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Income Tax Appellate Tribunal, ALLAHABAD ‘SMC’ BENCH, ALLAHABAD
Before: SHRI.VIJAY PAL RAO
PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 07.08.2019 of CIT(A) for the assessment year 2008-09. The assessee has raised the following grounds. 1. Because in the facts and circumstances of the case assessment made u/s 143(3)147 by order dated 15.12.2010 on income of Rs. 17,99,340/- 2. Because in the facts and circumstances of the case the Ld. CIT(A) was wrong in deciding the appeal ex-parte without providing reasonable opportunity to the assessee and since the assessee was not well for last more than 6 months and undergoing dialysis at Lucknow hospital therefore compliance could not be made hence ex-parte order passed by CIT(A) is not correct. 3. Because in the facts and circumstances of the case proceeding u/s 148 is not correct since the same was initiated on the ground that value as shown by assessee and value as per stamp duty in respect of sale of property has escaped assessment which is not correct and thus simply on notional value proceeding as initiated u/s 148 is not the valid proceeding in the eyes of law. 4. Because in the facts and circumstances of the case the Assessing officer was wrong in determining the value of property at Rs. 92,37,000/- as per Section 50C
ITA No.47/ALLD/2020 Shobha Rastogi as against 52 lakhs shown by the assessee and thus the addition as made on such basis on account of capital gain as per Assessing own working is highly unjustified. 5. Because in the facts and circumstances of the case both the two lower authorities failed to considered the issue of capital gains in an arbitrary manner and determined the capital gain at Rs. 9,04,580/- and his action as confirmed by CIT(A) is highly unjustified. 6. Because in the facts and circumstances of the case assessee reserved his right to take any fresh ground of appeal before hearing of appeal.”
Ground no. 1 is regarding the validity of reassessment framed by the Assessing Officer under section 143(3) read with section 147 of the Income Tax Act. The learned AR of the assessee has submitted that the Assessing Officer has issued notice under section 143(2) on 29.06.2010 which is beyond the limitation and therefore the re-assessment framed by the Assessing Officer is invalid and liable to be set aside. 3. On the other hand, learned DR has pointed out that the Assessing Officer has issued notice under section 148 on 7.1.2010 and assessee has not filed any return of income in response to notice under section 148. Therefore, the notice under section 143(2) was not required to be issued when the assessee has not filed any return of income. Even otherwise the notice issued under section 143(2) Dt. 29.06.2010 is well within the period of limitation as the notice under section 148 was issued on 7.1.2010. In rejoinder, the learned AR has submitted that once the assessee has not filed any return of income in response to notice under section 148 then notice issued by the Assessing Officer under section 143(2) would be considered in respect of the original return of income filed under section 139(1) on 29.09.2008 and consequently the said notice is barred by limitation. 4. I have considered the rival submissions as well as relevant material on record. There is no dispute that the Assessing Officer issued notice under section 148 on 7.1.2010 and assessee has not filed any return of income in response to the said notice under section 148. Therefore, there is no requirement of issuing any notice under section 143(2) by the Assessing Officer and thus the notice issued by the Assessing Officer under section 143(2) on 29.06.2010 cannot be challenged on the ground of limitation. The issuance of notice under section 143(2) in the absence of any return filed by the assessee shall have no consequence. 2
