2025 (2) TMI 822 - AT - Income Tax

Reopening of assessment - non issuing and serving the notice u/s 143(2) - on the basis of AIR information case of the assessee was reopened by AO u/s 147 -HELD THAT - Keeping in view the legal position as emerging from the several judicial precedents which have taken the consistent stand that issue of notice u/s 143(2) is mandatory even in reassessment proceedings hence the reassessment order framed by the AO u/s 147 of the Act is not sustainable in the eye of law and is liable to be quashed. Decided in favour of assessee.

Summary

The appeal in ITA No. 169/Agr/2022 was filed by the assessee for the Assessment Year 2011-12, arising from the appellate order passed by the Commissioner of Income Tax (Appeals) (NFAC), Delhi. The case was reopened by the Revenue under section 147 of the Income-tax Act, 1961 based on the information that the assessee had deposited cash in his bank account during the relevant year. The Assessing Officer made various additions to the income of the assessee, leading to the appeal before the Tribunal.**Issues Presented and Considered:**1. Whether the reassessment order was valid without issuing notice under section 143(2) of the Act?2. Whether the additions made by the Assessing Officer were justified?**Issue-Wise Detailed Analysis:****Issue 1: Validity of Reassessment Order**- The Assessing Officer reopened the case under section 147 based on the belief that income had escaped assessment.- The assessee contended that the reassessment order was invalid as no notice under section 143(2) was issued.- The Tribunal found that the assessee had indeed filed the return of income originally under section 139, contrary to the Assessing Officer's belief.- The Tribunal relied on judicial precedents such as PCIT v. Dart Infrabuild Pvt. Ltd. and ACIT v. M/s Hotel Blue Moon to establish the mandatory requirement of issuing notice under section 143(2) even in reassessment proceedings.- The Tribunal concluded that the reassessment order was not sustainable in law due to the absence of the required notice and therefore quashed the order.**Issue 2: Justification of Additions**- The Assessing Officer had made various additions to the income of the assessee, including interest income, unexplained cash deposits, unsecured loans, and unexplained investments.- The CIT(A) partly allowed the appeal of the assessee, leading to the appeal before the Tribunal.- However, since the reassessment order was quashed on the first issue, the Tribunal refrained from adjudicating on the other issues raised by the assessee.**Significant Holdings:**- The Tribunal held that the reassessment order passed without issuing notice under section 143(2) was not sustainable in law and quashed the order.- The Tribunal refrained from considering the merits of the additions made by the Assessing Officer due to the invalidity of the reassessment order.In conclusion, the Tribunal allowed the appeal of the assessee by quashing the reassessment order on the grounds of procedural irregularity, without delving into the merits of the additions made by the Assessing Officer.