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Facts
The assessee filed a belated return for AY 2012-13 showing a loss. Information was received about cash deposits of Rs. 63,40,400/-. The assessment was reopened, and the AO made an addition of this amount as unexplained. The CIT(A) upheld the addition.
Held
The Tribunal found unresolved factual aspects regarding the validity of reassessment, the non-issuance of notice under Section 143(2), and the conflicting claims about evidence submission. Therefore, the matter was restored to the Assessing Officer for de novo assessment.
Key Issues
Whether reassessment proceedings were validly initiated and whether the addition on account of cash deposits is justified without proper evidence and issuance of notice under Section 143(2).
Sections Cited
148, 143(2), 139(4), 68, 271(1)(c), 274
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Income Tax Appellate Tribunal, CHANDIGARH BENCH “A”, CHANDIGARH
Before: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM
सुनवाई की तारीख/Date of Hearing : 11/12/2025 उदघोषणा की तारीख/Date of Pronouncement : 15/12/2025 आदेश/Order
PER KRINWANT SAHAY, AM:
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 26/11/2024 pertaining to Assessment Year 2012-13.
In the present appeal Assessee has raised the following grounds:
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the initiation of proceedings under section 148 in as much as there was no escapement of income leading to a reason to belief and as such the re-opening is illegal, arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law in holding that that there was no requirement to issue notice under section 143(2) which admittedly has not been issued to the assessee and as such the order passed is illegal arbitrary and unjustified.
3. That the Ld. Assessing Officer has erred in law as well as on facts in as much as there has been no reason to believe that there was an escapement of income in as much as the reasons recorded are based only on borrowed information and as such the assessment order passed is illegal, arbitrary and unjustified.
4. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs.63,40,400/- made on account of cash deposits in the bank account in utter disregard ofthe explanations rendered which is arbitrary and unjustified.
That the appellant craves leave to add or amend the grounds of appeal
before the appeal is finally heard or disposed off.
6. That the order of Ld. Commissioner of Income Tax(Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable.
Briefly the facts of the case are that the assessee originally filed his return of income for Assessment Year 2012-13 on 04.03.2016, declaring a loss of Rs.1,66,199/-. The return was filed belatedly, well beyond the due date of 30.09.2012 prescribed under Section 139(4) of the Income Tax Act. Subsequently, on 10.03.2018, information was received through the AIR system from the Deputy Director of Income Tax (Investigation) indicating that the assessee had deposited cash amounting to Rs.63,40,400/- in his ICICI Bank account (A/c No. 632205006059).
3.1 Based on this information, the assessment was reopened and completed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, vide order dated 30.12.2019. During reassessment proceedings, the Assessing Officer noted that the assessee failed to furnish any credible evidence to explain the source of the cash deposits. Since the source of the cash deposit of Rs.63,40,000/- remained unsubstantiated, the Assessing Officer treated the entire amount as unexplained and made an addition under Section 68 of the Act.
3.2 Consequently, the income of the assessee for A.Y. 2012-13 was recomputed by adjusting the originally returned loss of Rs.1,66,199/- against the addition of Rs. 63,40,000/-, resulting in an assessed income of Rs. 61,73,801/-. The Assessing Officer also recorded satisfaction for initiating penalty proceedings under Section 271(1)(c) read with Section 274 for concealment of income, to be pursued separately.
Against the order of the AO the assessee went in appeal before the Ld. CIT(A).
5. The CIT(A) first considered the ground relating to non-issuance of notice under section 143(2). Ld. CIT(A) observed that although notice under section 148 was issued on 31.03.2019, the assessee failed to file the return within the time prescribed in the notice. Instead, the return was filed belatedly on 21.12.2019 at the fag end of the assessment proceedings, making it a nonest return for purposes of section 148. Since the assessee did not comply with the statutory requirement of filing return in response to notice under section 148, the CIT(A) held that the AO was not mandatorily required to issue notice under section 143(2). Accordingly, this ground was dismissed.
5.1 On the issue of lack of opportunity of being heard, the Ld. CIT(A) noted that several notices including notice under section 148, notice under section 142(1), and a show-cause notice were duly issued to the assessee. However, the assessee chose not to respond to any of them until 21.12.2019. Therefore, any alleged haste in assessment was a result of the assessee’s own non- compliance. It was thus held that adequate opportunity had been granted, and this ground was also dismissed.
5.2 Regarding the addition of cash deposits under section 68, the Ld. CIT(A) examined the assessee’s claim that the deposits represented immigration fees received from clients. The assessee asserted that it had submitted a detailed immigration fee account containing names and details of clients. However, CIT(A) found that no such account or supporting evidence was actually enclosed with the submission. Further, even after issuance of a specific notice dated 04.11.2024 asking the assessee to submit copies of all documents filed before the AO including the immigration fee account the assessee did not file any reply. Due to the absence of supporting documentary evidence, the CIT(A) held that the assessee’s explanation remained unsubstantiated, and therefore the addition made by the AO had to be sustained.
5.3 In view of the above findings, the Ld. CIT(A) dismissed all the grounds raised by the assessee.
Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.
During the course of hearing the learned counsel for the assessee contended that the reassessment proceedings initiated under section 148 are void ab initio, as there was no material to form a valid “reason to believe” regarding escapement of income, and the reasons recorded are based solely on borrowed information without any independent satisfaction of the Assessing Officer. It was argued that the Ld. CIT(A) erred in upholding such reopening and further erred in holding that issuance of notice under section 143(2) was not mandatory, whereas the settled law mandates that absence of such notice renders the reassessment void. Without prejudice, it was submitted that the addition of ₹63,40,400/- towards cash deposits has been confirmed without proper appreciation of the explanations and evidences placed on record, and the appellate findings are mechanical, contrary to facts, and unsustainable. The assessee therefore prayed that the reassessment be quashed.
Per contra, the Ld. DR relied on the orders of the lower authorities.
We have considered the rival submissions and examined the record. The assessee has challenged the validity of the reassessment, the non- issuance of notice under section 143(2), and the addition of Rs. 63,40,400/- sustained by the Ld. CIT(A). The assessee asserts that necessary details were submitted, whereas the Ld. CIT(A) has recorded that no such evidence was filed. These conflicting claims require proper factual verification. The issue relating to the filing of return in response to notice under section 148 and its effect on the requirement of notice under section 143(2) also needs fresh examination.
9.1 In view of these unresolved factual aspects, and in the interest of justice, we set aside the order of the Ld. CIT(A) and restore the entire matter to the file of the Assessing Officer for de novo assessment. The Assessing Officer shall examine all issues afresh, verify the evidences that the assessee may produce, and thereafter pass a well reasoned order in accordance with law after giving adequate opportunity of hearing.
In the result, the appeal of the assessee is allowed for statistical purposes.