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2023 (3) TMI 554 - AT - Income TaxReopening of assessment u/s 147 - Failure to issue notice u/s. 143(2) - Scope of curable defect u/s 292BB - HELD THAT - In view of the judgment of ACIT Vs. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT non-issuance of notice u/s. 143(2) of the Act is a jurisdictional error on the part of Assessing Authority. Hence Section 292BB of the Act would not help AO. The impugned assessment so framed without issuance of notice u/s. 143(2) is illegal hence deserves to be annulled. It is pertinent to note that the judgment rendered in the case of Josh Builders Developers (P.) Ltd. 2016 (9) TMI 340 - PUNJAB AND HARYANA HIGH COURT has been rendered on different set of facts hence do not help Revenue. From the records placed before me it is evident that AO failed to issue notice u/s. 143(2) of the Act. Hence the assessment framed by the AO is without authority of law. Decided in favour of assessee. Unexplained cash deposits in bank account - . From the bank statement it is seen that there are withdrawals and deposits by the assessee in his bank account. Further it is stated that he had sold certain lands and the sale consideration was available with him to deposit such amount in the bank. Looking to the evidences submitted by the assessee it can be inferred that the assessee was having sufficient funds for making deposit coupled with the fact that there were withdrawals from the bank account. Hence these facts ought to have been considered by the authorities below which has not been considered. The addition made by the AO is not justified and the same is hereby deleted. Appeal of the assessee is allowed.
Issues Involved:
1. Validity and legality of reopening the assessment. 2. Non-issuance of notice under Section 143(2) of the Income-tax Act. 3. Addition of Rs. 31,70,000/- as unexplained cash deposits. Issue-Wise Detailed Analysis: 1. Validity and Legality of Reopening the Assessment: The assessee argued that the reopening of the assessment under Section 148 was without a valid basis and was merely for making fishing inquiries. The Assessing Officer (AO) had reopened the case based on the information that the assessee had deposited Rs. 31,70,000/- in his savings bank account, which was not disclosed in the return of income. The Tribunal found no infirmity in the AO's action as the assessee failed to provide any evidence explaining the source of the cash deposits. The reopening was deemed valid since the AO had a reason to believe that income had escaped assessment. 2. Non-Issuance of Notice under Section 143(2): The assessee contended that the AO failed to issue a notice under Section 143(2), which is mandatory for completing the assessment. The Tribunal noted that the AO did not issue the notice under Section 143(2) after the assessee filed the return of income in response to the notice under Section 148. The Tribunal referred to the Supreme Court's judgment in ACIT Vs. Hotel Blue Moon, which held that non-issuance of notice under Section 143(2) is a jurisdictional error and cannot be cured by Section 292BB. Consequently, the assessment framed without issuing the notice under Section 143(2) was held to be illegal and annulled. 3. Addition of Rs. 31,70,000/- as Unexplained Cash Deposits: The AO had added Rs. 31,70,000/- to the assessee's income as unexplained cash deposits. The assessee provided various explanations, including the sale of agricultural land and cattle, and submitted supporting documents. However, the AO and the Commissioner of Income-tax (Appeals) (CIT(A)) rejected these explanations due to lack of sufficient evidence and non-compliance during remand proceedings. The Tribunal, upon reviewing the cash flow statement and bank transactions, inferred that the assessee had sufficient funds for the deposits. The Tribunal found that the authorities below did not adequately consider the evidence provided by the assessee. Therefore, the addition made by the AO was not justified and was deleted. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the assessment was invalid due to the non-issuance of notice under Section 143(2) and deleted the addition of Rs. 31,70,000/- as unexplained cash deposits. The order was pronounced in open court on 24th February 2023.
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