ITA No.47/ALLD/2020 Shobha Rastogi Hence, the assessment framed by the Assessing Officer under section 143(3) read with section 147 cannot be challenged on the ground of limitation for notice under section 143(2) of the Act. Accordingly, the ground no. 1 of assessee’s appeal is de void of any merit and substance and the same is dismissed. 5. Ground no. 3 is regarding validity of initiation of proceedings under section 148 of Income Tax Act. The learned AR of the assessee has submitted that while issuing the notice under section 148 of the Act, the Assessing Officer has recorded the reasons to assess the income being long term capital gain by applying the provisions of section 50C of the Income Tax Act. The Assessing Officer has not quantified the income assessable to tax that has escaped assessment while recording the reasons for reopening of the assessment. Therefore, in the absence of the quantification of the income at the time of recording the reasons, the Assessing Officer was not having a firm reason to believe that income assessable to tax has escaped assessment but the reopening is based on suspicion of escapement of income. In support of his contention, he has relied upon the decision of Hon'ble Jurisdiction High Court in case of Mahesh Kumar Gupta and Another vs. CIT and Another reported in 363 ITR 300. He has also relied upon the decision of Agra Bench of the Tribunal dated 19.06.2018 in the case of Smt. Usha Agarwal vs. Income Tax Officer in ITA No. 167/Agra/2018 and submitted that the Tribunal while following the decision of the Hon'ble jurisdiction High Court in the case of Mahesh Kumar Gupta and Another vs. CIT and Another (supra) has held that the so called reasons are no reasons in the eye of law and proceedings are initiated for verification based on pure conjucture and surmises. The reasons are based on incorrect assumption of fact and shows total lack of application of mind and do not meet the test of law. 6. On the other hand, learned DR has submitted that in the case in hand, the notice under section 148 was issued within four years from the end of the assessment year therefore, the quantification of the income assessable to tax and escaped assessment is not required to be determined at the time of recording the reasons. The learned DR has pointed out that as per the limitation provided under section 149(1) of the Income Tax Act, no notice under section 148 shall be issued after expiry of four years from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 1 Lac or more for that year. Therefore, the said 3
ITA No.47/ALLD/2020 Shobha Rastogi provisions of section 149(1) are not applicable in the case of the assessee when the notice under section 148 of the Income Tax Act is issued much prior to the expiry of four years from the end of the assessment year under consideration. He has pointed that the decisions relied upon by the learned AR of the assessee are not applicable in this case as in those decisions the issue involved was regarding the notice issued by the Assessing Officer after expiry of four years from the end of assessment years and that too without ascertaining the income chargeable to tax which has escaped assessment so as to fulfil the conditions provided under section 149(1) of the Income Tax Act. 7. I have considered the rival submissions as well as relevant material on record. The assessee has challenged the validity of notice issued under section 148 on the ground that while recording the reasons, the Assessing Officer has not quantified the income chargeable to tax which has escaped assessment. The Assessing Officer recorded the reasons for reopening of the assessment as under:- “ In the return of income for the AY 2008-09 filed on 29/09/20008 in ITR in this office. In the return, income is seen to be arrived from the heads-business Rs, 4,24,118/-, other sources Rs 5,49,541/- and long term capital loss Rs, 2,97,227/-. In the assessment for the AY 2007-08, it was noted that an advance was received towards the sale of house property at Meerganj, Allahabad in the AY 2007-08, the possession of which was transferred in the AY 2008-09 and hence, the assessee had stated that the sale was concluded in the AY 2008-09. The copy of the sale deed was furnished by the assessee. In the return of income, it was seen that the sale consideration was 52,00,000/- and the deductions u/s 48 were Rs, 48,60,961/- and exemption u/s 54F was claimed for Rs, 6,36,266/- and a long term capital loss of Rs. 2,97,227/- was declared. But on the perusal of the sale deeds (two separately, for commercial and for residential property respectively), it was seen that the sales were made for a total consideration of Rs, 42,00,000/- (25,00,000+17,000,000), but the valuation of the property for stamp purchases was Rs. 79,55,000/- (45,86,000+33,69,000). Hence, in view of the provisions of section 50C of the Income Tax Act, 1961, I have reason to believe that income has escaped assessment for the AY under consideration, and therefore, notice under section 148 is being issued.”
