2018 (12) TMI 1067 - AT - Income Tax

Reopening of assessment - addition in respect of renovation made in the house - assessment as time barred - no opportunity of being heard given to assessee - Held that - Undisputedly the assessee was not a party before the Tribunal. Even no notice of hearing was given to the assessee by the Tribunal. We are of the considered view that the assessee was not given opportunity of being heard therefore relying upon judgment of Hon ble Delhi High Court in the case of Rural Electrification Corporation Ltd. vs. CIT & Anr (2013 (7) TMI 317 - DELHI HIGH COURT) we hold that normal period of limitation would apply as per the notice issued u/s 148 of the Act and assessment framed thereafter is clearly barred by time. The assessment framed is hereby quashed for being time barred - Decided in favour of assessee.

Issues:
1. Validity of notice issued under section 148 of Income Tax Act 1961
2. Limitation period for notice issued under section 148 of I.T. Act 1961
3. Justification of addition made by Assessing Officer
4. Confirmation of addition by CIT(A) as unexplained investment
5. Liability to pay interest under section 234A, 234B, 234C, and 234D of I.T. Act 1961

Issue 1: Validity of notice issued under section 148 of Income Tax Act 1961
The appellant challenged the initiation of proceedings under section 148 of the Act, arguing that they were illegal and barred by limitation. The appellant contended that the notice was issued beyond the prescribed time limit, citing a judgment of the Hon'ble Delhi High Court. The appellant emphasized that the Tribunal's observation in another case did not extend the limitation period. The Departmental Representative supported the authorities' orders. The Tribunal noted that the appellant was not given an opportunity to be heard, following the Delhi High Court judgment, and held that the assessment was time-barred, thereby quashing the assessment.

Issue 2: Limitation period for notice issued under section 148 of I.T. Act 1961
The appellant raised concerns about the notice issued under section 148 being beyond the limitation period. The appellant relied on the judgment of the Hon'ble Delhi High Court, emphasizing the importance of providing an opportunity to be heard before concluding on tax liability. The Tribunal, following the Delhi High Court's ruling, concluded that the appellant was not given a chance to be heard, thus applying the normal limitation period and quashing the assessment as time-barred.

Issue 3: Justification of addition made by Assessing Officer
The Assessing Officer made an addition of a significant amount in relation to renovation expenses in the house, leading to a higher assessed total income. The appellant contended that the addition was unjustified and unwarranted, particularly based on loose papers. The Tribunal did not delve into the merits of this ground due to quashing the assessment on limitation grounds.

Issue 4: Confirmation of addition by CIT(A) as unexplained investment
The CIT(A) confirmed the addition as unexplained investment in the house, which the appellant disputed. However, the Tribunal did not address this issue on its merits due to the assessment being quashed on limitation grounds.

Issue 5: Liability to pay interest under section 234A, 234B, 234C, and 234D of I.T. Act 1961
The appellant denied liability to pay interest under the specified sections of the Act, claiming it was unjustified and excessive. However, as the assessment was quashed on limitation grounds, the Tribunal did not delve into the issue of interest liability.

In conclusion, the Tribunal allowed the appeal filed by the assessee, quashing the assessment due to being time-barred, as per the notice issued under section 148 of the Act. The judgment highlighted the importance of providing an opportunity to be heard before determining tax liability and emphasized the adherence to the prescribed limitation periods in such cases.

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