RAJBIR SINGH,MEERUT vs. ITO, WARD-2(2), MEERUT, MEERUT

Heard and perused the records. The basic facts are that the appellant has filed his return of income on 12.01.2013, declaring a total income of Rs.3,21,450/- along with tax audit report in from 3CB -3D and audited balance sheet. The ITR of the appellant was selected for scrutiny assessment u/s 143(3) of the Act, through CASS. The assessment proceedings were completed vide order dated 18.11.2014, wherein the returned income of the appellant was accepted.

Thereafter, the Id. A.O. received non-PAN information that the appellant has sold an immovable property for a total consideration of Rs.74,25,000/- and had purchased an immovable property valued at Rs.1,02,49,680/-. On the basis of the said information the Ld. A.O. formed an opinion that the investment of Rs. 1,02,49,680/- and capital gain on sale of Rs.74,25,000/- has escaped assessment and issued notice u/s 148 of the Act on 27.03.2019. The reassessment proceedings, were completed vide order dt. 27.12.2019, passed u/s 144/147 of the Act, at an assessed income of Rs.1,17,34,680/- making the following additions: -

Aggrieved by the same the appellant filed an appeal before the Ld. CIT (A). During the course of the appeal proceedings the assessee filed his written submission and paper book. The said appeal was decided vide impugned order dated 27.12.2025, wherein the assessment order was set aside to the file of the Ld. A.O. with a direction to make the assessment de-novo. While doing so the Ld. CIT(A) impliedly rejected the legal ground of the appellant that the proceedings under consideration are bad in law as the same are based on the incorrect facts on record.

Aggrieved by the same assessee is in appeal before us and foremost thing contended is that all the notices u/s 148 and 142(1) of the Act, were issued to the appellant at his old address i.e. 439, Laxmanpuri, Meerut, instead of his new address i.e. H. no. 146/2, Madhav Puram, Sector -2, Meerut, which was already on record as the assessment order u/s 143(3) was passed on the new address. Thus for this reason, none of the notices including notice u/s 148 were served upon the appellant and re-assessment order was passed ex-parte.

Now before us ld. Counsel has primarily argued on ground no. 1 and 2 by which the appellant has challenged the action of the Ld. CIT(A) of upholding the validity of the assessment proceedings when the same ought to have been quashed being based on the incorrect reasons to believe.

Ld. DR has contested the issue by submitting that recording of reasons cannot be a mini assessment and only prima facie material need to exist and prima facie reasons of escapement of income should be reflected in reasons for reopening.

We have considered the rival submission and perused the matter on record. It comes up that the appellant filed his ITR for the relevant year on 12.01.2013 along with tax audit report in form 3CB - 3CD. Copies of the ITR filed and computation of income for the transaction under consideration are placed at page nos. 5 to 7 of the paper book and copies of the audited balance sheet and tax audit report of the appellant for the relevant year are placed at page nos. 8 to 23 of the paper book. The ITR filed by the appellant was duly assessed to tax u/s 143(3) of the Act, vide order dt. 18.11.2014. Copy of the assessment order is placed at page nos. 1 to 2 of the paper book.

We find that foremost thing that comes up is that Id. AO was not aware or ignored the fact that the appellant had only 1/5th share in both the transactions, which were duly reflected in his audited balance sheet and were already assessed u/s 143(3) proceedings. As from the perusal of the said purchase deed (copy placed at Page nos. 66 to 126 of the paper book), it is apparent that the appellant had only 1/5th share in the same. The appellant along with 4 other co-owners had actually purchased the said property from MDA, Meerut. The date wise detail of payment made by the appellant and his co-owners for the purchase of the said property is placed at page no. 25 of the paper book and same show that only a payment of Rs.10,96,7201-, has been made during the year under consideration i.e. FY 2011-12, and all the remaining payments have been made before the year under consideration. The 1/5th share of cost of Rs. 18,30,300/-is also appearing in opening stock as on 01.04.2011 in the trading account placed at page no. 24 of the paper book. Thus it can be concluded that only on the basis of the AIR information without independent application of the mind to the same by the Ld. A.O. is bad in law. In this regard, reliance is placed on the following judicial pronouncements: -

The copy of the reasons to believe as recorded before issuance of notice u/s 148 of the Act are placed at page Nos. 3 to 4 of the paper book and same show that before issuance of notice u/s 148 of the Act, the Id. AO alleged that the appellant neither has a PAN nor he has filed his ITR for the relevant year. While earlier the assessment proceedings were completed vide order dated 18.11.2014, u/s 143(3) of the Act, wherein the returned income of the appellant was accepted.

We are of considered view that mentioning of wrong facts of as material as assessee being a non-PAN and non-filer, makes the whole assessment proceedings liable to be quashed. Reliance is placed on the following judicial pronouncements:

Then based on aforesaid discussion we can also conclude that reassessment proceedings are only out come of change in opinion since both the transactions under consideration were recorded in the audited books of account of the appellant which was placed on record during the course of the original assessment proceedings and accepted after due queries. Specially, the copy of the trading account of the appellant for the year under consideration as placed at Page no. 24 of the paper book show that both the transactions under consideration are duly recorded in the said trading account which has been considered in the original assessment proceedings.

In aforesaid circumstances it was necessary that as reopening has been made after a period of expiry of 4 years from the end of the financial year, reasons as recorded before issuance of notice u/s 148 of the Act, should have mentioned fact which was not on record during the course of the original assessment proceedings nor there is any finding of failure on part of the appellant to disclose all material facts.

In view of the above, we are of considered view that though assessment order was passed u/s 147/144 of the Act, as these legal grounds were raised by substantial submission, the ld. CIT(A), instead of restoring the issues on merits to files of ld. AO, for fresh opportunity, should have decided the same, having not done so was an error and thus we are inclined to sustain the ground no. 1-2, and appeal is allowed. The impugned re-assessment order is quashed.