It is apparent from the reasons recorded by the Assessing Officer for reopening of the assessment that the factum of transfer of property in question by the assessee was 4
ITA No.47/ALLD/2020 Shobha Rastogi already came to the notice of the Assessing Officer during the assessment proceedings for the assessment year 2007-08 as the assessee received the advance towards the sale of house of property in question. However, the assessee claimed that the sale was not concluded in the assessment year 2007-08 but it was concluded in the assessment year 2008-09. The Assessing Officer did not proceed to assess the income arisen from the sale of the property in question and consequentially the assessment for the assessment year 2008-09 was reopened by the Assessing Officer by issuing a notice issued under section 148 on 7.1.2010. It is pertinent to note that the notice issued under section 148 of the Act in the case of the assessee is even before the expiry of one year from the end of the assessment year under consideration. Therefore, the limitation period for issuing the notice under section 148 of the Income Tax Act provided under section 149(1) is not applicable in the case of the assessee. Even otherwise, all the primary facts regarding the cost of acquisition, sale consideration shown in the sale deed and stamp duty valuation were available on record as the assessee claimed long term capital loss of Rs. 02,97,227/- from the transaction of sale of property in question. All these facts are also recorded by the Assessing Officer in the reasons recorded for reopening of the assessment. Therefore, the objections raised by the assessee against the validity of issuing the notice under section 148 is contrary to the undisputed facts on record. The decision of Hon'ble jurisdiction High Court in the case of Mahesh Kumar Gupta and Another vs. CIT and Another (supra) would not help the case of the assessee as in the said case, the issue before the Hon'ble High Court was regarding the time limit for notice under section 148 provided under section 149 of the Income Tax Act as recorded in para 7 of the said judgment as under:- “7. The controversy centers around the interpretation of section 149 (1) (b) of the Income Tax Act. For the sake of convenience, the relevant portion of section 149 is reproduced below: - Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub- clause (b) or sub- clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year; Explanation.— In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.] (2) The provisions of sub- section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is 5
ITA No.47/ALLD/2020 Shobha Rastogi a person treated as the agent of a non- resident under section 163 and the assessment, reassessment or re-computation to be made in pursuance of the notice is to be made on him as the agent of such non- resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year.”
Thus, the controversy before the Hon'ble High Court was regarding interpretation of section 149(1)(b) of the Income Tax Act and the finding of the Hon'ble High Court is also regarding the said provision. The Hon'ble High Court has finally held in para 15 and 16 as under:- ”15. The only point urged and pressed before us is whether in absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped the assessment is Rs. one lakh or more having not been mentioned the reassessment notice given after four years of the close of the assessment order is valid or not. 16. For the reasons given above, we find sufficient force in the argument of the learned counsel for the petitioner that on the basis of the reasons recorded by the Assessing Officer, the initiation of the reassessment proceedings relevant to the Assessment Year 2000-2001 by means of the notice dated 23.3.2007 after more than four years is clearly barred by time.” 10. Similarly, the decision delivered on 19.06.2018 by Agra Benches of the Tribunal in the case of Usha Agarwal vs. Income Tax Officer (supra) is also not applicable in the case of the assessee as in the said case, the issue was similar as in the judgment of Hon'ble jurisdiction High Court because the notice under section 148 was issued after the expiry of four years from the end of the assessment year. On the contrary, the case of the assessee does not fall in any of the clauses of section 149(1) of the Income Tax Act then the decisions relied upon the learned AR of the assessee are not applicable. Accordingly, when all the primary facts are available with the Assessing Officer, the objection raised by the assessee against the validity of notice under section 148 is without any merit or substance, the same is rejected. 11. Ground nos. 4 and 5 is regarding the addition made by the Assessing Officer by applying the provisions of section 50C of the Income Tax Act. 12. I have heard the learned AR as well as learned DR and considered the relevant material on record. Though the assessee has not filed any return of income in response to notice under section 148 however, the assessee in the return of income filed under section 6
ITA No.47/ALLD/2020 Shobha Rastogi 139(1) of the Income Tax Act has claimed long term capital loss on account of sale of property in question and also claimed deduction under section 54F of the Income Tax Act. The assessee also raised objection before the Assessing Officer against the applicability of provisions of section 50C of the Income Tax Act and claimed that the sale consideration received by the assessee as stated in the sale deed is the actual fair market price of the property in question. Despite objection raised by the assessee, the Assessing Officer did not proceed to determine the fair market value of the property in question as provided under section 50C(2) of the Income Tax Act. Once the assessee has raised the objection against the adoption of deemed full value consideration in terms of section 50C of the Income Tax Act, the Assessing Officer is duty bound to refer the matter to the DDO for determination of the fair market value of the property in terms of section 50C(2) of the Income Tax Act. Since, the Assessing Officer has not taken any step to determine the fair market value therefore, in the facts and circumstances of the case, this issue of fair market value of the property in question is set aside to the record of the Assessing Officer to refer the same to the DVO, and then be decided as per law, after giving an opportunity of hearing to the assessee. 14. Ground no. 2 is regarding ex parte order passed by the CIT(A) in view of the matter being set aside to the record of the Assessing Officer for determination of fair market value of the property the ground no. 2 of the assessee’s appeal becomes infructuous and the same is dismissed. 15. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 13.08.2021 through video conferencing at Allahabad.
Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 13/08/2021 Sh