Not necessary that reason for scrutiny be incorporated in the notice u/s 143(2) itself, says ITAT

The Income Tax Appellate Tribunal (ITAT) has ruled that the specific reason for selecting a case for scrutiny under section 143(2) of the Income Tax Act does not need to be explicitly mentioned in the notice itself. This decision clarifies the procedural requirements for tax assessments. The case involved an assessee whose return was selected for scrutiny, and the tribunal considered the validity of the notice issued.

IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES “B” : HYDERABAD

BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
(THROUGH VIRTUAL CONFERENCE)

ITA Nos. 1395 & 1396/Hyd/2019
Assessment Year: 2015-16

P. Venkata Ramana Reddy, Hyderabad.
PAN – ADFPP 2181 F
(Appellant)

Vs

Asst. Commissioner of Income-tax, Circle – 14(1), Hyderabad.
(Respondent)

For Assessee :Shri P. Murali Mohan Rao
For Revenue : Shri Sunil Kumar Pandey

Date of Hearing : 25-11-2020
Date of Pronouncement : 03-02-2021

O R D E R

PER P. MADHAVI DEVI, J.M. :

Both are assessee’s appeals for AY 2015-16. ITA No. 1395/Hyd/2019 is against the order of CIT(A) – 6, Hyderabad, dated 08/07/2019 confirming the assessment order passed by the AO u/s 143(3) of the IT Act, while, ITA No. 1396/Hyd/2019 is against the order of the CIT(A) – 6, Hyderabad dated 08/07/2019 confirming penalty levied by the AO u/s 271(1)(c) of the IT Act.

2. Brief facts of the case are that the assessee, an individual, filed his e-return of income for the Ay 2015-16 on 05/01/2017 admitting total income at Rs. 56,30,000/-. The said return was initially processed u/s 143(1) of the Act and subsequently, the case was selected for scrutiny under CASS. During the assessment proceedings u/s 143(2) of the Act, the assessee was asked to produce details of property and sources for cash deposits in the bank account. In response to the same, the assessee submitted details of his properties, bank statements and submitted that the properties belong to the company M/s Indus Creators Pvt. Ltd. and were purchased as a representative for the company. In support of the same, assessee submitted the copies of the sale deeds and after considering the same, the AO accepted the explanation and did not draw any adverse inference.

2.1 With regard to cash deposits, the assessee submitted that these were his business receipts and that the assessee has admitted business income u/s 44AD. When asked to submit the evidence of his carrying on construction activity, he submitted that he is not in a position to produce any evidences/confirmations for the same.

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