2023 (6) TMI 1378 - AT - Income Tax

Validity of scrutiny assessment on non-issuance of notice u/s 143(2) - HELD THAT - From departmental assessment folder, it is clear that the department was not able to find any notice u/s 143(2) initiating the assessment proceeding. AR also placed the online record before the bench but there is no trace of the notice U/s 143(2) of the Act. The Without issuance of notice u/s 143(2) is caused the assessment bad in law. We respectfully relied on the order of Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT and Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT We conclude that there was no issuance of the valid statutory notice u/s 143(2) of the Act within the prescribed time. DR has also not brought anything on record contrary to the arguments advanced by the AR for the assessee. Thus, in the absence of the valid statutory notice, the assessment framed u/s 144 of the Act is not sustainable. Decided in favour of assessee.

Summary

Issues Involved:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2017-18, challenging the assessment made by the Income Tax Officer under section 144 of the Income Tax Act 1961.

Grounds Raised by Assessee:
1. Challenge to the order passed under section 250(6) of the Income Tax Act.
2. Non-issuance of notice under section 143(2) by the Assessing Officer.
3. Disagreement with the assessment of total income by the Income Tax Officer.
4. Assertion that addition made on account of cash deposit and credit entries is beyond the scope of operation clean money.
5. Dispute regarding non-production of certain financial records by the assessee.
6. Submission of return of income and cash book during demonetization period.
7. Claim that cash deposits represent legitimate business proceeds.
8. Allegation of failure to consider evidence by the Commissioner of Income Tax (Appeals).
9. Dispute over the application of section 115BBE and section 69A by the Assessing Officer.

Decision and Analysis:
The appeal was filed with a delay of 71 days, which was condoned due to a medical emergency. The Assessing Officer did not issue a notice under section 143(2) to the assessee, which was deemed crucial for a valid assessment. The absence of this notice rendered the assessment bad in law, in accordance with legal precedents such as the case of Hotel Blue Moon. As a result, the addition made on account of cash deposits and credit entries was deleted, and the assessment for the year 2017-18 was quashed.

Conclusion:
The Tribunal allowed the appeal in favor of the assessee, emphasizing the importance of adhering to statutory requirements such as issuing notices under the Income Tax Act for valid assessments. The decision was based on legal principles established by the Supreme Court, highlighting the significance of procedural compliance in tax assessments.