Veerendra Singh Vs ITO (ITAT Agra)
Summary: The case of Veerendra Singh Vs ITO (ITAT Agra) involves the reassessment of the assessee’s income for AY 2011-12 under Section 147 of the Income-tax Act, 1961. The Assessing Officer (AO) reopened the assessment based on AIR information indicating unexplained cash deposits of ₹26,78,350 in the assessee’s bank account. The AO issued a notice under Section 148 on March 23, 2018, alleging that the assessee had not filed a return under Section 139. However, the assessee contended that he had already filed a return in September 2011, which had been processed and resulted in a refund. Additionally, the reassessment led to additions totaling ₹13,81,377, including unexplained cash deposits, unsecured loans, and cash purchases. The CIT(A) partly allowed the appeal, but the assessee further challenged the reassessment before the ITAT Agra, arguing that the AO had failed to issue a mandatory notice under Section 143(2) before completing the reassessment. The ITAT Agra ruled in favor of the assessee, holding that the reassessment was invalid due to procedural lapses. It noted that the AO incorrectly claimed that no return had been filed, despite evidence to the contrary. Furthermore, the failure to serve a Section 143(2) notice was deemed a violation of mandatory legal requirements, making the reassessment order unsustainable in law. The Tribunal relied on multiple judicial precedents, including PCIT v. Dart Infrabuild Pvt. Ltd. (2024) and ACIT v. Hotel Blue Moon (2010), to emphasize that the absence of a 143(2) notice renders reassessment proceedings void. Consequently, the ITAT quashed the reassessment order, without addressing the other merits of the case. This ruling reinforces the importance of procedural compliance in reassessment cases.
Brief facts : The case of the assessee was reopened by the Revenue u/s 147 of the Act for reassessment of the concluded assessment, with the approval of the competent authority. A notice u/s 148, dated 23.03.2018, was issued by the Assessing Officer to the assessee, requiring the assessee to file return of income in pursuance to notice u/s 148. The assessee sought adjournments from time to time. The case of the assessee was reopened based upon AIR information that assessee had deposited cash of Rs. 26,78,350/- in his bank account during the year under consideration. The Assessing Officer observed “It is a No PAN case & No Return is found on records”. Hence, the Assessing Officer had reasons to believe that income of assessee to the tune of Rs. 26,78,350/- had escaped assessment within the meaning of section 147 of the Act, and proceedings u/s 147 were initiated against the assessee. The Assessing Officer issued questionnaire to the assessee. The AO has recorded in the assessment order that the assessee filed his return of income on 16.7.2018 in response to notice u/s 148 of the Act as is emerging from the reassessment order passed by the Assessing Officer. So far as merits of the additions are concerned, the Assessing Officer made additions to the tune of Rs. 13,81,377/- in the hands of the assessee, being interest income from bank account to the tune of Rs. 21,882/-; unexplained cash deposit Rs. 55,000/-; unsecured loan raised in cash to the tune of Rs. 9,50,000/-; and unexplained investment in cash purchases to the tune of Rs. 3,54,495/-. Aggrieved, assessee filed first appeal to the learned CIT(Appeals) and the CIT(Appeals) partly allowed the appeal of the assessee.
