2020 (12) TMI 727 - AT - Income Tax

Admission of additional grounds - HELD THAT - We inclined to admit the additional ground of appeal since, as assessee rightly contends, it is a pure question of law challenging the very assumption of jurisdiction to pass impugned order which goes to the root of the case and merely because the assessee did not raise this grievance earlier the assessee cannot be prevented from raising this grievance now. In view of these facts, and in view if the law laid down by Hon ble Supreme Court in NTPC s case 1996 (12) TMI 7 - SUPREME COURT admit the additional grounds of appeal and proceed to deal with the same. Reopening of assessment u/s 147 - Non recording satisfaction by the Assessing officer - HELD THAT - In this case, there is no proper issue of notice u/s.148 of the Act and notice issued without recording the reasons. From the order sheet dated 30.1.2014, it is recorded that the jurisdiction of the case was transferred to ITO Ward -3(4) but on 15.11.2014, the ITO Ward 2(4) had issued notice u/s.142(1) of the Act on same issue and, therefore, the notices issued to the assessee are clearly in mess. On a careful consideration of the matter hold that the assumption of jurisdiction u/s. 147 by the AO is without reasons record and proper service of notice u/s. 148 of the Act and is bad in law and reassessment proceedings and all consequent orders including reassessment order are consequently liable to be quashed. Appeal of the assessee is allowed

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Admittance of additional grounds of appeal.
3. Validity of reassessment proceedings under section 147/148 of the Income Tax Act.
4. Merits of the original grounds of appeal concerning capital gains, cash deposits, and non-cash deposits.

Detailed Analysis:

1. Condonation of Delay:
The appeal was time-barred by 8 days. The assessee filed a condonation petition supported by an affidavit explaining the delay. After considering the submissions and the petition, the delay was condoned, and the appeal was admitted for adjudication.

2. Admittance of Additional Grounds of Appeal:
The assessee sought to admit an additional ground of appeal, arguing that the assessment completed under sections 143(3)/147 was invalid due to the non-issuance and non-service of notices under sections 148 and 143(2). The Tribunal admitted the additional ground, citing the Supreme Court's judgment in NTPC vs. CIT, which allows raising legal questions based on facts already on record. The Tribunal noted that the additional ground challenged the jurisdiction to make the assessment, which could be raised at any stage.

3. Validity of Reassessment Proceedings:
The Tribunal focused on whether the reopening of the assessment under section 147 was justified without recording the necessary satisfaction by the Assessing Officer (AO). The assessee argued that no reasons were recorded before issuing the notice under section 148, making the reassessment invalid. The Tribunal examined the order sheets and found no recorded reasons for the reassessment. It cited several judicial precedents, including the Bombay High Court's decision in Tata Sons Ltd., which held that the absence of recorded reasons before issuing a notice under section 148 invalidates the reassessment. The Tribunal concluded that the AO's failure to record reasons before initiating proceedings under section 147 rendered the reassessment proceedings and all consequent orders invalid.

4. Merits of the Original Grounds of Appeal:
Given that the reassessment proceedings were quashed on legal grounds, the Tribunal did not adjudicate the original grounds concerning the computation of capital gains, the source of cash deposits, and the addition of non-cash deposits as unexplained income.

Conclusion:
The Tribunal allowed the appeal, quashing the reassessment proceedings and all consequent orders due to the AO's failure to record reasons before issuing the notice under section 148. The original grounds of appeal were not addressed as the reassessment was deemed invalid. The order was pronounced on 17/12/2020.