Search assessment notice under section 143(2) not mandatory; unexplained bank deposits sustained for failure to prove source and genuineness.

In a section 153A search assessment, the absence of notice under section 143(2) did not vitiate the assessment because no specific statutory requirement for such notice was applied to this type of proceeding, and section 292B gave the assessee no relief on the facts. Unexplained cash deposits in bank accounts were also treated as taxable under section 68 where the assessee failed to prove the identity, creditworthiness, genuineness, and source of the alleged lenders or deposits. Self-serving affidavits and unsupported claims of no regular books of account were held insufficient, and the additions were sustained.

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Issues: (i) Whether, in a search assessment under section 153A, issue of notice under section 143(2) was mandatory and whether the notice issued in the present case vitiated the assessment; (ii) Whether unexplained cash deposits in the assessee's bank account could be added under section 68, including where the assessee contended that no regular books of account were maintained.

Issue (i): Whether, in a search assessment under section 153A, issue of notice under section 143(2) was mandatory and whether the notice issued in the present case vitiated the assessment.

Analysis: The return was filed belatedly and could not be treated as a valid return in response to the search notice. The assessment was under section 153A, and the governing position applied by the Court was that there is no specific statutory requirement to issue notice under section 143(2) for a section 153A assessment. The Court also held that section 292B did not assist the assessee in these facts.

Conclusion: The challenge to the assessment on the ground of notice under section 143(2) failed and was decided against the assessee.

Issue (ii): Whether unexplained cash deposits in the assessee's bank account could be added under section 68, including where the assessee contended that no regular books of account were maintained.

Analysis: The assessee failed to establish the identity, creditworthiness, and genuineness of the alleged lenders and the source of cash deposits. The supporting affidavits were treated as insufficient and self-serving, the alleged lenders were not credibly produced, and no satisfactory documentary evidence of repayment or source was shown. The Court further held that bank entries could be examined for unexplained credits and that, in the circumstances of the case, the addition under section 68 was sustainable even though the assessee claimed not to maintain books of account.

Conclusion: The additions on account of unexplained bank deposits were upheld and were decided against the assessee.

Final Conclusion: The appeals were dismissed, and the additions confirmed by the first appellate authority were sustained.

Ratio Decidendi: In a section 153A search assessment, section 143(2) notice is not mandatory, and unexplained credits in bank accounts may be brought to tax under section 68 when the assessee fails to prove the source, creditworthiness, and genuineness of the transactions.

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