2022 (3) TMI 1232 - AT - Income Tax

Validity of reopening of assessment - Non-issuance of notice u/s. 148 - case of the assessee is that no notice u/s. 148 was issued, which is a condition precedent for exercising jurisdiction u/s. 147 - HELD THAT - As evident that recourse to reassessment under section 147 can be taken only after notice u/s. 148. In the absence of any notice u/s. 148, there can be no re-assessment. Here is a case in which there is no evidence of the AO issuing notice u/s. 148 of the Act, which fact has also transpired from the remand report furnished by the AO. Once it is proved that notice u/s.148 was not issued, there cannot be any question of making any reassessment. Reliance of CIT(A) on the provisions of section 292BB is misplaced because the said section only stipulates that participation in the assessment proceedings/reassessment proceedings would be deemed as a proper service of notice. This section does not deal with the issuance of the requisite notice. In the case of CIT vs. Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT has held that section 292BB deals with failure of service of notice and not failure to issue notice. Since, admittedly, no notice was issued u/s. 148 in this case, we are satisfied that the entire edifice of reassessment created by the AO is without any bedrock. Appeal of allowed.

Summary

Issues:
1. Non-issuance of notice u/s. 148 of the Income-tax Act, 1961

Analysis:
The appeal before the Appellate Tribunal ITAT Pune pertains to the order passed by the CIT(A)-9, Pune, concerning the assessment year 2011-12. The primary issue raised in the appeal is the non-issuance of notice under section 148 of the Income-tax Act, 1961. The case involves the construction of a new hospital-cum-residential building by the assessee, leading to a valuation dispute between the assessee and the Departmental Valuation Officer (DVO). The Assessing Officer (AO) initiated reassessment proceedings due to the variance in valuation figures, resulting in an addition to the income of the assessee. The assessee contended that no notice under section 148 was issued before the reassessment proceedings commenced. The Ld. CIT(A) relied on section 292BB to validate the assessment, stating that the participation of the assessee in the proceedings implied the service of notice. However, the Appellate Tribunal observed that the absence of a notice under section 148 rendered the reassessment invalid.

The Appellate Tribunal, after considering the arguments from both sides and examining the records, concluded that the reassessment order was flawed due to the non-issuance of notice under section 148. While section 292BB deals with the improper service of notice and deems participation as validation, it does not address the absence of the requisite notice itself. Citing a Supreme Court judgment, the Tribunal emphasized that section 292BB pertains to failure of service, not failure to issue notice. As no notice under section 148 was issued in the present case, the reassessment conducted by the AO was deemed invalid, leading to the setting aside of the impugned order. Consequently, the appeal was allowed, and the reassessment order was overturned.

In summary, the Appellate Tribunal's judgment focused on the crucial issue of non-issuance of notice under section 148 of the Income-tax Act, 1961. The Tribunal clarified that participation in proceedings does not substitute for the mandatory requirement of issuing a notice under section 148 for reassessment. By highlighting the legal position and relevant precedents, the Tribunal invalidated the reassessment order due to the absence of the essential notice, emphasizing the importance of adhering to procedural requirements in tax assessments.