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2024 (12) TMI 1172 - AT - Income TaxReopening of assessment u/s 147 - final Assessment order u/s 147 r/w section 144 in pursuance to the direction of DRP u/s 144C(5) for the Assessment Year 2013-14 - HELD THAT - As per notice dated 25.06.2021 u/s 148 of the Act, assessee sold two properties for sale. Assessee in reply dated 31.10.2021 claimed that assessee had 1/6th share in the property. Copies of sale deeds clearly mentioned assessee s shares as 1/6th i.e. 16.69%. T AO in compliance of judgment of Hon ble Supreme Court of Union of India vs. Ashish Aggarwal 2022 (5) TMI 240 - SUPREME COURT and CBDT Instruction No.1 dated 11.05.2022 converted notice under section 148 into a deemed show-cause notice under Clause (B) of Section 148A of the Act and issued fresh notice dated 01.06.2022. Notice dated 28.07.2022 u/s 148 of the Act for reopening of A.Y. 2013-14 based on income below Rs. 50,00,000/- is contrary to law. Therefore, the directions of DRP dated 26.02.2024 and assessment order dated 22.03.2024 are illegal and are set aside. Appeal filed by the assessee is allowed.
Issues:
Challenge to final Assessment order under section 147 read with section 144 of the Income Tax Act, 1961 for Assessment Year 2013-14 based on notice under section 148, validity of notice under section 148, source of investment for Long Term Capital Gain (LTCG), legality of assessment order, period of limitation, absence of notice under section 143(2), and adequacy of opportunity afforded before passing final assessment order. Analysis: The judgment pertains to an appeal challenging the final Assessment order under section 147 read with section 144 of the Income Tax Act, 1961 for the Assessment Year 2013-14. The appeal was filed by the assessee against the order dated 22.03.2024 of the Assessing Officer (AO), which was issued pursuant to the direction of the Dispute Resolution Panel-1, New Delhi under section 144C(5) of the Act. The case involved a notice under section 148 of the Act issued to the assessee for allegedly not disclosing true facts of her income in the Income Tax Return (ITR). The assessee was notified of the sale of two properties in Katra for a total consideration of Rs. 86,27,000/-, with the tax liability remaining unverified and unexplained. The assessee clarified her share in the properties as 1/6th, amounting to Rs. 14,39,500/-. The copies of sale deeds submitted clearly indicated the assessee's share as 16.69% or 1/6th. The Assessing Officer, in compliance with relevant judgments and instructions, converted the notice under section 148 into a deemed show-cause notice under Clause (b) of Section 148A and issued a fresh notice. However, the subsequent notice issued for reopening the assessment for A.Y. 2013-14 based on income below Rs. 50,00,000/- was deemed contrary to law. The appellant/assessee contended that the notice under section 148 was barred by the period of limitation and that the assessment order was illegal due to the absence of a notice under section 143(2). It was argued that the assessment order under section 147 read with section 144 was void ab initio and illegal. The Department of Revenue, on the other hand, emphasized the failure of the assessee to explain the source of investment for the Long Term Capital Gain (LTCG) arising from the sale of properties. Upon examination of the record and rival contentions, it was concluded that the notice issued for reopening the assessment for A.Y. 2013-14 based on income below Rs. 50,00,000/- was against the law. Consequently, the directions of the Dispute Resolution Panel and the assessment order were deemed illegal and set aside. As a result, the appeal filed by the assessee was allowed.
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