Notice format defects, books rejection, and demonetisation cash deposits were separately tested in income-tax proceedings.

A notice under section 143(2) in a format different from the CBDT-prescribed form was treated as a directory defect, so the assessment was not invalidated and section 292BB was relevant to procedural objections. Rejection of audited books under section 145(3) was held unjustified on the facts because specific reasons were not adequately recorded, so that ground succeeded. Cash deposits during demonetisation under section 69A were not finally sustained or deleted because the assessee's explanation and supporting evidence were insufficient, yet the matter was remanded for de novo examination after further opportunity.

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Issues: (i) Whether a notice issued under section 143(2) of the Income-tax Act, 1961 in a format different from the CBDT-prescribed format vitiated the assessment; (ii) Whether rejection of books of account under section 145(3) of the Income-tax Act, 1961 was justified; (iii) Whether the addition made under section 69A of the Income-tax Act, 1961 towards cash deposits during the demonetization period could be sustained, or the matter required fresh examination.

Issue (i): Whether a notice issued under section 143(2) of the Income-tax Act, 1961 in a format different from the CBDT-prescribed format vitiated the assessment.

Analysis: The prescribed format for the notice was treated as directory rather than mandatory. A mere technical defect in the form of the notice was held insufficient to render the assessment void ab initio, particularly when procedural objections are covered by section 292BB of the Income-tax Act, 1961.

Conclusion: The objection to the notice format was rejected and the assessment was not held invalid on that ground.

Issue (ii): Whether rejection of books of account under section 145(3) of the Income-tax Act, 1961 was justified.

Analysis: The rejection was founded on inconsistency in cash sales and non-compliance with queries, but no addition was made under the head business income. Even so, rejection of audited books without assigning specific reasons was held not justified on the facts recorded.

Conclusion: The rejection of books of account under section 145(3) was held unjustified and this ground was allowed.

Issue (iii): Whether the addition made under section 69A of the Income-tax Act, 1961 towards cash deposits during the demonetization period could be sustained, or the matter required fresh examination.

Analysis: The assessee failed to satisfactorily explain the source of cash deposits with supporting documentary evidence, including stock position, cash balance, and corresponding cash sales. At the same time, the matter was considered fit for one more opportunity because the assessee raised an arguable case on merits. The addition was therefore not finally affirmed or deleted, and the assessment issue was restored for de novo consideration after giving adequate opportunity.

Conclusion: The addition was not finally sustained or deleted and the matter was remanded for fresh assessment.

Final Conclusion: The appeal succeeded only in part: the challenge to the notice format failed, the rejection of books was held unjustified, and the addition issue was sent back for fresh adjudication by the Assessing Officer.

Ratio Decidendi: A procedural defect in the format of a statutory notice does not, by itself, vitiate the assessment when it is merely directory, while disputed cash-deposit additions may be remanded for de novo examination where the explanation and evidence remain inadequate but a further opportunity is considered necessary in the interest of justice.

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