2015 (2) TMI 158 - AT - Income Tax

Reopening of assessment - addition u/s 68 - claim of the assessee that no notice u/s 143(2) was issued - Held that - This issue, though not raised before the Income Tax Authorities can be raised before the appellate forum, since it is a pure legal issue without bring on record any fresh documentary evidence. The relevant assessment year records are not available and therefore, we cannot examine the veracity of the claim made by the assessee/Representative. Moreover, we find that the additional evidence, which goes to the root of the matter has been filed before us and in the interest of justice and equity, the same need to be taken on record, for a proper adjudication of the issue. Therefore, the issue of whether there is a service of the notice u/s 143(2) of the Act, shall be examined by AO for the first time after perusal of material on record. As regards the issue on merit (additions u/s 68 of the Act), the AO shall decide the matter afresh after examining additional evidence filed before us. The assessee shall be given reasonable opportunity of being heard before the assessment is reframed. Needless to state, the assessee s legal Representative shall cooperate with the Assessing Officer for expeditious disposal of the matter. It is ordered accordingly. -Decided in fvaour of assessee for statistical purposes.

Summary

Issues:
Reopening of assessment u/s 148 and additions made u/s 68 of the Act.

Analysis:
1. The case involves an appeal by the assessee against the CIT(A)'s order regarding the assessment year 2007-08. The Assessing Officer had issued a notice under section 148 due to unexplained cash deposits in the assessee's bank account. The CIT(A) upheld the assessment order, stating that the assessee failed to provide evidence for the cash deposits.
2. The CIT(A) found that the assessee deposited significant amounts in cash in his bank account, claiming they were from the sale of agricultural land. However, the assessee could not produce the agreement to sell or the person involved in the transaction. The Assessing Officer treated the cash deposits as unexplained credits under section 68 of the Income Tax Act.
3. The assessee raised multiple grounds in the appeal, challenging the reopening of assessment and the additions made under section 68. An application was filed seeking admission of additional grounds related to the validity of the assessment order due to the absence of a notice under section 143(2) of the Act.
4. The assessee also sought permission to introduce additional evidence, including an affidavit from a relative confirming the land sale transaction. The Tribunal considered the additional evidence crucial for a fair decision and allowed the application for admission of the additional grounds and evidence.
5. The Tribunal directed the Assessing Officer to reexamine the issue of the notice under section 143(2) and the additions under section 68 after considering the additional evidence. The assessee was granted a reasonable opportunity to present their case during the reassessment process.
6. The appeal of the assessee was allowed for statistical purposes, emphasizing the importance of a fair and thorough examination of all relevant evidence in tax assessments.

This detailed analysis highlights the legal proceedings, challenges raised by the assessee, the Tribunal's decision to admit additional grounds and evidence, and the direction for reassessment based on the new evidence presented.