2022 (12) TMI 402 - HC - Income Tax

Reopening of assessment u/s 147 or assessment u/s 153C - HELD THAT - Undisputed facts of the case are, based on the agreement found during the search in the premises of M/s Davanam Jewellers Pvt. Ltd., the assessment was reopened for A.Y.2006-07. The assessment order does not indicate the procedure followed in re-opening the assessment. In addition protective assessment for A.Y.2007-08 has also been completed. As perused the agreement. Shri Chandrashekar is right in his submission that though the agreement is undated, the stamp paper bears the date of purchase as October 9th, 2009. The details of the payments are shown. In agreement, it is stated that the possession of the land shall be handed over after execution of the sale deed. In the facts of this case, in the absence of details in the assessment order with regard to the procedure followed and want of reasons whether assessment could be done under Section 147 or 153C which is a question of law, in our considered opinion, same requires to be answered by the ITAT. As pointed out by Sri Aravind that the question with regard to conclusion of assessment in similar case is pending consideration which has been heard and reserved for orders by the Apex Court. Thus the matter requires consideration in the hands of the ITAT. Accordingly, this matter is remitted on the file of the ITAT for fresh consideration in accordance with law.

Summary

Issues:
1. Jurisdiction of notices issued under section 148 for Assessment Years 2006-07 and 2007-08.
2. Validity of notices issued under section 148 in absence of a sale of the subject land in the impugned assessment years.
3. Correct section under which proceedings could have been initiated - section 147 or section 153C of the Act.

Analysis:

Issue 1: Jurisdiction of notices under section 148
The appellant challenged the common order dated 02.12.2021, questioning the jurisdiction of the notices issued under section 148 for the Assessment Years 2006-07 and 2007-08. The Assessing Officer had issued the notices without following due process, claiming that a sale had taken place based on an undated 'agreement to sell' found during a search. The appellant argued that the sale was not complete as of the date the stamp paper was purchased, and physical possession was to be delivered only upon execution and registration of the sale deed. The ITAT remitted the matter to the CIT(A) for fresh disposal to address the issues raised.

Issue 2: Validity of notices without sale of subject land
The appellant contended that since no sale of the subject land took place during the impugned assessment years, the notices issued under section 148 were without jurisdiction and void-ab-initio. The agreement in question was undated, but the stamp paper indicated a purchase date before the completion of the alleged sale transaction. The possession of the land was to be transferred only upon execution of the sale deed, implying that the sale was not finalized during the relevant assessment years.

Issue 3: Correct section for initiating proceedings
The debate arose regarding whether the proceedings initiated under section 147, through notices under section 148, were valid or if they should have been conducted under section 153C of the Act. The appellant argued that the initiation of proceedings under section 147 was incorrect, and the correct section should have been 153C. The ITAT remanded the case to the CIT(A) for further consideration, emphasizing the need for clarity on the procedural aspects and the appropriate legal provisions governing the assessments.

In conclusion, the High Court remitted the matter to the ITAT for fresh consideration in accordance with the law, highlighting the need for a thorough review of the procedural and jurisdictional aspects involved in the assessment proceedings. The judgment underscored the importance of addressing the legal nuances and procedural correctness in tax assessments to ensure fair and lawful outcomes.