2021 (10) TMI 648 - AT - Income Tax

Tribunal Invalidates Assessment, Emphasizes Legal Procedures

The Tribunal found that the assessment completed without issuing a notice under section 143(2) was invalid, directing further consideration by the CIT(A). ... Reopening of assessment u/s 147 - ex-parte order passed by CIT-A - assessee has made cash deposit in his savings bank account maintained with Oriental Bank of Commerce, Janak Puri and the assessee has not offered any explanation regarding the source of the same - CIT(A) passed the ex parte order on the ground that despite five opportunities granted by the CIT(A), the assessee did not appear before him to substantiate his case - submission of assessee that there was no notice issued u/s 143(2) of the Act before completing the assessment u/s 144/147 of the IT Act despite the assessee filed the return of income in response to the notice u/s 148 - HELD THAT:- As the submissions made by the assessee before the Tribunal were not submitted before the CIT(A) and the CIT(A) has passed an ex parte order since the assessee did not appear before him despite five opportunities granted by the CIT(A). Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue back to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate his case - Appeal filed by the assessee is allowed for statistical purposes. Issues:1. Validity of assessment completed under section 144 read with section 147 without issuing notice under section 143(2) of the Income Tax Act.2. Jurisdiction of the assessment completed without complying with legal requirements.3. Validity of reassessment proceedings initiated under section 147 of the IT Act.4. Approval under section 151 of the IT Act and its impact on reassessment proceedings.5. Addition made under section 68 of the IT Act for unexplained credits.Issue 1: Validity of assessment under sections 144 and 147 without issuing notice under section 143(2):The AO reopened the case based on cash deposits in the bank account. The assessee claimed to have filed the return in response to the notice under section 148 but no notice under section 143(2) was issued. The CIT(A) upheld the validity of reassessment proceedings. The Tribunal found no notice under section 143(2) was issued despite the return being filed, directing the issue back to the CIT(A for further consideration.Issue 2: Jurisdiction of assessment without legal compliance:The assessee contended that the assessment lacked jurisdiction due to non-compliance with legal requirements. The AO proceeded with the assessment under sections 144 and 147 without issuing a notice under section 143(2). The Tribunal directed the CIT(A) to grant the assessee an opportunity to substantiate the case, emphasizing adherence to legal procedures for a valid assessment.Issue 3: Validity of reassessment proceedings under section 147:The assessee challenged the validity of reassessment proceedings initiated under section 147, alleging lack of independent application of mind by the AO. The Tribunal observed the AO reopened the case due to unexplained cash deposits and directed the CIT(A) to provide the assessee with a final opportunity to present the case for a fair decision based on facts and law.Issue 4: Impact of approval under section 151 on reassessment proceedings:The assessee raised concerns about the mechanical satisfaction shown by the Pr CIT under section 151, arguing it affected the validity of reassessment proceedings. The Tribunal emphasized the need for a proper assessment process and directed the CIT(A) to reconsider the case in light of all legal aspects.Issue 5: Addition under section 68 for unexplained credits:The AO made an addition under section 68 for unexplained cash deposits despite the assessee providing evidence and explanations. The Tribunal found the addition unjustified, arbitrary, and unsustainable, directing the CIT(A) to reevaluate the addition in line with the evidence presented by the assessee.In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of following legal procedures and granting the assessee a fair opportunity to present their case before making any decisions.