2024 (8) TMI 744 - AT - Income Tax

Reopening of assessment u/s 147 - whether the assessee is non-filer or not? - Reopening were initiated on the basis of survey operation conducted at Hotel Sagar Proprietary concern of Wife of Karta of HUF - HELD THAT - There is no mention by the assessee having filed the original return and neither that fact has been mentioned in the reasons so recorded by the AO how there can be reason to believe that the income has escaped assessment by the reason on the failure on the part of the assessee to disclose fully and truly all material facts necessary for assumption of jurisdiction u/s 148. Thus, by not recording the fact that the assessee had filed the original return, which is evident from record, it is very much clear that the reasons are wrong and on the basis of these wrong reasons, the assumption of jurisdiction by the AO u/s 148 is invalid. We are fortified by the Judgement of of Gaurav Joshi, 2019 (1) TMI 1893 - ITAT AMRITSAR Sagar Enterprises 2001 (12) TMI 18 - GUJARAT HIGH COURT and also Fortune Metaliks Ltd. 2021 (2) TMI 781 - ITAT CHANDIGARH , Monika Rani , 2020 (9) TMI 271 - ITAT CHANDIGARH Baba Kartar Singh Dukku Education Trust 2015 (5) TMI 1200 - ITAT CHANDIGARH and in all the above said judgments, it has been held that where wrong facts have been recorded regarding the filing of return, the assumption of jurisdiction u/s 148 was not valid and also that the Assessing Officer has not applied his mind independently. Decided in favour of assessee.

Summary

Issues:
1. Validity of addition confirmed by CIT(A)
2. Failure to disclose material facts for assessment
3. Mechanical approval of notice issuance
4. Confirmation of undisclosed investment in advances
5. Confirmation of entries in impounded documents
6. Assumption of jurisdiction by Assessing Officer under section 148

Analysis:

Issue 1: Validity of addition confirmed by CIT(A)
The appellant challenged the addition of Rs. 76,69,038 out of the total addition of Rs. 1,00,84,653 made by the Assessing Officer. The CIT(A) confirmed the addition, leading to the appeal. The appellant argued that the CIT(A) erred in confirming the addition without proper consideration of facts and law.

Issue 2: Failure to disclose material facts for assessment
The appellant contended that the Assessing Officer's finding regarding the failure to disclose material facts for assessment was void ab initio. The appellant argued that the original return was filed, and the reasons recorded by the Assessing Officer were incorrect, leading to non-application of mind. The appellant cited various judgments to support this argument.

Issue 3: Mechanical approval of notice issuance
The appellant raised concerns about the mechanical approval of granting sanction for the issuance of notice by the Joint Commissioner of Income Tax. Citing recent judgments, the appellant argued that the mechanical approval rendered the proceedings void ab initio.

Issue 4: Confirmation of undisclosed investment in advances
The CIT(A) confirmed the addition of Rs. 29,75,000 on account of alleged undisclosed investment in advances. The appellant challenged this confirmation, arguing that the CIT(A) erred in confirming the addition.

Issue 5: Confirmation of entries in impounded documents
The CIT(A) also confirmed the addition of Rs. 46,94,038 based on entries in impounded documents. The appellant disputed this confirmation, alleging an error in the CIT(A)'s decision.

Issue 6: Assumption of jurisdiction by Assessing Officer under section 148
The core issue revolved around the Assessing Officer's assumption of jurisdiction under section 148 for reassessment. The appellant argued that the reasons recorded by the Assessing Officer were incorrect and did not reflect the filing of the original return. Citing relevant case law, the appellant contended that the assumption of jurisdiction was invalid.

In the final judgment, the tribunal quashed the reassessment proceedings initiated under section 148, citing incorrect reasons recorded by the Assessing Officer and lack of independent application of mind. The tribunal relied on previous judgments to support its decision. Consequently, the appeal of the assessee was allowed, rendering other grounds moot due to the quashing of the reassessment proceedings.