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Facts
The assessee filed a return of income for AY 2013-14. The case was reopened under Section 147 based on information that the assessee had given an unsecured loan to one Pankaj Sand. The assessee requested a copy of the reasons for reopening and relied upon judgments that quashed assessments where such copies were not provided.
Held
The Tribunal held that the entire assessment proceeding is vitiated and liable to be quashed because the assessee was not supplied with a copy of the reasons for reopening, despite a specific request. The assessment order was found to be invalid and suffering from jurisdictional error.
Key Issues
Whether the assessment order is liable to be quashed for non-supply of the reasons recorded for reopening of assessment to the assessee despite a specific request.
Sections Cited
147, 144, 148, 143(3), 143(2), 143(1), 44AD, VIA
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Income Tax Appellate Tribunal, “SMC” BENCH, DELHI
Before: MS. MADHUMITA ROY
The instant appeal filed by the assessee is directed against the order passed by the Ld. CIT(A) NFAC, Delhi, dated 09.10.2024 arising out of the order dated 04.03.2022 passed by the NWR-W-(51)(1) Bharuch under Section 147 r.w.s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2013-14 whereby and whereunder the addition to the tune of Rs.10,73,978/- made by the Ld. AO applying the test of human probability was confirmed by the First Appellate Authority.
Brief facts leading to the case is this that the assessee filed return of income for Assessment Year 2013-14 on 19.03.2014 declaring total income of Rs.2,74,467/-. The case was reopened on the basis of information received from the ITO, W-29(3) New Delhi, that during the course of assessment proceeding under Section 143(3) of the Act in the case of one Pankaj Sand it was revealed that the assessee before us had given unsecured loan of Rs.10,73,978/- to said Shri Pankaj Sand during the Financial Year 2012-13. The assessee was served with the notice under Section 148 of the Act in response whereto the assessee duly filed its return of income on 08.12.2021. Notices under Section 143(2) and 143(1) were further served upon the assessee. The assessee duly submitted the loan confirmation of the loan creditors as directed by the Ld. AO. She has submitted her return of income in SUGAM-4 declaring total turnover for Rs.25,50,000/- and calculated presumptive income under Section 44AD to the tune of Rs.2,04,000/-. Further she disclosed income from other sources of Rs.1,45,220/- and claimed deduction under Chapter VIA. Consequently total income of Rs.2,47,467/- has been declared in ITR. The assessment was finalized using test human probability and in the absence of evidence in support of source of loan adduced upon making addition of the entire loan amount of Rs.10,73,978/- to the total income of the assessee. Further fact which has been brought to our notice that the assessee duly filed return of income on 08.12.2021 in compliance with the notice issued under Section 148 of the Act. It was further submitted by the Ld. Counsel appearing for the assessee that by and under a representation dated 22.12.2021 the assessee raised objection against the reopening of assessment on the ground of notice under Section 148 of the Act having been issued without jurisdiction, barred by limitation, bad in law, illegal and invalid. Further that the assessee categorically requested for a copy of the reason recorded by the Ld. AO for reopening of assessment along with the copy of the standard format wherein the approval of the higher authorities was obtained and further that the copy of the statement/material relied upon by the Ld. AO for forming a belief that the income had escaped assessment in order to enable the assessee to raise a formal objection against the reopening of assessment proceedings. In fact, this particular fact of request for supply of copy of the reason so recorded and other documents as narrated hereinabove was duly reproduced by the Ld. CIT(A) in the order impugned but no deliberation on this aspect is forthcoming. On the other hand, in the absence of such statutory compliance made by the statutory authorities being the Assessing Officer, the entire assessment is vitiated and the resultant order of assessment passed under Section 147 of the Act is liable to be quashed as submitted by the Ld. AR in support of which several judgments were also relied upon including the judgment passed in the case of PCIT VS. Jagat Talkies Distributors (2017) 85 taxmann.com 189 (Delhi).
Such fact of not supply of the copy of reason so recorded by the Ld.AO for reopening of assessment under Section 148 of the Act in spite of specific request made by the AO has not been able to be controverted by the Ld. DR. Under this facts and circumstances of the matter the judgment relied upon by the Ld. AR was duly considered and it is found that where the assessee was not given the copy of reason of reopening for issuance of notice under Section 148 by AO, the whole assessment proceeding and the resultant order of the assessment passed in the reassessment proceeding is liable to be quashed as held by the jurisdictional High Court. It is noted that the Ld. DR has failed to place any judgment contrary to such finding. Thus, having regard to the entire aspect of the matter when the assessee was not supplied with the copy of reason for issuance notice under Section 148 by the Assessing Officer in spite of specific request made by the assessee to that effect, the whole assessment proceeding is vitiated and the resultant assessment order is also, therefore, liable to be set aside as found to be invalid, non sustainable in the eyes of law and suffers from jurisdictional error. Hence, with the aforesaid observations the entire assessment proceeding is quashed.
The appeal of the assessee is allowed.
Order pronounced in the open court on 21.05.2025