2022 (10) TMI 1099 - AT - Income Tax

Validity of reopening of assessment u/s 147 - mandation of application of mind by AO - HELD THAT - AO has initiated reassessment proceedings and issued notice u/s 148 without application of mind to the facts and circumstances of the case in a hasty manner which vitiates the proceedings. The similar issue was placed before the ITAT Delhi, SMC Bench in the case of Ajendra Pal Singh 2022 (6) TMI 1322 - ITAT DELHI Reassessment proceedings u/s 147 of the Act and notice u/s 148 of the Act has been issued without application of mind by the AO on the basis of incomplete information without any verification of the facts and without complying with the mandatory requirement of section 147 and 148 of the Act. Consequently, the impugned reassessment order passed u/s 147 r.w.s 143(3) of the Act is not sustainable being bad in law and, thus, the same is quashed. Accordingly, the legal grounds of the assessee are allowed.

Issues involved:
1. Assessment order legality and sustainability.
2. Addition without providing opportunity to the assessee.
3. Basis of notice issuance under section 148.
4. Calculation of long-term capital gain.
5. Charging of interest under sections 234A, B, and C.
6. Adequacy of opportunity of being heard.
7. Initiation of reassessment proceedings without proper verification.
8. Legal grounds for quashing the reassessment order.

Analysis:

1. The appeal challenged the legality and sustainability of the assessment order for Assessment Year 2009-10. The assessee contended that the Income Tax Officer's actions were illegal, perverse, and unsustainable under the law and facts of the case.

2. The assessee raised concerns regarding additions made without providing a reasonable opportunity to be heard. It was argued that the Income Tax Officer erred in making additions without allowing the assessee a fair chance to present their case.

3. The basis of the notice issued under section 148 was disputed by the assessee, claiming that the notice was based on non-filing of the return, whereas the return had been filed and presented during the assessment proceedings.

4. The Income Tax Officer's calculation of long-term capital gain was challenged by the assessee, citing a different method of computing the indexed cost of acquisition. Reference was made to a specific judgment to support the contention.

5. The assessee objected to the charging of interest under sections 234A, B, and C, arguing that interest should not be levied on frivolous additions to the income, especially when tax had already been paid on the business income.

6. The issue of adequacy of opportunity of being heard was examined, and it was concluded that the Income Tax Officer had indeed provided sufficient opportunities for the assessee to present their case, thereby dismissing the related ground raised by the assessee.

7. The initiation of reassessment proceedings without proper verification of facts was highlighted. The reasons recorded for initiating the proceedings were found to be based on incomplete information, leading to a conclusion that the proceedings were initiated without due application of mind.

8. The legal grounds for quashing the reassessment order were thoroughly analyzed, and it was determined that the reassessment proceedings and subsequent orders were not sustainable in law due to being initiated without proper verification and application of mind. Consequently, the reassessment order was quashed, and the appeal of the assessee was allowed on legal grounds.

This comprehensive analysis covers all the issues raised in the judgment, providing a detailed breakdown of the arguments and conclusions reached by the ITAT Delhi.

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