2022 (9) TMI 1018 - AT - Income Tax

Validity of assessment u/s 147 - no notice u/s 143(2) was issued in response to the return filed by the assessee subsequent to the issuance of notice u/s 148 - Addition of cash deposit as alleged unexplained cash deposited in the bank account of the assessee u/s 69A - Revenue submitted AO has categorically mentioned that the return was not filed in response to notice u/s 148 but u/s 119(2)(b) - whether return has been stated to be filed u/s 119(2)(b) and, therefore, this return could not be considered as valid ITR and accordingly, there was no requirement of issuance of notice u/s 143(2)? HELD THAT - Pre-requisite condition is that, firstly, the assessee has to file application for a claim for any exemption, deduction, refund or any other relief to the Board; and secondly, Board if considered it desirable or expedient for avoiding any general hardship may authorize any income-tax authorities to accept this application. Nowhere in the record which is even admitted by the AO in his remand report that the assessee has ever made any application before the CBDT. Not only that, there is no claim for any exemption, refund or any other relief by the assessee. It is not understandable, how and under what circumstances the return of income for AY 2012-13 filed on 19.11.2019 can be stated to be u/s 119(2)(b) as shown in e-filing portal submitted by the AO. On the contrary screen-shot of filing of the return by the assessee is shown as filed in response to the notice u/s 148. Once there is no application filed by the assessee, then there cannot be any return u/s 119 (2)(b). CBDT Circular No.9/2015 dated 09.06.2015 had clearly instructed that no condonation application for claim of refund/loss within the scope of section 119(2)(b) shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. Here in this case, six years had expired on 31.03.2019, whereas the assessee had filed the return on 19.11.2019. Even as per the CBDT Instruction/Circular (supra), such a return could not have been entertained u/s 119(2)(b). Accordingly, I hold that it is not a return u/s 119(2)(b) albeit it is a return filed in response to notice u/s 148 which has been accepted by the AO. Thus, when return has been filed in response to notice u/s 148 then it was mandatory for AO to issue notice u/s 143(2) before the completion of assessment, in case he wanted to vary the return of income and make addition. Accordingly, the additions made by the AO are deleted on the ground that the statutory requirement of issuance of notice u/s 143(2) is not complied. Accordingly, the additions are deleted. Assessee appeal allowed.

Summary

Issues:
1. Addition of cash deposit as unexplained income under section 69A of the Income-tax Act.
2. Requirement of notice under section 143(2) after filing return in response to notice under section 148.

Issue 1: Addition of cash deposit as unexplained income under section 69A of the Income-tax Act.
The appeal was filed against the order passed by the National Faceless Appeal Centre regarding the assessment year 2012-13. The assessee challenged the addition of cash deposit of Rs.12,15,000 as unexplained income deposited in a bank account under section 69A of the Act. The Assessing Officer (AO) acquired jurisdiction under section 147/148 due to non-filing of the return of income by the assessee. The assessee claimed the cash was related to business activities, but the AO found discrepancies and added the amount under section 69A. The First Appellate Authority upheld the addition. The Tribunal noted the contentions of both parties and held that the addition was not valid as the statutory requirement of issuing notice under section 143(2) was not complied with, and thus, the additions were deleted.

Issue 2: Requirement of notice under section 143(2) after filing return in response to notice under section 148.
The assessee contended that the return filed in response to the notice under section 148 should have triggered a notice under section 143(2). The Revenue argued that since the return was filed under section 119(2)(b) after a significant delay, it was not a valid return, and hence, no notice under section 143(2) was required. The Tribunal analyzed the facts and found that the return was indeed filed in response to the notice under section 148, contrary to the Revenue's claim. As per the CBDT Circular, the return could not have been entertained under section 119(2)(b) due to the delay. Therefore, the Tribunal held that the AO should have issued a notice under section 143(2) before making any additions based on the return filed in response to the notice under section 148. Consequently, the additions made by the AO were deleted, and the appeal was partly allowed.

In conclusion, the Tribunal found in favor of the assessee on both issues, highlighting the importance of compliance with statutory requirements and proper issuance of notices under the Income-tax Act. The judgment emphasized the need for procedural adherence in assessments to ensure fairness and legality in tax proceedings.