Appeal Dismissed Due to Invalid Notice: Revenue's Appeal Rejected, CIT(A)'s Decision Upheld

The Tribunal dismissed the Revenue's appeal, holding that the non-service of mandatory notices invalidated the assessment. The CIT(A)'s decision to delete the addition was upheld as it was based on the same evidence already on record, not additional evidence. The assessee's cross-objection was allowed, and the assessment under section 144 was quashed. The Tribunal emphasized the importance of serving notices correctly and within the prescribed time to assume jurisdiction under the Income Tax Act.

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Issues Involved:
1. Admittance of additional evidence by the CIT(A).
2. Service of mandatory notices under sections 142(1) and 143(2) of the Income Tax Act, 1961.
3. Validity of the assessment made under section 144 of the Act.
4. Jurisdictional issue regarding the service of notices.
5. Whether the CIT(A) examined additional evidence or the same evidence already on record.

Detailed Analysis:

1. Admittance of Additional Evidence by the CIT(A):
The Revenue contended that the CIT(A) erred in admitting additional evidence and deleting the addition of Rs. 59,87,420/-. The CIT(A) was accused of ignoring the conditions prescribed under Rule 46A(1)(a) of the Income Tax Rules, 1962. Additionally, the CIT(A) did not provide the AO an opportunity to cross-check and rebut the additional evidence, violating Rule 46A(3) and principles of natural justice.

2. Service of Mandatory Notices under Sections 142(1) and 143(2):
The assessee argued that the AO did not serve the mandatory notices under sections 142(1) and 143(2) before completing the assessment under section 144. The record showed that notices were sent to incorrect addresses, and only one notice was sent to the correct address, but it was unclear which notice it was.

3. Validity of the Assessment Made under Section 144:
The assessee filed a cross-objection challenging the assessment under section 144 as bad in law due to non-service of notices under sections 143(2) and 142(1). The assessee claimed that notices were sent to wrong addresses, and the affixture notice was also affixed at an inaccurate address. The assessment was argued to be liable for quashing.

4. Jurisdictional Issue Regarding the Service of Notices:
The Tribunal examined whether the AO served the notices correctly. It was found that the notices were not served as required. The Tribunal cited various High Court judgments, including CIT vs. Adarsh Travel Bus Service and CIT vs. Rajeev Sharma, which held that non-service of notice under section 143(2) invalidates the assessment. The Tribunal concluded that the AO wrongly assumed jurisdiction and that this defect could not be cured by section 292BB.

5. Whether the CIT(A) Examined Additional Evidence or the Same Evidence Already on Record:
The Tribunal found that the CIT(A) did not admit any additional evidence but examined the same bank statement already on record. The AO had mistaken the current account for a savings account, leading to an incorrect addition under section 68. The CIT(A) verified that the deposits in the current account were less than the disclosed sales, which were part of the assessee's books of accounts.

Conclusion:
The Tribunal dismissed the Revenue's appeal, holding that the non-service of mandatory notices invalidated the assessment. The CIT(A)'s decision to delete the addition was upheld as it was based on the same evidence already on record, not additional evidence. The assessee's cross-objection was allowed, and the assessment under section 144 was quashed. The Tribunal emphasized the importance of serving notices correctly and within the prescribed time to assume jurisdiction under the Income Tax Act.

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