2021 (8) TMI 598 - AT - Income Tax

Reopening of assessment u/s 147 - Validity of reason to believe - notice not in the name of assessee but issued in the name of minor daughter - HELD THAT - AO sought to make the assessee as representative assessee u/s. 160(ii), then it was incumbent upon him to issue a notice u/s.148 in the case of the assessee as a representative assessee. Notice cannot be validated even if a notice has been issued in a different name with different PAN and at the same time the income can be assessed in the hands of different assessee, because, Shri Harneet Singh Chandhoke is otherwise an independent assessee assessable to tax. It is not a case of rectifiable mistake u/s. 292B, because even in the reasons recorded the AO has entertained reasons to believe that it was the escapement of income in the hands of Ms. Jyotika Chandhoke and not the assessee. Action of the AO itself shows that there is no application of mind on the material coming into his possession as to whether income escaping assessment belongs to the assessee and not to the assessee's minor daughter. The right course under the law should have been that the assessee's case, should have been reopened and notice u/s. 148, should have been issued in the name of Shri Harneet Singh Chandhoke and if there is any undisclosed income belonging to the minor, then same ought to have been taxed in the hands of the assessee. Thus, the assessment order passed u/s. 147/143 (3) which has been framed on the basis of notice issued in the name of minor daughter, Ms. Jyotika Chandhoke and a different PAN cannot validate the proceedings. Hence, the same is quashed as void ab initio. Accordingly, the appeal of the assessee is allowed.

Summary

Issues Involved:
1. Validity of proceedings under Section 147 and notice under Section 148.
2. Jurisdiction of the Assessing Officer.
3. Addition of alleged cash payment of ?19,93,560/-.

Detailed Analysis:

1. Validity of Proceedings under Section 147 and Notice under Section 148:
The assessee challenged the validity of the notice under Section 148 dated 30.03.2013, which was issued in the name of the minor daughter, Ms. Jyotika Chandhoke, instead of the assessee. The Tribunal noted that the notice was issued in the name of the minor daughter and even the reasons recorded for income escaping assessment were in her name. The PAN mentioned was also different from that of the assessee. The Tribunal held that no valid notice was issued in the name of the assessee, rendering the entire proceedings void ab initio. It emphasized that jurisdiction under Section 147 can only be acquired by serving a valid notice in the name of the assessee and recording reasons for income escaping assessment in the assessee's case. The Tribunal concluded that the assessment order passed under Section 147/143(3) based on a notice issued in the name of the minor daughter and a different PAN could not validate the proceedings.

2. Jurisdiction of the Assessing Officer:
The assessee argued that the notice under Section 148 was not issued by the jurisdictional Assessing Officer. The Tribunal observed that the notice was issued by the Assessing Officer having jurisdiction over the minor daughter according to her PAN. However, the Tribunal found that the correct procedure under the law should have been to reopen the assessee's case and issue a notice under Section 148 in the name of the assessee, who is the representative assessee under Section 160(ii). The Tribunal highlighted that the Assessing Officer's action showed a lack of application of mind regarding whether the income escaping assessment belonged to the assessee or the minor daughter. Consequently, the Tribunal held that the notice issued by a different Assessing Officer with a different PAN could not validate the proceedings.

3. Addition of Alleged Cash Payment of ?19,93,560/-:
The assessee challenged the addition of ?19,93,560/- as alleged cash payment. The Tribunal noted that the Assessing Officer had reason to believe that the minor daughter had made substantial investment in cash in a property. However, the Tribunal found that the notice and reasons recorded were in the name of the minor daughter, and the assessment was framed in the hands of the assessee without issuing a valid notice to the assessee. The Tribunal emphasized that the correct course of action should have been to issue a notice under Section 148 to the assessee and tax any undisclosed income of the minor in the hands of the assessee. Therefore, the Tribunal quashed the assessment order as void ab initio, and the addition of ?19,93,560/- was not sustained.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment proceedings as void ab initio due to the invalid notice issued in the name of the minor daughter and the lack of jurisdiction by the Assessing Officer. The Tribunal emphasized the importance of issuing a valid notice to the correct assessee and recording reasons for income escaping assessment in the assessee's case. The assessment order and the addition of ?19,93,560/- were set aside.