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2020 (12) TMI 1362 - AT - Income TaxValidity of Reopening of assessment u/s 147 - non issuing and serving of notice U/s 143(2) - assessee had filed return after stipulated period of 30 days but before finalization of assessment - HELD THAT - In the present case, the assessee had filed return, though, after stipulated period of 30 days but before finalization of assessment and in case the A.O. had found that there were problems with the return which required explanation by the assessee, then the A.O. ought to have followed up with a notice U/s 143(2). As no notice U/s 143(2) of the Act was issued which is mandatory requirement in reopen procedure and in our view issuance of notice U/s 143(2) is mandatory in reassessment proceedings initiated U/s 148 which has also been clearly laid down in the case of Alpine Electronics Asia PTE Ltd. 2012 (1) TMI 100 - DELHI HIGH COURT consedring case of M/S. HOTEL BLUE MOON 2010 (2) TMI 1 - SUPREME COURT held that Section 143(2) was applicable to a proceedings U/s 147/148 of the Act also. Since, in the present case, no notice U/s 143(2) of the Act was issued or served, therefore, in our view, it relates all the subsequent proceedings as invalid. In view of the above facts and circumstances, we set aside the orders of the authorities below and quash the reassessment proceedings initiated U/s 147 of the Act and allow grounds of assessee.
Issues Involved:
1. Initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961. 2. Jurisdiction without serving notice under Section 148. 3. Finalization of reassessment proceedings without issuing and serving notice under Section 143(2). 4. Validity of the return filed on 23.01.2015. 5. Determination of the nature of the alleged property as a capital asset. 6. Applicability of Section 50C on the alleged transactions. 7. Addition under the head Capital Gains. 8. Admission of additional evidence by the CIT(A). 9. Admission of the agreement to sale dated 22.01.2006 as additional evidence. 10. Relevant year of transfer of property. 11. Applicability of Section 50C considering the sale agreement dated 22.01.2006. 12. Modification of the assessment order without giving an opportunity to the assessee. 13. Credit of index cost of improvement. Detailed Analysis: 1. Initiation of Reassessment Proceedings under Section 147: The assessee challenged the initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961. The Tribunal noted that the reassessment was initiated based on a notice issued under Section 148 on 14/05/2012, and the assessment was completed under Section 147 read with Section 143(3) determining the total income at Rs. 1,17,70,880/-. 2. Jurisdiction without Serving Notice under Section 148: The assessee contended that the jurisdiction was resumed without serving the notice under Section 148. The Tribunal found that the notice under Section 148 was issued and served on the assessee on 07/08/2013, and the assessee was required to file the return within 30 days from the date of service of the notice. 3. Finalization of Reassessment Proceedings without Issuing and Serving Notice under Section 143(2): The Tribunal emphasized that the issuance of notice under Section 143(2) is a mandatory requirement. The assessee argued that no such notice was issued or served, rendering the reassessment proceedings void ab initio. The Tribunal referred to multiple judicial precedents, including the Supreme Court's decision in CIT Vs Hotel Blue Moon and the Rajasthan High Court's decision in PCIT Vs Kamla Devi Sharma, which held that the issuance and service of notice under Section 143(2) is mandatory and not merely procedural. 4. Validity of the Return Filed on 23.01.2015: The CIT(A) had concluded that the return filed on 23/01/2015 was "non est" as it was beyond the statutory period of 30 days from the date of service of the notice under Section 148. The Tribunal, however, found that the return was filed before the finalization of the reassessment proceedings and thus required the issuance of a notice under Section 143(2). 5. Determination of the Nature of the Alleged Property as a Capital Asset: The assessee argued that the AO erred in finalizing the reassessment without establishing whether the alleged property was a capital asset. The Tribunal did not specifically address this issue due to the quashing of the reassessment proceedings. 6. Applicability of Section 50C on the Alleged Transactions: The assessee contended that Section 50C was not applicable to the transactions and that no opportunity under Section 50C(2) was given. The Tribunal did not adjudicate this issue separately due to the quashing of the reassessment proceedings. 7. Addition under the Head Capital Gains: The AO had made an addition of Rs. 1,16,95,190/- under the head Capital Gains. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 8. Admission of Additional Evidence by the CIT(A): The assessee argued that the CIT(A) erred in not fully accepting additional evidence. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 9. Admission of the Agreement to Sale Dated 22.01.2006 as Additional Evidence: The assessee contended that the CIT(A) erred in not admitting the agreement to sale dated 22.01.2006 as additional evidence under Rule 46A. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 10. Relevant Year of Transfer of Property: The assessee argued that the transfer of property related to A.Y. 2006-07 and not A.Y. 2007-08. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 11. Applicability of Section 50C Considering the Sale Agreement Dated 22.01.2006: The assessee contended that Section 50C was not applicable as the transfer was made vide sale agreement dated 22.01.2006. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 12. Modification of the Assessment Order without Giving an Opportunity to the Assessee: The assessee argued that the CIT(A) erred in modifying the assessment order without giving an opportunity to the assessee. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. 13. Credit of Index Cost of Improvement: The assessee contended that the lower authorities erred in not giving credit for the index cost of improvement. The Tribunal did not address this issue separately due to the quashing of the reassessment proceedings. Conclusion: The Tribunal quashed the reassessment proceedings initiated under Section 147 due to the non-issuance of notice under Section 143(2), which was deemed a mandatory requirement. Consequently, the Tribunal did not adjudicate the other issues raised in the appeal. The appeal of the assessee was allowed, and the reassessment proceedings were quashed.
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