2012 (4) TMI 629 - AT - Income Tax

Summary

Issues Involved:
1. Legality of reassessment proceedings initiated by notice u/s 148.
2. Reduction of addition on account of cash deposit.
3. Working out of expenses and investment.
4. Confirmation of addition by applying 12% on contract receipts.
5. Confirmation of addition by computing difference between alleged expenses/investments with availability of cash.

Summary:

1. Legality of reassessment proceedings initiated by notice u/s 148:
The assessee argued that the reassessment proceedings initiated by the AO by issuing notice u/s 148 were illegal and bad in law because the assessment of the return filed on 13.03.2008 was still pending. The Tribunal admitted this additional ground, citing the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT. The Tribunal concluded that the AO issued notice u/s 148 on 04.02.2009, while the time for issuing notice u/s 143(2) was available until 31.03.2009. The AO cannot acquire jurisdiction to issue notice u/s 148 when there is still time to issue notice u/s 143(2). Therefore, the notice issued u/s 148 was deemed bad in law, and the assessment was quashed.

2. Reduction of addition on account of cash deposit:
The Revenue contended that the CIT(A) erred in reducing the addition of Rs. 25,00,450/- to Rs. 9,13,060/- made by the AO on account of cash deposit. The Tribunal upheld the CIT(A)'s decision to reduce the addition.

3. Working out of expenses and investment:
The Revenue argued that the CIT(A) erred in working out expenses and investment at Rs. 45,42,823/- as against Rs. 67,47,213/- worked out by the AO. The Tribunal upheld the CIT(A)'s decision.

4. Confirmation of addition by applying 12% on contract receipts:
The assessee argued that the CIT(A) erred in confirming the addition of Rs. 11,31,004/- by applying 12% on contract receipts as against 8% declared by the assessee. The Tribunal did not consider this ground for decision in view of the quashing of the assessment.

5. Confirmation of addition by computing difference between alleged expenses/investments with availability of cash:
The assessee contended that the CIT(A) erred in confirming the addition of Rs. 15,97,347/- by computing the difference between alleged expenses/investments with the availability of cash. The Tribunal did not consider this ground for decision in view of the quashing of the assessment.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment initiated by notice u/s 148, and dismissed the appeal of the Revenue.