2020 (1) TMI 964 - AT - Income Tax

Reopening of assessment u/s 147 - long-term capital had escaped assessment - tangible material - HELD THAT - Specific information received by the Assessing Officer, which constituted tangible material, was analysed, verified and cross-checked by the Assessing Officer and after such analysis and cross verification, a belief was formed by him that this substantial long-term capital gain chargeable to tax in the hands of the assessee for the year under consideration had escaped assessment. He accordingly recorded the reasons giving the details of specific information received by him, analysis and inquiries made by him to cross verify the said information and findings of fact arrived at on the basis of such analysis and cross-verification, which ultimately formed the basis or reason to believe that the income of the assessee in the form of long-term capital had escaped assessment for the year under consideration. In our opinion, the tangible material coming to his possession thus was properly and adequately analysed and cross verified by the Assessing Officer and after arriving at the satisfaction by applying his mind to the relevant facts of the case as emerging from the analysis and cross verification of the tangible material, a belief was formed by the Assessing Officer about the escapement of income of the assessee from the assessment for the year under consideration. The assessment of the assessee for the year under consideration thus was reopened by the Assessing Officer after arriving at his own satisfaction by analysing and cross-verifying the information received by him and since the same is clearly evident from the reasons recorded by him, we are of the view that the reopening of assessment by the Assessing Officer is in accordance with law and there is no legal infirmity as alleged on behalf of the assessee. We, therefore, find no merit in the case of the assessee on this issue and reject the same - Decided against assessee.

Summary

Issues Involved:
1. Validity of the notice issued under section 148 by the ITO, Ward-2(3), Cuttack.
2. Jurisdiction of the ITO, Ward-2(3), Cuttack at the time of issuing the notice.
3. Application of mind by the Assessing Officer while forming the belief of income escapement.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued under Section 148:
The assessee contended that the ITO, Ward-2(3), Cuttack issued the notice under section 148 without having jurisdiction as the assessee had shifted to Midnapore, West Bengal. The notice was issued to the address in Midnapore, which indicated that the ITO, Ward-2(3), Cuttack was aware of the change in address. The Tribunal upheld the validity of the notice, stating that the jurisdiction over the assessee’s case was with the ITO, Ward-2(3), Cuttack when the notice was issued on 30.03.2018. The Tribunal referred to the Supreme Court judgment in Principal CIT vs. M/s. I-Ven Interactive Limited, which held that mere mentioning of a new address in the return of income without specifically intimating the Assessing Officer and without getting the PAN database changed is not sufficient. Therefore, the notice issued by the ITO, Ward-2(3), Cuttack was valid.

2. Jurisdiction of the ITO, Ward-2(3), Cuttack:
The assessee argued that the ITO, Ward-2(3), Cuttack did not have jurisdiction to issue the notice under section 148 as the address had changed to Midnapore. The Tribunal noted that the assessee did not inform the ITO, Ward-2(3), Cuttack about the change of address, nor did he request for the transfer of jurisdiction. The jurisdiction was transferred to the ITO, Ward-38(4), Midnapore only after the Principal CIT passed an order under section 127 on 14.09.2018. The Tribunal concluded that the ITO, Ward-2(3), Cuttack had jurisdiction over the assessee’s case when the notice under section 148 was issued and the subsequent transfer of jurisdiction did not invalidate the notice.

3. Application of Mind by the Assessing Officer:
The assessee claimed that the notice under section 148 was issued mechanically without the Assessing Officer applying his mind to the material on record. The Tribunal found that the Assessing Officer had specific information from the Investigation Wing about the sale of immovable property and the resultant long-term capital gain. The Assessing Officer verified the information, computed the capital gain, and noted that the assessee had not filed a return for the relevant year. The Tribunal held that the Assessing Officer had tangible material, made necessary verifications, and applied his mind before forming the belief that income had escaped assessment. The reopening of the assessment was thus in accordance with law.

Conclusion:
The appeal of the assessee was dismissed, and the validity of the notice issued under section 148, the jurisdiction of the ITO, Ward-2(3), Cuttack, and the application of mind by the Assessing Officer were upheld. The Tribunal found no merit in the arguments presented by the assessee and confirmed the assessment made under section 144/147.