2003 (3) TMI 650 - AT - Income Tax

Summary

Issues:
1. Failure to issue notice under section 143(2) within the mandatory period.
2. Addition of Rs. 88,460 in the hand of the firm and treating it as income from "Undisclosed Sources."

Issue 1 - Failure to issue notice under section 143(2) within the mandatory period:
The appeal by the Revenue challenges the order of CIT(A) on the grounds that no notice under section 143(2) was issued and served on the proprietor within the mandatory period as required by law. The absence of proof of service of notice and the lack of an acknowledgement slip raised concerns regarding the validity of the proceedings. The appellant argued that the non-service of the notice violated statutory requirements, leading to a lack of fair play and judicial standards. The assessment was contended to be time-barred and without jurisdiction due to the failure to serve the notice within the specified timeframe. The tribunal noted that while the notice was issued within the period of limitation, there was no evidence to prove its service on the assessee before the expiry of the limitation. As per the proviso to section 143(2), the notice must be served within 12 months from the end of the month in which the return is furnished. Since the notice was not served within this period, the tribunal held the assessment as void and annulled it, ruling in favor of the assessee.

Issue 2 - Addition of Rs. 88,460 in the hand of the firm and treating it as income from "Undisclosed Sources":
The authorities below had made an addition of Rs. 88,460 in the hand of the firm, treating it as income from "Undisclosed Sources." The appellant contended that such additions were unwarranted and excessive, citing various reasons for each component of the addition. The tribunal observed that the additions lacked legal and factual basis, being arbitrary and unjust. The appellant argued against the validity of the additions, stating that they were devoid of legal and factual circumstances. The tribunal found that the observations leading to the additions were ill-set and unsupported, ultimately ruling that all the additions should be deleted. The tribunal concluded that the entire addition of Rs. 88,460 should be deleted, thereby allowing the appeal of the assessee.

In conclusion, the judgment by the Appellate Tribunal ITAT DELHI dealt with issues related to the failure to issue a notice under section 143(2) within the mandatory period and the addition of Rs. 88,460 in the hand of the firm. The tribunal annulled the assessment due to the non-service of the notice within the prescribed timeframe, declaring it as void. Additionally, the tribunal ruled in favor of the assessee by deleting the entire addition of Rs. 88,460, considering it unwarranted and lacking legal and factual basis.