2013 (11) TMI 1730 - AT - Income Tax

Notice issued u/s 142(1) of the Act having been issued after the expiry of one year from the end of the relevant assessment year and the assessment made consequent thereto is valid or not? - No time limit for issuance of notice u/s 142(1) of the Act - HELD THAT - There is absolutely no restriction on the part of the Assessing Officer to issue notice u/s 142(1) before expiry of one year from the end of the relevant assessment year as has been held by the CIT (A). The provisions of section 142(1) of the Act do not provide any such restriction, after the insertion of the proviso to section 142(1) of the Act w.e.f. 1-4-1990. The notice issued u/s 142(1) of the Act in the instant case is valid and consequently the assessment order passed cannot be held to be invalid in law. Decision against assessee. Cash deposit made by the assessee - He failed to substantiate his claim that the deposit was made out of the earlier withdrawals from SBI - Unexplained investment in terms of section 69 - No valid reason as to why he kept so much cash with him for over a period of one year when he was holding a bank account. - HELD THAT - In the present case the assessee has failed to prove the source of deposit with valid reasons and proper evidence. In this view of the matter, we do not find any infirmity in the order of the CIT (A) in sustaining the addition of ₹ 6,50,000/-. Accordingly, ITAT upheld the order of the CIT (A) by dismissing the ground raised by the assessee.

Summary

Issues Involved:
1. Validity of the assessment order passed pursuant to a notice issued u/s 142(1) beyond one year from the relevant assessment year.
2. Addition of Rs. 6,50,000/- u/s 69 of the Act as unexplained investment.

Summary:

Issue 1: Validity of the Assessment Order
The assessee challenged the validity of the assessment order on the grounds that the notice issued u/s 142(1) was beyond one year from the relevant assessment year. The CIT (A) rejected this argument, noting that the assessee had not raised a specific ground challenging the validity of the notice and had complied with statutory notices and participated in the assessment proceedings. The Tribunal held that the proviso to section 142(1), inserted by the Finance Act, 2006 with retrospective effect from 1-4-1990, allows the Assessing Officer to issue a notice u/s 142(1) after the end of the relevant assessment year. The Tribunal concluded that there is no restriction on issuing such notice before the expiry of one year from the end of the relevant assessment year. The Tribunal cited previous decisions, including those of the Hon'ble Delhi High Court and the Income-tax Appellate Tribunal, Hyderabad Bench, to support its view. Consequently, the notice issued u/s 142(1) was deemed valid, and the assessment order was upheld.

Issue 2: Addition of Rs. 6,50,000/- u/s 69
The assessee contended that the cash deposit of Rs. 6,50,000/- was from earlier withdrawals made from his NRE account between February 2002 and September 2003. The Assessing Officer and CIT (A) rejected this explanation, finding it unconvincing and against human probability. The Tribunal agreed, noting that it was incomprehensible for the assessee to keep such a substantial amount in cash for over a year without depositing it into a bank account. The Tribunal found the explanation to be a make-believe story and upheld the addition of Rs. 6,50,000/- as unexplained investment u/s 69 of the Act.

Conclusion:
The appeal by the assessee was dismissed, with the Tribunal upholding both the validity of the assessment order and the addition of Rs. 6,50,000/- u/s 69. The order was pronounced in court on 22-11-2013.