2018 (2) TMI 1786 - AT - Income Tax

Reopening of assessment - reopening after expiry of four years - time for AO to issue and serve the notice u/s 143(2) - Held that - AO has issued several notices u/s 142(1) asking assessee to file the relevant information. Only upon serving final opportunity by issue of letter dated 19/01/2015 only on 20/03/2015 the assessee has filed the return of income by incorporating capital gain of 2, 19, 720/-. As stated earlier AO has to complete the assessment on or before 31/03/2015 the assessee chose to file return of income only on 20/03/2015 by adopting delay tactics. There was no time for AO to issue and serve the notice u/s 143(2) to assessee and complete the assessment. In this situation assessee cannot expect to claim the benefit of issue of notice u/s 143(2) as the assessee is well aware of the assessment and chose to delay the submission of return of income. The assessee filed his return of income on 10/02/2008 but failed to disclose the sale transaction which generated capital gains. The same was declared only in the return of income which was submitted on 20/03/2015 After the expiry of four years from the end of the relevant assessment year no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer aforesaid that it is a fit case for the issue of such notice. In a case other than a case falling under sub-section (1) no notice shall be issued under section 148 by an Assessing Officer who is below the rank of Joint Commissioner after the expiry of four years from the end of the relevant assessment year unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice. Explanation.-For the removal of doubts it is hereby declared that the Joint Commissioner the Commissioner or the Chief Commissioner as the case may be being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148 need not issue such notice himself. As per section 151(2) the power to sanction was with CIT/Addl. CIT. Therefore the sanction of notice u/s 148 in the instant case by Addl. CIT was proper. Therefore the ground raised by the assessee is dismissed. Provisions of section 50C become applicable since assessee has not challenged the issue for referring to valuation cell for evaluation of market value or made any submission for selling at a lower price than SRO value we do not see any reason to interfere with CIT(A) s order.

Summary

Issues:
1. Reopening of assessment under Sec. 147 of the Income Tax Act, 1961.
2. Validity of the notice issued under Sec. 148.
3. Failure to disclose income generated from the sale transaction.
4. Application of Sec. 50C for determining capital gains.
5. Compliance with the provisions of Sec. 143(2) for assessment completion.

Analysis:

Issue 1: Reopening of assessment under Sec. 147:
The Assessing Officer (AO) initiated the reassessment for the assessment year 2007-08 due to the assessee's failure to file the return of income, leading to the belief that income chargeable to tax had escaped assessment. The Additional CIT approved the reopening, and notice u/s 148 was served on the assessee. The CIT(A) upheld the AO's decision based on the applicability of Sec. 50C, disregarding the challenge to the reopening process.

Issue 2: Validity of the notice under Sec. 148:
The assessee contested the validity of the notice under Sec. 148, arguing that it was beyond the permissible 4-year limit. However, the Tribunal dismissed this argument, stating that the notice was issued within the statutory timeframe and the sanction by the Addl. CIT was in accordance with the law.

Issue 3: Failure to disclose income from the sale transaction:
The assessee failed to disclose the income generated from the sale transaction in the return of income filed in 2008, only declaring it in the return submitted in 2015. Consequently, the Tribunal dismissed the ground raised by the assessee regarding the failure to disclose the capital gains.

Issue 4: Application of Sec. 50C for determining capital gains:
The AO applied Sec. 50C to determine the capital gains based on the stamp valuation authorities' valuation of the property. The CIT(A) affirmed this decision, stating that the AO's computation of capital gains was correct under Sec. 50C, as the market value was higher than the declared sale consideration.

Issue 5: Compliance with Sec. 143(2) for assessment completion:
The assessee argued that the assessment was completed without issuing a notice under Sec. 143(2), which is essential for jurisdiction. The Tribunal noted that the return of income was filed late, and the AO had insufficient time to issue the notice. Therefore, the Tribunal dismissed the ground raised by the assessee regarding the absence of a Sec. 143(2) notice.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the decisions of the CIT(A) and the AO regarding the reopening of assessment, application of Sec. 50C, and compliance with statutory provisions for assessment completion. The Tribunal found no merit in the grounds raised by the assessee and ruled in favor of the revenue authorities.