not in regular books of accounts.6. Justification of addition made under Section 68 based on individual creditor's peak credit.7. Addition made on suspicion without corroborative material.Analysis:Issue 1: Condonation of delay in refiling the appealThe application for condonation of delay of 18 days in refiling the appeal was allowed by the court.Issue 2: Validity of assessment under Section 143(3) of the Income Tax Act, 1961The appellants raised substantial questions of law regarding the validity of the assessment under Section 143(3) instead of Section 144. The court noted that the appellants were repeatedly given opportunities to access necessary documents, and the assessment order was based on information provided by the assessee. The court found no infirmity in the action taken by the Assessing Officer and dismissed the appeal.Issue 3: Upholding of assessment order by CIT (Appeals) without independent findingsThe appellants questioned the Tribunal's decision to uphold the order of assessment by CIT (Appeals) without independently recording its own findings. However, the court did not find any substantial question of law in this regard and dismissed the appeal.Issue 4: Addition made without fair opportunity of being heardThe appellants contested the addition made without a fair, proper, and reasonable opportunity of being heard, alleging a violation of principles of natural justice. The court, however, did not find any merit in this argument and upheld the decision of the Assessing Officer.Issue 5: Addition made under Section 68 based on credits not in regular books of accountsThe Tribunal upheld the addition made under Section 68 of the Act based on credits not in the regular books of accounts of the assessee. The court did not find any fault with this decision and dismissed the appeal.Issue 6: Justification of addition made under Section 68 based on individual creditor's peak creditThe Tribunal upheld the addition made under Section 68 based on the peak credit of the individual creditor. The court found no reason to interfere with this decision and dismissed the appeal.Issue 7: Addition made on suspicion without corroborative materialThe appellants challenged additions made on suspicion without corroborative material. The court, however, found no infirmity in the action taken by the Assessing Officer and dismissed the appeal, stating that no substantial question of law arose in this regard.