Court Nullifies Assessment Due to Lack of Jurisdiction

The court held that the Assessing Officer lacked jurisdiction to proceed with the scrutiny assessment due to non-service of the notice under section 143(2) within the statutory time limit. Consequently, the assessment order was deemed null and void ab initio, resulting in the deletion of all additions made. The penalty imposed under section 271(1)(c) was set aside as the grounds for levying it were no longer valid. Both appeals by the assessee were allowed, emphasizing the importance of valid jurisdiction in tax assessments.

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Issues Involved:
1. Jurisdiction of the A.O. for non-service of notice under section 143(2) within the statutory time limit.
2. Levy of penalty under section 271(1)(c) of the I.T. Act, 1961.

Issue 1: Jurisdiction of the A.O. for non-service of notice under section 143(2) within the statutory time limit:

The case involved challenges to the assessment order for Assessment Year 2011-2012 due to non-service of the notice under section 143(2) within the statutory time limit. The assessee contended that the notice dated 6th August, 2012, issued under section 143(2) of the I.T. Act, was returned unserved. The Ld. CIT(A) noted that the notice was received back with the comments "No such person." The A.O. did not issue any other notice under section 143(2) after the unserved notice dated 6th August, 2012. The A.O. failed to make any effort to serve the notice through other modes of service, as required by law. Consequently, it was established that the A.O. lacked valid jurisdiction to proceed with the scrutiny assessment. The assessment order was deemed null and void ab initio, leading to the deletion of all additions made in the assessment order.

Issue 2: Levy of penalty under section 271(1)(c) of the I.T. Act, 1961:

The A.O. had imposed a penalty under section 271(1)(c) based on the additions made in the assessment order, including unexplained cash deposits in the bank account. However, since the assessment order was quashed due to the non-service of the notice under section 143(2), the grounds for levying the penalty were no longer valid. Consequently, the penalty under section 271(1)(c) was set aside, and the appeal of the assessee was allowed.

In conclusion, both appeals by the assessee were allowed. The first issue regarding the jurisdiction of the A.O. was crucial, leading to the quashing of the assessment order and deletion of all additions. Additionally, the penalty under section 271(1)(c) was canceled due to the invalidity of the assessment order.

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