2024 (8) TMI 1042 - AT - Income Tax

Validity of Reopening of assessment - Section 143(2) notice not sent - addition u/s 68 - HELD THAT - From the perusal of records uptill date of issuance of Section 142(1) of the Act dated 31.10.2022 where the assessee has filed his reply on 07.11.2022 alongwith documents but the assessee has not filed return of income. In fact, the assessee chose to file return of income on 14.02.2023 as submitted in assessee s written submission but the same cannot be treated as return in respect of response to the notice u/s 148 as the assessee has filed the original return of income as mentioned in the return of income acknowledgement dated 14.02.2023. Thus, the CIT(A) has rightly dismissed this ground with the precise observation. Hence ground no.1 is dismissed. Mandation to issue notice u/s 143(2) - As in the present case s scenario the assessment is reopened and the notice u/s 148 was rightly issued to the assessee for which the assessee has responded and, therefore, the statutory notice i.e. Section 148 notice has been issued and the plea to again issue notice u/s 143(2) is not justifiable when the notice itself has been issued u/s 148 and the other respective statutory notices u/s 142(1) was also subsequently issued for which the assessee has responded. Thus, the extension of ground no.1 in this context also is dismissed. Addition u/s 68 - As from the perusal of documents, it appears that certain documents which were submitted before the AO as well as before the CIT(A) was not taken into account either by the AO or by the CIT(A). Hence, it will be appropriate to remand back this issue on merit to the file of the AO for proper adjudication and verification after taking cognisance of the evidences/documents filed by the assessee. Appeal of the assessee is partly allowed for statistical purpose.

Summary

Issues:
1. Validity of assessment under Section 147 without issuing notice under Section 143(2) of the Act.
2. Addition of Rs. 62,50,000 under Section 68 disregarding documentary evidence.

Issue 1: Validity of assessment under Section 147 without issuing notice under Section 143(2) of the Act

The appellant contested that the assessment under Section 147 was invalid as no notice under Section 143(2) was served despite filing the return of income. The appellant argued that the absence of this notice rendered the assessment illegal, citing legal precedents. The appellant emphasized the mandatory nature of the notice under Section 148 of the Act before making assessments. The appellant also referred to Circular No.1/2023 issued by the CBDT. However, the Department argued that the return filed by the appellant was not valid as per the Assessing Officer, justifying the absence of a Section 143(2) notice. The Department relied on the Assessment Order and the CIT(A) decision to support their stance. The Tribunal noted that the appellant filed the return after the notice under Section 148, which was not considered a valid response. The Tribunal agreed with the CIT(A) and dismissed ground no.1.

Issue 2: Addition of Rs. 62,50,000 under Section 68 disregarding documentary evidence

The appellant contended that both the Assessing Officer and the CIT(A) overlooked the documentary evidence presented, leading to the addition of Rs. 62,50,000 under Section 68. The Department argued that no valid explanation or evidence was provided by the appellant during the assessment. The Tribunal acknowledged that certain documents submitted by the appellant were not considered during the assessment process. Consequently, the Tribunal decided to remand this issue back to the Assessing Officer for a thorough review, emphasizing the importance of considering all evidence and providing the appellant with a fair hearing. As a result, ground no.2 was partly allowed for statistical purposes.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, dismissing ground no.1 regarding the validity of the assessment under Section 147 without a notice under Section 143(2) and remanding ground no.2 back to the Assessing Officer for further examination based on the documentary evidence provided by the appellant.