2023 (2) TMI 149 - AT - Income Tax

Reopening of assessment u/s 147 - non service of the notice under section 148 of the act and 142 (1) of the act - HELD THAT - The statutory notice under section 148 of the act has never been served upon the appellant assesse. The revenue authorities, the AO, the CIT(A) and the Ld. DR has failed to brought on record any material evidence to controvert the contention of the appellant. In our considered view, the impugned order suffered legal infirmities and perversities to the peculiar facts on record which cannot be approved. Accordingly, we hold that the assumption of jurisdiction u/s 147 of the act, in absence of service of notice under section 148 in invalid and therefore, the consequent assessment order is held to be illegal and bad in law. Thus, the ground no. 3 on legal issue, challenging the validity of assessment on account of non-service of notice u/s 148 of the act is allowed. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Validity of assumption of jurisdiction in absence of non-service of notice under section 148 and 142(1) of the act.
2. Confirmation of addition of alleged unexplained investment under section 69 of the Act.

Analysis:
Issue 1: Validity of assumption of jurisdiction in absence of non-service of notice under section 148 and 142(1) of the act.
The appellant challenged the order passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, arguing that the assessing officer assumed jurisdiction without serving notices under section 148 and 142(1) of the Act. The appellant supported their argument with an affidavit and case laws. The CIT(A) dismissed the challenge stating that the notices were served, but the appellant contended that the rejection was unjustified. The High Court held that the statutory notice under section 148 was never served on the appellant, and there was no evidence to refute the appellant's claim. Consequently, the assumption of jurisdiction under section 147 without serving the notice under section 148 was deemed invalid, rendering the assessment order illegal and bad in law.

Issue 2: Confirmation of addition of alleged unexplained investment under section 69 of the Act.
The appellant contested the addition of Rs. 11,44,800 as unexplained investment under section 69 of the Act. They argued that the addition was based on assumptions and presumptions, which are not permitted under the law. The appellant claimed that Rs. 10,00,000 was paid as an advance in the previous year, supported by an agreement to sell. However, the CIT(A) upheld the addition. Since the appellant succeeded on the legal ground of non-service of notice under section 148, other grounds on merits were not adjudicated. Consequently, the appeal of the assessee was allowed, and the assessment order was deemed invalid due to the lack of proper service of notice under section 148.

In conclusion, the judgment focused on the legal issue of the validity of assumption of jurisdiction based on the non-service of notice under section 148, ultimately leading to the allowance of the appellant's appeal and the rejection of the assessment order.