INCOME TAX ACT, 1961

Section 143(3)

Assessment - Validity - Issuance of section 143(2) on the spot at the time of filing of return without examining return filed by assessee -

Assessee filed return of income along with computation of income, trading and profit and loss account and balance sheet. AO issueed notice under section 143(2) along with questionnaire as regartds deposits in saving bank account on the same date of filing of return. Assessee challenged validity of consequent assessment framed under section 143(3).Held: Before issuance of section 143(2) notice, AO has to examine the return filed by assessee. In the instant case, not only AO issued the notice on the spot to assessee but also issued questionnaire along with that at the time of issuance of notice, AO was merely having information about cash deposit in assessee's savings bank account maintained with Indusind Bank Ltd. AO did not have any information about what kind of business assessee is doing, whether the bank account in which alleged was deposited, appeared balance sheet of assessee. Whether level of income shown by assessee justified amount of cash deposited, etc. In such a situation, it could be said that, AO did not thought it 'necessary' but issued notice in a mechanical manner. Accordingly, assessment order passed under section 143(3) could not be sustained.

Supported by:Director of IT v. Society Forward Interbank Financial Telecommunication (2010) 323 ITR 249 (Del-HC) : 2010 TaxPub(DT) 1812 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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