2021 (4) TMI 342 - AT - Income Tax

Reopening of assessment u/s 147 - assessee has sold an immoveable property, she has failed to respond to notice u/s. 133(6) and thus, the assessee has failed to disclose the said transaction and which has thus been made the basis for reopening the assessment proceedings - HELD THAT - The fact that there is a return of income already filed by the assessee wherein she has disclosed the said transaction has thus not been considered by the AO while recording the reasons. The assessee may not have responded to notice u/s. 133(6), however, where she has already filed her return of income and wherein the said transaction has been duly disclosed, there cannot be any failure on part of the assessee to disclose truly and fully such transaction. Thus, the very basis for reopening the assessment is basis incomplete facts available on record where such transaction has been duly disclosed and offered to tax which shows non-application of mind by the AO while recording the reasons and it cannot be held that there is a nexus between the material available on record and formation of belief that the income has escaped assessment. See NARAIN DUTT SHARMA VERSUS INCOME-TAX OFFICER, WARD- 6 (1) , JAIPUR 2018 (4) TMI 427 - ITAT JAIPUR Thus where the very foundation for reopening the case is vitiated given that the assessee has filed her return of income disclosing the transaction of sale of immovable property for the specified consideration and offering the same to tax, there cannot be any reasons to believe that income has escaped assessment for the very same transaction the assumption of jurisdiction u/s. 147 cannot be sustained and the subsequent proceedings are hereby directed to be set-aside. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment proceedings under section 147.
2. Reopening of assessment based on undisclosed immovable property sale.
3. Additions made by Assessing Officer.
4. Jurisdictional validity of charging interest under sections 234A, 234B, and 234C.

Issue 1: Validity of assessment proceedings under section 147:
The appellant challenged the validity of the assessment proceedings under section 147, contending that the Assessing Officer (AO) lacked jurisdiction in issuing the notice under section 148. The appellant argued that the AO did not consider the material available on record before concluding that income had escaped assessment. The appellant emphasized that the capital gains from the sale of the immovable property were duly disclosed in the original return of income. The appellant further asserted that the AO's failure to acknowledge the disclosed transaction in the original return indicated a lack of proper application of mind. The appellant cited relevant case laws to support the argument that the notice issued under section 148 was based on incomplete facts and lacked a nexus between the available material and the belief of income escapement.

Issue 2: Reopening of assessment based on undisclosed immovable property sale:
The AO reopened the assessment based on the alleged non-disclosure of the sale of an immovable property by the appellant. However, the appellant contended that the AO's reasoning for reopening the assessment was flawed as the transaction in question had already been disclosed in the original return of income. The appellant highlighted that despite not responding to a notice under section 133(6), the transaction was duly declared in the original return, rendering the basis for reopening the assessment invalid. The appellant presented a case law precedent to support the argument that failure to disclose the transaction was not established, and the reopening of the assessment lacked a valid foundation.

Issue 3: Additions made by Assessing Officer:
The Assessing Officer made additions to the appellant's income, including a trading addition and a long-term capital gain addition. The appellant contested these additions, arguing that they were contrary to the provisions of the Income Tax Act. Specifically, the appellant challenged the trading addition made without invoking section 145(3) of the Act and the long-term capital gain addition due to disallowance of construction and transfer expenses. The appellant sought the deletion of these additions, claiming that they were not supported by law and facts on record.

Issue 4: Jurisdictional validity of charging interest under sections 234A, 234B, and 234C:
The appellant disputed the charging of interest under sections 234A, 234B, and 234C by the AO, denying any liability for such charges. The appellant argued that the interest levied was not in accordance with the law and facts of the case. The appellant sought the deletion of the interest charges imposed by the AO, asserting that they were unjustified and contrary to legal provisions.

In conclusion, the Appellate Tribunal, ITAT Jaipur, ruled in favor of the appellant, partially allowing the appeal. The Tribunal set aside the assessment proceedings under section 147, emphasizing the lack of a valid basis for reopening the assessment due to the disclosed transaction in the original return of income. The Tribunal held that the additions made by the Assessing Officer were not sustainable and directed the deletion of the trading and long-term capital gain additions. Additionally, the Tribunal invalidated the charging of interest under sections 234A, 234B, and 234C, directing their deletion. The Tribunal's decision highlighted the importance of proper application of law and consideration of factual evidence in assessment proceedings.