2021 (10) TMI 568 - AT - Income Tax

Reopening of assessment u/s 147- Notice not sent to correct address - no service of valid notice on the assessee and the notice for re-assessment proceedings was served through affixture which even does not mention the name of the witnesses - HELD THAT - CIT(A) has not adjudicated the grounds challenging the validity of the re-assessment proceedings and has straightaway proceeded to decide the appeal on merit. Therefore in the interest of justice, we deem it proper to restore the issue to the file of Ld. CIT(A) with a direction to decide the grounds challenging the validity of re-assessment proceedings taken before her. CIT(A) shall decide the issue afresh including the grounds challenging the validity of re-assessment proceedings in accordance with Law, after giving due opportunity of being heard to the assessee - Appeal of the Assessee is allowed for statistical purposes.

Summary

Issues:
Challenge to validity of re-assessment proceedings due to improper notice and jurisdiction.
Addition of cash deposit to total income without proper verification or opportunity for explanation.

Analysis:
1. The appeal was filed against the Order of the Ld. CIT(A) regarding the assessment year 2009-2010, where the assessee, an individual, deposited cash in a bank account. The Assessing Officer (A.O.) issued notices under section 148 for re-assessment due to non-response from the assessee. The Ld. CIT(A) dismissed the appeal without addressing the validity of the re-assessment proceedings.
2. The assessee contested the validity of the re-assessment proceedings, citing improper notice issuance and lack of jurisdiction. The Ld. CIT(A) did not address these grounds, prompting the appeal to the Tribunal. The assessee argued that the notice was invalid as it was issued by a non-jurisdictional A.O. and failed to mention the correct address, leading to a lack of opportunity for response.
3. The Tribunal considered both sides' arguments and found that the Ld. CIT(A) did not address the grounds challenging the validity of the re-assessment proceedings. In the interest of justice, the Tribunal directed the Ld. CIT(A) to re-examine the issue of re-assessment proceedings and the addition to total income. The Tribunal did not rule on the merits of the addition pending the Ld. CIT(A)'s fresh decision on the validity of the re-assessment proceedings.
4. The Tribunal emphasized the need for proper adjudication of the grounds challenging the validity of the re-assessment proceedings and directed the Ld. CIT(A) to provide the assessee with a fair opportunity to present their case. The Tribunal allowed the appeal for statistical purposes, indicating a procedural victory for the assessee without determining the substantive tax liability.

This detailed analysis highlights the legal complexities surrounding the validity of re-assessment proceedings and the importance of due process in tax matters. The Tribunal's decision underscores the significance of addressing procedural irregularities to ensure a fair and just outcome in tax disputes.