Assessment order quashed for invalid notice, CIT(A) decisions upheld, Revenue's appeal dismissed.

The Tribunal quashed the assessment order due to the invalid service of notice under section 143(2), leading to the deletion of all additions by the AO. The Tribunal upheld the CIT(A)'s decisions on the disallowance under section 10B and the addition for alleged suppression of sales, dismissing the Revenue's appeal.

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Issues Involved:
1. Validity of the assessment order under section 143(3) due to non-service of notice under section 143(2) within the statutory period.
2. Disallowance of deduction under section 10B of the IT Act.
3. Addition of Rs. 73,89,823 due to alleged suppression of sales.

Detailed Analysis:

1. Validity of the Assessment Order under Section 143(3):
The assessee contended that the mandatory notice under section 143(2) was not served within the statutory period, rendering the assessment order invalid. The return was filed on 31st October 2005, and the notice under section 143(2) was issued on 27th October 2006 but served on 2nd November 2006. The assessee argued that the notice should have been served by 31st October 2006, as per the proviso to Section 143(2). The CIT(A) deemed the notice served within time, but the Tribunal found this incorrect. The Tribunal noted that the service through affixture was not valid as the conditions under Order-V, Rule-20 CPC were not met. Therefore, the assessment order was quashed, and the additions were deleted.

2. Disallowance of Deduction under Section 10B:
The Revenue challenged the deletion of the disallowance of Rs. 1,57,41,762 claimed under section 10B. The AO argued that the assessee did not engage in manufacturing activities but purchased hot mix masala for export. The CIT(A) accepted the assessee's evidence, including excise records, showing that the assessee was engaged in manufacturing. The Tribunal upheld the CIT(A)'s findings, noting that the AO admitted in the remand report that manufacturing was done at the assessee's premises. The Tribunal found no merit in the Revenue's appeal and dismissed it.

3. Addition of Rs. 73,89,823 Due to Alleged Suppression of Sales:
The AO added Rs. 73,89,823 to the assessee's income, alleging that the difference in consumption and production was due to unaccounted sales. The assessee argued that the difference was due to natural wastage during the manufacturing process. The CIT(A) accepted the assessee's explanation, supported by excise records and laboratory reports. The Tribunal found that the AO did not reject the assessee's books of account or provide evidence of unaccounted sales. Therefore, the Tribunal upheld the CIT(A)'s deletion of the addition.

Conclusion:
The Tribunal allowed the assessee's cross-objection, quashing the assessment order due to the invalid service of notice under section 143(2). Consequently, all additions made by the AO were deleted. The Tribunal also dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on the disallowance under section 10B and the addition for alleged suppression of sales.

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