2008 (11) TMI 292 - AT - Income Tax

Summary

Issues involved:
The Revenue challenges the deletion of an addition of Rs. 10,09,500 for unexplained deposits, while the assessee raises concerns about the validity of notice and order under s. 144, and the rejection of additional grounds by the CIT(A).

Issue 1: Unexplained deposits
The assessee, a sub-broker in shares, faced an addition of Rs. 10,09,500 to income due to deposits found during a survey. The AO's assessment was based on these deposits, with the assessee failing to provide details of the depositors. However, the CIT(A) found that the cash receipts were related to share and securities transactions, not deposits, leading to the deletion of the addition.

Issue 2: Validity of notice and order under s. 144
The assessee argued that the notice under s. 143(2) was not served correctly, as it was affixed and served on a former power of attorney holder whose authority had ceased. The CIT(A) upheld the AO's actions, but the Tribunal ruled that the notice served was invalid, following a precedent that service on an agent is not proper service on the assessee. Consequently, the assessment order was deemed unsustainable and quashed.

Decision:
The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition as the cash receipts were related to share transactions. The assessee's cross-objections were allowed, annulling the assessment order due to the invalid service of notice under s. 143(2). The judgment was delivered on 18th Nov., 2008.