2021 (9) TMI 73 - AT - Income Tax

Validity of reopening of assessment u/s 147 - period of limitation to reopen the assessment as barred by time - as contended that under the provisions of section 150(2) assessments for AYs 2010-11, 2011-12 and 2012-13 could not be reopened as on the date of passing the appellate order on 30/01/2020 - HELD THAT - While disposing of the appeal, the CIT(A) may consider and decide any matter arising out of the proceedings, in which order appealed against was passed, even if such matter was not raised by the taxpayer before the CIT(A). As per section 251(1)(c) of the Act, In any other case, he may pass such orders in the appeal as he thinks fit. CIT(A) observed assessee has received an business receipts on account of sale of flats falling under its share. However, the assessee has not disclosed such transactions to the Income Tax Department by way of filing the return of income either within the due dates stipulated u/s.139(1) of the Act or belatedly uls 139(4) of the Act. On the other hand, it is also observed that the AO has not initiated the action in terms of sec. 147 of the Act, for other AYs 2010-11, 2011-12 and 2012-13 - income in respect of 14 flats ta be brought to tax in the hands of the assessee in the AY 2010-11,2011-12 and 2012-13 No infirmity in the directions of the CIT(A) u/s 150 of the IT Act for the AYs 2010-11, 2011-12 and 2012-13. Accordingly, we uphold the order of the CIT(A) and dismiss the ground No. 1 to 3 raised by the assessee in this regard. Computation of turnover arising on sale of flats for each of the AYs 2010-11, 2011-12 and 2012-13 - We direct the AO to examine the computation of turnover for the said AYs as disputed by the assessee.

Summary

Issues Involved:
1. Jurisdiction of CIT(A) to direct reopening of assessments for subsequent years.
2. Delay in filing appeal and its condonation.
3. Assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961.
4. Treatment of income from sale of flats for multiple assessment years.

Issue 1: Jurisdiction of CIT(A) to direct reopening of assessments for subsequent years:
The appeal challenged the CIT(A)'s order directing necessary action to bring escaped assessment to tax for subsequent assessment years, despite the appeal being for a specific year. The CIT(A) found that the assessee had not disclosed income from the sale of flats for multiple years and directed the AO to take action. The CIT(A) relied on precedents to support the decision, stating that the AO could reopen assessments beyond the limitation period based on findings and directions from the First Appellate Authority. The ITAT upheld the CIT(A)'s decision, stating that the CIT(A) has the authority to decide matters arising from the proceedings, even if not raised by the taxpayer, under section 251(1)(c) of the Act.

Issue 2: Delay in filing appeal and its condonation:
The appeal suffered a delay of 38 days in filing, attributed to the COVID-19 pandemic and lockdown. Citing relevant case laws, the ITAT condoned the delay, stating that it was beyond the assessee's control and not intentional. The case proceeded for adjudication on merits after condoning the delay.

Issue 3: Assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961:
The AO initiated proceedings under section 147 after receiving information on a development agreement involving the assessee. The AO completed the assessment ex-parte under section 144, determining the total income of the assessee. The CIT(A) later treated the assessment order as void-ab-initio, leading to the appeal before the ITAT.

Issue 4: Treatment of income from sale of flats for multiple assessment years:
The CIT(A) found that the assessee had not disclosed income from the sale of flats for several years. The CIT(A) directed the AO to bring the escaped income to tax for the relevant assessment years, citing the mandatory requirement for a firm to file returns within due dates, even if there is no taxable income. The ITAT upheld the CIT(A)'s order, directing the AO to examine the turnover computation for the disputed assessment years.

This detailed analysis covers the jurisdictional aspects, delay condonation, assessment procedures, and treatment of income related to the sale of flats as addressed in the judgment by the ITAT Hyderabad.