Omission of concluding sentence doesn’t amount to non-furnishing of reasons for reassessment

Brief Facts of the case-

• This is a petition u/s. 254(2) of the Income-tax Act, 1961 (“the Act”) i.e. rectification petition, preferred by the assessee-appellant, directed against the order u/s. 254(1) passed by the Tribunal.
• The Miscellaneous Application assails the impugned order on several grounds, raising legal and factual issues. These have been discussed point-wise as under.

Issue wise analysis

Ground 1– Assessee not been provided the copy of the reasons recorded for re-opening of assessment u/s. 147, but only the gist thereof.

Held

On facts, the Tribunal had clearly stated that the assessee had been in fact supplied the verbatim copy of the reasons, reproducing the same at paragraph 2 (page 2) of its order. The tribunal’s findings appear at paragraph 2.8 of the impugned order. The omission of the last sentence is not a reason itself, but only the concluding sentence, stating of the foregoing as being the reasons for belief as to escapement of income. In as much as the same does not bear any reason, we do not find that it could be said that the assessee had not been conveyed the reasons as to escapement of income, or had been so either in part or only the gist thereof, as alleged.

Ground dismissed.

Ground 2- Non-application of mind by the (AO) in the matter of reopening the assessment

Held: There was material available with the AO on the basis of which a reasonable belief that income chargeable to tax had escaped assessment could be formed.

Ground Dismissed

Ground 3– Disallowance of expenditure booked in favour of the two concerns in view of lack of substantiation of the actual rendering of the services

There is nothing to show that the ‘overwhelming evidences’, as stated by the assessee, had not been considered by the tribunal. On the contrary, the tribunal found material on the basis of which it stood, in its view, established that the two concerns were shell companies, who had given accommodation entries to the assessee. Finding/s of fact, rendered upon appreciation of evidences, could not be   revisited in rectification proceedings.

Ground Dismissed

Ground 4– denial of opportunity to cross-examine the AO’s witnesses

Held: The cross-examination may not have been asked for, being in the nature of deposition/s. The tribunal has considered the argument and in its view the disallowance had not been affected only on the basis of the said statements and, two, that all the material had been duly confronted to the assessee. Ground Dismissed