2021 (10) TMI 618 - AT - Income Tax

Reopening of assessment u/s 147 - no notice u/s 143(2) was issued - HELD THAT - As gone through the assessment order AO has simply stated that the notice u/s 148 was issued on 23.03.2016 after recording the reasons placed on record, consequently; notice u/s 142(1) was issued on 21.07.2016. From the assessment order, it is clear that no notice u/s 143(2) was issued which is mandatory condition for framing the assessment u/s 147 - the assessment was framed is without authority of law - therefore, hold that the assessment is bad in law and the same is hereby quashed. Have quashed the assessment order on the ground that no notice u/s 143(2) was issued, the other grounds on merit have become of academic in nature, hence not adjudicated - Appeal of the assessee is allowed.

Issues Involved:
1. Validity of the assessment order passed by the CIT(A).
2. Addition made on account of cash deposit by the assessee.
3. Compliance with mandatory provisions of the IT Act.
4. Jurisdiction assumed by the Assessing Officer.
5. Notice under Section 143(2) of the IT Act.

Issue 1: Validity of the assessment order passed by the CIT(A):
The appellant challenged the assessment order passed by the CIT(A), claiming it to be bad in law, wrong on facts, and against the principles of natural justice. The appellant argued that the order was unsustainable and lacked any legal basis. The CIT(A) dismissed the appeal on technical grounds, citing non-compliance with mandatory provisions of the IT Act. The appellant contended that the CIT(A) failed to consider the merits of the case and focused solely on procedural issues, leading to an arbitrary and illegal assessment order. The Tribunal found that the assessment order was arbitrary, illegal, and in violation of basic principles of contemporary jurisprudence. The Tribunal held that the CIT(A) did not comply with the jurisdictional requirements under the law, and the assessment order was quashed due to lack of proper jurisdiction.

Issue 2: Addition made on account of cash deposit by the assessee:
The case revolved around a cash deposit of ?14 lakhs in the assessee's account, which the Assessing Officer considered as undisclosed income. The appellant explained that the cash was received from the sale of agricultural land by the assessee's husband, who did not maintain a bank account. The appellant argued that the amount deposited was not from undisclosed sources and should not attract tax liability. The Tribunal noted that the Assessing Officer proceeded ex-parte against the assessee, leading to a dismissal of the appeal based on procedural non-compliance. The Tribunal found that the assessment order was based on conjecture and surmises, lacking a proper factual basis. The Tribunal held that the addition made by the Assessing Officer was devoid of merit and not supported by the factual matrix, ultimately ruling in favor of the appellant.

Issue 3: Compliance with mandatory provisions of the IT Act:
The appellant raised concerns regarding the non-compliance with mandatory provisions of the IT Act by the Assessing Officer. The Tribunal highlighted that the Assessing Officer failed to assume jurisdiction under Section 143(2) of the IT Act before framing the assessment order, which is a mandatory requirement. The Tribunal emphasized that the absence of a notice under Section 143(2) rendered the assessment order without legal authority. The Tribunal quashed the assessment order on the grounds of non-assumption of due jurisdiction by the Assessing Officer, emphasizing the importance of adhering to procedural requirements under the law.

Issue 4: Jurisdiction assumed by the Assessing Officer:
The Tribunal scrutinized the jurisdiction assumed by the Assessing Officer and found that the failure to issue a notice under Section 143(2) of the IT Act rendered the assessment order invalid. The Tribunal held that the Assessing Officer did not follow the proper procedure in framing the assessment, leading to a lack of legal authority in conducting the assessment. The Tribunal concluded that the assessment order was bad in law due to the Assessing Officer's failure to assume jurisdiction as required by the IT Act.

Issue 5: Notice under Section 143(2) of the IT Act:
The Tribunal observed that the Assessing Officer did not issue a notice under Section 143(2) of the IT Act, which is a mandatory condition for framing an assessment under Section 147 of the Act. The absence of this notice rendered the assessment without legal authority, leading the Tribunal to quash the assessment order. The Tribunal emphasized the importance of adhering to procedural requirements, such as issuing proper notices, to ensure the validity of assessment orders.

This detailed analysis of the judgment highlights the key legal issues involved and the Tribunal's findings on each issue, emphasizing the significance of procedural compliance and jurisdictional requirements in tax assessments.

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