Reassessment notice service and cash-deposit additions: presumption of valid service applied, but unexplained income addition failed on cash-flow evidence.

Valid service of reassessment notice was treated as a jurisdictional requirement, but dispatch by registered post to the PAN address attracted the statutory presumption of service and the objection to reassessment jurisdiction therefore failed. On the cash-deposit issue, contemporaneous cash-flow material, banking-channel credits and withdrawals showed availability of funds for recycling; the explanation for opening cash and withdrawals was accepted in substance, and the peak-credit approach was found unsustainable on the facts. In the absence of rebuttal material showing diversion or alternative use of funds, the addition for unexplained cash deposits could not be maintained, resulting in partial relief to the assessee.

---

---

Issues: (i) Whether the reassessment proceedings were invalid for want of proper service of notice under the reassessment provisions. (ii) Whether the addition sustained on account of cash deposits in the bank account was justified under the unexplained cash credit / unexplained income provisions.

Issue (i): Whether the reassessment proceedings were invalid for want of proper service of notice under the reassessment provisions.

Analysis: The challenge was founded on the plea that service of notice was a condition precedent to assumption of reassessment jurisdiction. The record showed dispatch of notice by registered post to the address reflected in the PAN data, and the appellate authority had examined the objection in the light of the relevant judicial precedents and the statutory presumption attached to postal service. The contention that the notice was not validly served was not accepted.

Conclusion: The objection to jurisdiction based on alleged non-service of notice failed and is against the assessee.

Issue (ii): Whether the addition sustained on account of cash deposits in the bank account was justified under the unexplained cash credit / unexplained income provisions.

Analysis: The account reflected cash deposits along with banking-channel credits and cash withdrawals. The bank transfers were not properly ignored in isolation, and the cash-flow materials showed availability of funds for recycling. The explanation relating to withdrawals and opening cash was accepted in substance, and the peak-credit approach adopted by the first appellate authority was found to be unsustainable on the facts. In the absence of contrary material showing diversion or utilization elsewhere, the addition sustained by the appellate authority could not be maintained.

Conclusion: The addition sustained on account of cash deposits was deleted and this issue is in favour of the assessee.

Final Conclusion: The reassessment challenge did not succeed, but the addition relating to bank deposits was set aside, resulting in partial relief to the assessee.

Ratio Decidendi: A reassessment notice issue turns on valid statutory service, and where bank deposits are supported by contemporaneous cash-flow material and banking-channel credits without rebuttal by the Revenue, the unexplained addition cannot be sustained merely on suspicion or a truncated peak-credit computation.

---