ITAT Kolkata rules in favor of assessee on undisclosed income addition and assessment notice issue

The Appellate Tribunal ITAT Kolkata reviewed the appeal filed by the assessee against the Commissioner's decision regarding the addition of undisclosed income, finding the addition unjustified and allowing the appeal. Additionally, the Tribunal ruled in favor of the assessee regarding the Assessing Officer's failure to issue a statutory notice under section 143(2), canceling the assessment on those grounds. The decision was pronounced on September 26, 2017.

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Issues:
1. Validity of addition of undisclosed income by the Assessing Officer.
2. Non-issuance of statutory notice under section 143(2) by the Assessing Officer.

Issue 1: Validity of addition of undisclosed income by the Assessing Officer
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) upholding the Assessing Officer's addition of undisclosed income. The assessee contended that the addition of Rs. 20,15,083 as net undisclosed income on account of deposits in Axis Bank was erroneous. Additionally, the assessee argued that the Commissioner erred in not considering certain payments made by the assessee while determining the undisclosed income. Despite the submissions made by the assessee, the Commissioner upheld the Assessing Officer's order. The Tribunal reviewed the case and allowed the assessee's appeal, holding that the Commissioner's decision was incorrect, and the addition of Rs. 20,15,083 was not justified based on the available records.

Issue 2: Non-issuance of statutory notice under section 143(2) by the Assessing Officer
The assessee raised additional grounds challenging the validity of the assessment made by the Assessing Officer under section 143(3)/147. The primary contention was the non-issuance of the statutory notice under section 143(2) before passing the assessment order. The Tribunal examined the relevant assessment records and confirmed that no notice under section 143(2) was issued to the assessee. The Department argued that the assessee participated in the assessment proceedings without objecting to the lack of notice, invoking section 292BB to preclude the assessee from raising the issue later. However, the Tribunal held that section 292BB applies to failures in serving notices, not in issuing them. Citing legal precedents, the Tribunal concluded that the failure to issue a notice under section 143(2) rendered the assessment invalid. Relying on judicial decisions, the Tribunal ruled in favor of the assessee, canceling the assessment made by the Assessing Officer under section 143(3)/147 due to the absence of a statutory notice under section 143(2).

In summary, the Appellate Tribunal ITAT Kolkata reviewed the appeal filed by the assessee against the Commissioner's decision regarding the addition of undisclosed income. The Tribunal found the addition unjustified and allowed the appeal. Additionally, the Tribunal addressed the issue of the Assessing Officer's failure to issue a statutory notice under section 143(2), ruling in favor of the assessee and canceling the assessment on those grounds. The decision was pronounced on September 26, 2017.

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