2024 (4) TMI 802 - AT - Income Tax

Reopening of assessment - scope of new regime of reopening of assessment after introduction of provisions of section 148/148A - notices issued for assessment years 2013-14 to 2015-16 - Limitation provided in section 149 - where the escaped income is less than Rs. 50 lakhs - HELD THAT - We noted that admittedly the notice issued u/s. 148 of the Act either on 19.03.2021 or 13.04.2021, whether these are issued on 19.03.2021 i.e., extended, that falls in extended period or fresh notice issued on 13.04.2021 is of no relevance for adjudication on this issue. In either of the notice, the assessment was framed and Revenue s contention is that the notices u/s. 148 of the Act is valid under the new regime of reopening of assessment after introduction of provisions of section 148/148A of the Act. We have gone through the assessee s paper-book and examined the facts and noted that admittedly escaped income is Rs. 29,20,000/- only. Now this issue has been clarified by CBDT explaining the judgment of Hon ble Supreme Court in the case of Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT implementation of by lower authorities and accepted the position that notices cannot be issued for assessment years 2013-14 to 2015-16, wherever income escaping assessment in that year, amounts to or is likely to amount to less than fifty lakh rupees. In the present case before us, the amount is Rs. 29,20,000/-. This issue is squarely covered by the decision of Hon ble Supreme Court in Ashish Agarwal, supra, in favour of assessee and subsequently, issued instruction by CBDT and hence, we quash the notice issued u/s. 148 of the Act dated 13.04.2021 or 19.03.2021 as without jurisdiction.

Summary

Issues Involved:
The issues involved in this case are regarding the jurisdiction of the Income Tax Officer to reopen the assessment u/s 147 of the Income Tax Act without proper sanction of law and the validity of the reopening of assessment based on the amount of income escaping assessment.

Jurisdiction of Income Tax Officer:
The first issue in this appeal concerns the jurisdiction of the Income Tax Officer to reopen the assessment u/s 147 of the Act without proper sanction of law. The appellant contended that the assumption of jurisdiction was without the required legal sanction, rendering the reassessment order bad in law. The appellant argued that the reopening of assessment without fresh and tangible materials amounted to a change of opinion, making it null and void. Additionally, the appellant claimed that the procedure for conducting reassessment was not followed as per the guidelines laid down by the Apex Court, thereby vitiating the impugned order.

Factual Background:
The appellant, an individual and NRI, sold an immovable property during the assessment year 2013-14 and computed capital gains accordingly. The Assessing Officer (AO) reopened the assessment upon discovering a variance between the value declared by the appellant and the guideline value from the TNREGINET website. The AO added additional income on account of capital gains as per Section 50C of the Act, leading to a dispute resolution process. The Dispute Resolution Panel upheld the reopening of assessment, prompting the appellant to appeal to the Tribunal.

Legal Arguments:
The appellant's counsel argued that the notice issued by the AO fell under the new regime of taxation for reopening assessments u/s 148 of the Act. Referring to a CBDT instruction clarifying the Supreme Court's decision in Union of India vs. Ashish Agarwal, the appellant contended that the escaped income being less than Rs. 50 lakhs, the AO lacked jurisdiction to reopen the assessment. The counsel highlighted the specific instructions issued by CBDT regarding cases where income escaping assessment is below the specified threshold.

Tribunal Decision:
After hearing both parties and examining the facts, the Tribunal found that the notice issued by the AO was invalid under the new regime of reopening assessments. Given that the escaped income was only Rs. 29,20,000, falling below the threshold specified by CBDT, the Tribunal quashed the notice issued by the AO as lacking jurisdiction. Consequently, the Tribunal allowed the appeal of the assessee, thereby setting aside the reassessment.

Conclusion:
The Tribunal's decision focused on the lack of jurisdiction of the Income Tax Officer to reopen the assessment based on the amount of income escaping assessment. By applying the guidelines set forth by the CBDT and the Supreme Court's decision, the Tribunal ruled in favor of the appellant, ultimately allowing the appeal and quashing the reassessment.