2024 (5) TMI 642 - AT - Income Tax

Reopening of assessment - notice u/s 148 issued beyond the period of four years - As per assessee AO has not recorded a belief that income escaped was more than Rs. 1,00,000/-, which was required u/s 149(1)(b) - HELD THAT - Assessing officer was required to record that income escaped was more than Rs. one lakh but in copy of the reasons recorded provided to the assessee, the Assessing Officer has not complied with the mandatory condition of tax effect involved being more than Rs. 1,00,000/-. As in the case of Hindustan Unilever ltd in 2021 (10) TMI 466 - BOMBAY HIGH COURT held the assessing officer has to specifically point out the failure on the part of the assessee in disclosing all the material facts and in absence therefore , reassessment proceedings is invalid in law. In instant case also in absence of any such satisfaction in the reasons recorded, the assessment proceedings are void ab-initio, therefore, same are quashed. The appeal of the assessee is accordingly allowed.

Summary

Issues involved:
The judgment involves issues related to assessment under section 143(3) read with section 147, addition of sale consideration under section 69A, validity of assessment order without DIN, and compliance with conditions of section 149(1)(b) for reopening assessment.

Assessment under section 143(3) read with section 147:
The appeal challenged the confirmation of the assessment order passed under section 143(3) read with section 147, highlighting the absence of notice under section 143(2) issued by the Income Tax Officer. The appellant contended that the assessment order was invalid and bad in law due to the lack of a computer-generated Document Identification Number (DIN) and failure to state facts in the required format as per circular no. 19 of 2019. The Tribunal admitted the additional ground raised by the appellant for adjudication, emphasizing that no fresh facts were involved, and the issue was purely legal in nature. The Tribunal ultimately allowed the appeal, ruling in favor of the assessee.

Addition of sale consideration under section 69A:
Another issue raised was the confirmation of the addition of Rs. 1,45,00,000 as 100% sale consideration of a flat under section 69A. The appellant argued that the sale consideration should not have been fully attributed to them as their ownership share in the flat was only 50%. Additionally, the appellant contended that the deduction of the cost of the flat and expenses incurred in the relevant financial year was not provided. The Tribunal, after considering the submissions, allowed the appeal of the assessee, indicating that the reassessment proceedings were quashed, rendering the other grounds academic and not requiring adjudication.

Validity of assessment order without DIN and compliance with section 149(1)(b):
The issue of the validity of the assessment order without a DIN and compliance with section 149(1)(b) for reopening the assessment was also addressed. The Tribunal analyzed the reasons recorded by the Assessing Officer and the contentions of both parties regarding the income escaped being more than Rs. 1,00,000 as required under section 149(1)(b). Discrepancies were noted between the reasons provided by the Assessing Officer and those produced during the hearing, raising doubts about the authenticity of the reasons. The Tribunal held that the Assessing Officer failed to comply with the mandatory condition of tax effect exceeding Rs. 1,00,000, leading to the quashing of the reassessment proceedings. Consequently, the appeal of the assessee was allowed based on these findings.