2019 (1) TMI 1893 - AT - Income Tax

Reopening of assessment u/s 147 - Jurisdiction of AO to issue notice - HELD THAT - In the present case, it is an admitted fact that the ITO-1(5), Ludhiana issued the notice u/s 148 r.w.s. 147 of the Act, thereafter, the jurisdiction was transferred to the ITO-1(5), Jalandhar who never issued the notice u/s 148 of the Act but framed the assessment u/s 143(3) - As relying on JAWAHAR LAL AGARWAL VERSUS ITO-4 (2) , AGRA 2018 (3) TMI 936 - ITAT AGRA he assessment framed by the AO who had not issued notice u/s 148 r.w.s. 147 of the Act is quashed. Addition u/s 69 of the Act on account of non declaration of cash and other deposits in bank account. Reasons to believe - AO while issuing the notice u/s 148 of the Act has mentioned that the assessee had deposited a cash of ₹ 1,39,28,640/- during the financial year 2009-10 in the bank account which had escaped assessment. On the contrary, in the assessment order, he mentioned that the cash deposited in the bank account of the assessee was ₹ 51,24,064/-, which is evident from para 8.3 off the assessment order dated 14.12.2017. Therefore, the reasons recorded by the AO were not emerging from the record available with him. AO recorded the reasons which were not found to exists on the record, therefore, the reassessment framed deserves to be quashed. In view of the aforesaid discussion, we are of the confirmed view that viewed from any angle, the reassessment framed by the AO was not justified, hence quashed. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdiction of the Assessing Officer in reopening the assessment under section 147 r.w.s 148 of the Income Tax Act, 1961.
2. Validity of the assessment order based on the reasons recorded by the Assessing Officer.

Issue 1: Jurisdiction of the Assessing Officer in reopening the assessment under section 147 r.w.s 148 of the Income Tax Act, 1961:

The appeal raised concerns regarding the jurisdiction of the Assessing Officer (AO) in reopening the assessment under section 147 r.w.s 148 of the Income Tax Act. The AO initiated proceedings based on the assessee's cash deposits, leading to the assessment of additional income. The appellant contended that the assessment was conducted by an officer different from the one who issued the notice under section 148. Citing a relevant ITAT Agra Bench decision, the appellant argued that the assessment was invalid due to the lack of jurisdiction by the assessing officer who framed the assessment. The Tribunal, following the precedent, held that the assessment conducted without the proper issuance of notice under section 148 was unlawful and consequently quashed the assessment.

Issue 2: Validity of the assessment order based on the reasons recorded by the Assessing Officer:

The second issue revolved around the validity of the assessment order in light of the reasons recorded by the Assessing Officer. The AO's reasons for reopening the assessment were based on substantial cash deposits by the assessee, which were later found to be inaccurately stated in the assessment order. The appellant argued that discrepancies between the reasons recorded and the actual deposits rendered the reassessment unjustified. Drawing from a decision by the Jurisdictional High Court, the Tribunal emphasized that if the grounds for reassessment were found to be non-existent, the AO lacked jurisdiction to proceed. Consequently, the Tribunal held that the reassessment, being unjustified due to the discrepancies in the reasons recorded, was quashed. The Tribunal allowed the appeal, affirming that the reassessment was not legally valid.

This judgment by the Appellate Tribunal ITAT Amritsar highlights the importance of proper jurisdiction and accurate reasons in the assessment process under the Income Tax Act, 1961. The Tribunal's detailed analysis and reliance on legal precedents demonstrate a meticulous approach to ensuring the legality and validity of assessments, ultimately upholding the principles of natural justice and fair tax administration.