2020 (11) TMI 769 - AT - Income Tax

Condonation of delay - delay of 132 days - As submitted assessee was seriously ill and was undergoing medical treatment from 5.6.2019 and was advised complete bed rest by the doctor and, therefore, he was unable to do his normal activities - HELD THAT - There can be no presumption of deliberateness or negligence or mala fides in case of delay, because litigants run a serious risk without any benefit by the delay. The judiciary is respected not for legalizing injustice on technical grounds but for removing injustice. We find that the assessee had reasonable cause for not filing the appeal within the stipulated time. Respectfully following the decision of Hon ble Supreme Court in the case of Mst Katiji 1987 (2) TMI 61 - SUPREME COURT we condone the delay of 132 days in filing the appeal before the Tribunal and admit the appeal for hearing. Reopening of assessment u/s.147 - Reassessment proceedings u/s.147 before expiry of limitation period for issuing notice u/s.143(2) - Undisclosed investment - value disclosed in the Registered Sale Deed when there was no such transaction - HELD THAT - Unless the return filed by the assessee is scrutinized by the AO by way of issuing notice u/s.143(2) he cannot come to the conclusion of any escapement of income by the assessee for the relevant assessment year. If the AO issues notice u/s.143(2) obviously, he would scrutinize the return and frame the assessment u/s.143(3) and, thereafter, original assessment proceedings would be closed or terminated. Subsequently, if the AO notice escapement of income, on the basis of some new tangible material, which was not before him during original assessment proceedings, then he has reason to believe that there is escapement of assessment and he may assume valid jurisdiction for initiation of reassessment proceedings u/s.147 and issuance of notice u/s.148 of the Act. Assessment proceedings are deemed to be over or terminated when (a) the return is processed u/s.143(1) of the Act or (b) scrutiny assessment order is framed u/s.143(3) of the Act or (c) the time limit for issue of notice u/s.143(2) of the Act is expired and thereby the assessment is no longer possible 143(3) of the Act. Thus, the assessment proceedings u/s.147 of the Act can be initiated only after the earlier assessment proceedings are terminated by way of any of the one of the three modes as noted above. We are convinced that the contention advanced by ld D.R. that even if the prescribed time for issuance of notice u/s.143(2) was not expired, the AO was having valid jurisdiction to initiate reassessment proceedings u/s.147 of the Act and issuance of notice u/s.148 of the Act is not correct, therefore, we dismiss the same. Our above noted judicious conclusion also gets strong support from the order of ITAT Hyderabad in the case of Sri Venkata Shiva Reddy 2017 (11) TMI 1475 - ITAT HYDERABAD Since, undoubtedly, the time limit for issuance of notice u/s.143(2) for assessment year 2014-15 was to be expired on 30.9.2016 and prior to that on 25.1.2016, the AO issued notice u/s.148 of the Act after initiating reassessment proceedings u/s.147 of the Act, i.e. before expiry of limitation period for issuing notice u/s.143(2) of the Act. Therefore, we are compelled to hold that the initiation of reassessment proceedings u/s.147 of the Act, notice u/s.148 of the Act, and all consequent proceedings and orders including the reassessment order u/s.144/147 of the Act passed on 19.12.2016 in pursuance to the notice u/s.148 of the Act and impugned first appellate order are also bad in law. - Decided in favour of assessee.

Issues Involved:
1. Condonation of Delay in Filing the Appeal
2. Jurisdiction of the Assessing Officer to Issue Notice u/s 148
3. Validity of Reassessment Proceedings u/s 147
4. Merits of the Addition Made by the Assessing Officer

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal was filed by the assessee with a delay of 132 days. The assessee submitted a condonation petition supported by an affidavit stating that the delay was due to serious illness and medical treatment, which prevented timely filing. The Tribunal, referencing the Supreme Court decision in Collector, Land Acquisition vs Mst. Katiji, held that there was no presumption of deliberateness or negligence in the delay. The Tribunal found reasonable cause for the delay and condoned it, admitting the appeal for hearing.

2. Jurisdiction of the Assessing Officer to Issue Notice u/s 148:
The assessee challenged the jurisdiction of the Assessing Officer (AO) to issue notice u/s 148 of the Income Tax Act, 1961, arguing that the time for issuing notice u/s 143(2) had not expired. The AO had issued the notice u/s 148 on 25.1.2016, while the time limit for issuing notice u/s 143(2) was up to 30th September 2016. The Tribunal referred to several judicial precedents, including the Full Bench decision of the Hon’ble High Court of Orissa in Jayanarayan Kedarnath vs Sales Tax Officer, which held that reassessment proceedings could not be initiated before the completion of regular assessment proceedings. The Tribunal concluded that the AO had no valid jurisdiction to initiate reassessment proceedings u/s 147 and issue notice u/s 148 before the expiration of the time limit for issuing notice u/s 143(2).

3. Validity of Reassessment Proceedings u/s 147:
The Tribunal examined whether the reassessment proceedings initiated by the AO were valid. The AO had received information about the assessee's purchase of land worth ?1,28,00,000, which was not reflected in the return of income. The Tribunal noted that the AO should have issued a notice u/s 143(2) to scrutinize the return before concluding any escapement of income. The Tribunal cited multiple judgments, including those from the Hon’ble Madras High Court and the Hon’ble Gujarat High Court, which supported the view that reassessment proceedings u/s 147 could not be initiated while the time for issuing notice u/s 143(2) had not expired. The Tribunal held that the reassessment proceedings were invalid and quashed the notice u/s 148 and the consequent reassessment order.

4. Merits of the Addition Made by the Assessing Officer:
Since the Tribunal quashed the reassessment proceedings on legal grounds, the merits of the addition made by the AO became academic and infructuous. The Tribunal did not adjudicate on the merits of the addition, as the reassessment order itself was deemed invalid.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the reassessment notice u/s 148 and the consequent reassessment order u/s 144/147. The other grounds of appeal on the merits of the addition were not adjudicated upon, as they had become academic due to the quashing of the reassessment proceedings.

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