Tribunal upholds re-assessment notices for 2004-05 and 2005-06, quashes for 2003-04. Unexplained investment issue remanded.

The Tribunal upheld the validity of re-assessment notices for the years 2004-05 and 2005-06, but quashed them for 2003-04 due to improper approval. The issue of unexplained investment was remanded for further examination. The appeal for 2003-04 was allowed, while for the other years, the appeals were allowed for statistical purposes. The order was issued on December 23, 2022, in Chennai.

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Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act on a non-existing company.
2. Approval of competent authority under Section 151(2) of the Income Tax Act for issuing re-assessment notice.
3. Addition of unexplained investment under Section 69 of the Income Tax Act.
4. Levy of interest under Sections 234A and 234B of the Income Tax Act.

Detailed Analysis:

1. Validity of Notice Issued Under Section 148 of the Income Tax Act on a Non-Existing Company:
The assessee argued that the notice issued under Section 148 was invalid because it was served on a company that had been struck off from the Registrar of Companies (RoC). The Tribunal examined the legal position, referencing the Supreme Court's decisions in Pr.CIT v. Maruthi Suzuki India Ltd. and CIT, Jaipur v. M/s.Gopal Shri Scrips Pvt. Ltd. The Tribunal noted that the assessee did not inform the Assessing Officer (AO) about the company's dissolution. Consequently, the Tribunal held that the notice issued and the subsequent re-assessment proceedings were valid because the AO was not informed of the company's dissolution as required by law. Therefore, the ground taken by the assessee was rejected for all three assessment years.

2. Approval of Competent Authority Under Section 151(2) of the Income Tax Act for Issuing Re-Assessment Notice:
The Tribunal found that for the Assessment Year (AY) 2003-04, the approval for issuing the notice under Section 148 was granted by the Commissioner of Income Tax (CIT)-III, Chennai, instead of the Joint Commissioner of Income Tax (JCIT) as required by Section 151(2). This rendered the notice and subsequent proceedings null and void for AY 2003-04. However, for AYs 2004-05 and 2005-06, the approval was correctly obtained from the Additional Commissioner of Income Tax (ACIT), making the notices and proceedings valid. Consequently, the Tribunal quashed the notice and re-assessment proceedings for AY 2003-04 but upheld them for AYs 2004-05 and 2005-06.

3. Addition of Unexplained Investment Under Section 69 of the Income Tax Act:
The assessee contended that the addition of Rs. 17,99,346 as unexplained investment was incorrect because the income from the land transaction was already offered for taxation by M/s. Wescare (India) Ltd. The Tribunal noted that the AO made the addition based on a statement from a real estate agent and other evidence. However, the assessee claimed that the transaction and resultant income were accounted for by M/s. Wescare (India) Ltd. The Tribunal found that this claim needed further verification. Therefore, it set aside the issue to the AO for re-examination in light of the agreement between the parties and the financial statements of M/s. Wescare (India) Ltd.

4. Levy of Interest Under Sections 234A and 234B of the Income Tax Act:
The assessee argued that there was no obligation to file a return or pay advance tax, and hence, the levy of interest under Sections 234A and 234B was unjustified. However, the Tribunal did not provide a detailed analysis or ruling on this issue in the judgment.

Conclusion:
The appeal for AY 2003-04 was allowed, quashing the notice and re-assessment proceedings. For AYs 2004-05 and 2005-06, the appeals were allowed for statistical purposes, with the issues regarding unexplained investment being remanded to the AO for further examination. The Tribunal upheld the validity of the re-assessment notices for these years. The order was pronounced on December 23, 2022, in Chennai.

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