Scrutiny Assessment without Notice is Defective in Law: ITAT
May, 19th 2020
While upholding an order passed by the Commissioner of Income Tax (Appeals), the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that scrutiny assessment under section 143(2) cannot be passed without serving notice to the assessee.
The assessee is a farmer and sold agricultural land through two sale deeds. The total cash received from the sale of said agricultural land was Rs.12,60,000/-. During the assessment proceedings, the assessee submitted the Tahsildar certificate for both the lands and submitted that the lands are situated 16-kilo meter far from the municipal limit of Sikandrabad. The Assessing Officer admitted the amount of Rs. 3,60,000/- received by the assessee from his father through sale proceeds of the agricultural land but did not consider the sale proceeds of the second land. The Assessing Officer made the addition of Rs. 6,74,000/- as cash deposit treated as unexplained income under section 68 and passed the Assessment Order.
On appeal, the assessee contended that the assessment proceedings are invalid since no notice was served on him.
Upholding the CIT(A)order granting relief to the assessee, the Tribunal observed that “admittedly in the present case the Ld. DR stated that no notice under Section 143(2) of the Act was issued before the completion of the assessment. The assessee has filed a return of income at NIL in response to notice under Section 148 of the Act. The CIT(A) has rightly relied upon the decision of the Tribunal in case of ITO vs. Sanjay being ITA No. 3701/Del/2018 order dated 02.03.2020 and held that the impugned assessment order is defective in law and is annulled. The CIT(A) has further held that the revenue is protected under the provisions of Section 150 of the Income Tax Act. The Assessing Officer was further directed to reopen the Assessment under Section 147 of the Act and thereafter, reframe the assessment order after following the due process of law and after issuing necessary notices to the assessee as per law and after giving to the assessee reasonable opportunity of being heard and considering the evidence laid by the assessee. Thus, the CIT(A) has given elaborate finding.”