2021 (8) TMI 804 - AT - Income Tax

Reopening of assessment u/s 147 - non issue of notice under section 143(2) - HELD THAT - There is no dispute that the Assessing Officer issued notice under section 148 on 7.1.2010 and assessee has not filed any return of income in response to the said notice under section 148. There is no requirement of issuing any notice under section 143(2) by the Assessing Officer and thus the notice issued by the AO under section 143(2) on 29.06.2010 cannot be challenged on the ground of limitation. The issuance of notice under section 143(2) in the absence of any return filed by the assessee shall have no consequence. Hence, the assessment framed by the Assessing Officer under section 143(3) read with section 147 cannot be challenged on the ground of limitation for notice under section 143(2) of the Act. Accordingly, the ground no. 1 of assessee s appeal is de void of any merit and substance and the same is dismissed. Validity of initiation of proceedings u/s 148 - as argued while recording the reasons AO has not quantified the income chargeable to tax which has escaped assessment - HELD THAT - The case of the assessee does not fall in any of the clauses of section 149(1) of the Income Tax Act then the decisions relied upon the learned AR of the assessee are not applicable. Accordingly, when all the primary facts are available with the Assessing Officer, the objection raised by the assessee against the validity of notice under section 148 is without any merit or substance, the same is rejected. Addition applying the provisions of section 50C - Assessee claimed that the sale consideration received by the assessee as stated in the sale deed is the actual fair market price of the property in question - HELD THAT - Despite objection raised by the assessee, the Assessing Officer did not proceed to determine the fair market value of the property in question as provided under section 50C(2) - Once the assessee has raised the objection against the adoption of deemed full value consideration in terms of section 50C of the Income Tax Act, the Assessing Officer is duty bound to refer the matter to the DDO for determination of the fair market value of the property in terms of section 50C(2) of the Income Tax Act. Since, the Assessing Officer has not taken any step to determine the fair market value therefore, in the facts and circumstances of the case, this issue of fair market value of the property in question is set aside to the record of the Assessing Officer to refer the same to the DVO, and then be decided as per law, after giving an opportunity of hearing to the assessee.

Issues Involved:
1. Validity of reassessment under section 143(3) read with section 147.
2. Ex-parte order passed by CIT(A) without providing reasonable opportunity.
3. Validity of proceedings initiated under section 148.
4. Determination of property value under section 50C.
5. Assessment of capital gains by lower authorities.
6. Right to raise new grounds of appeal.

Issue-wise Detailed Analysis:

1. Validity of Reassessment under Section 143(3) read with Section 147:
The assessee challenged the reassessment on the grounds that the notice under section 143(2) was issued beyond the limitation period. However, it was established that the notice under section 148 was issued on 7.1.2010, and the assessee did not file any return in response. Consequently, the notice under section 143(2) issued on 29.06.2010 was within the limitation period. The reassessment framed under section 143(3) read with section 147 was upheld as valid, and the ground was dismissed.

2. Ex-parte Order Passed by CIT(A):
This ground became infructuous as the matter was set aside to the Assessing Officer for a fresh determination of the fair market value of the property. Therefore, the ex-parte order issue was dismissed.

3. Validity of Proceedings Initiated under Section 148:
The assessee contended that the Assessing Officer did not quantify the escaped income while recording reasons for reopening under section 148, arguing that the reopening was based on suspicion. However, it was noted that the notice under section 148 was issued within four years from the end of the assessment year, making the quantification of escaped income unnecessary at that stage. The primary facts regarding the transaction were on record, and the objection was found to be without merit. The validity of the notice under section 148 was upheld.

4. Determination of Property Value under Section 50C:
The assessee objected to the adoption of the deemed full value consideration under section 50C, claiming the sale consideration stated in the sale deed was the actual fair market price. The Assessing Officer failed to refer the matter to the DVO for determining the fair market value as required under section 50C(2). The issue was set aside to the Assessing Officer to refer the matter to the DVO and decide as per law after providing an opportunity of hearing to the assessee.

5. Assessment of Capital Gains by Lower Authorities:
The lower authorities were criticized for arbitrarily determining the capital gains. Given the reassessment of the fair market value, this issue was indirectly addressed by setting aside the matter to the Assessing Officer.

6. Right to Raise New Grounds of Appeal:
The assessee reserved the right to raise any fresh grounds of appeal before the hearing, but this was not substantively addressed in the judgment.

Conclusion:
The appeal was allowed for statistical purposes, with the key issue of determining the fair market value of the property being remanded to the Assessing Officer. The reassessment under section 143(3) read with section 147 and the validity of the notice under section 148 were upheld. The ex-parte order issue was rendered moot due to the remand. The order was pronounced on 13.08.2021 through video conferencing at Allahabad.

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