UDAYAN PRAVINCHANDRA DHAMECHA,JAYVA TA DHROL, DIST JAMNAGAR vs. THE INCOME TAX OFFICER, WARD2(1)(1),RKT, RAJKOT

Grounds of appeal raised by the assessee are as follows: 1. The Ld.CIT(A) erred in law as well as in facts that upholding reopen of assessment u/s 147 r.w.s 144 of the Act.

The Ld.CIT(A) erred in law as well as on facts appeal dismissing only on limitation grounds without considering the merits. 3. The Ld.CIT(A) erred in law as well as on facts that upholding the addition of Rs.3,50,000/- as unexplained investment u/s.69A of the Act. 4. The Ld.CIT(A) erred in law as well as on facts in upholding validity of notice issued u/s.148 which was issued manually and without DIN. 5. The Ld.CIT(A) erred in law as well as on facts without given any further opportunity being heard. 6. The Ld.CIT(A) erred in law as well as on facts that assessment u/s.147 is bad in law and without jurisdiction. 7. The Ld.AO erred in law as well as on facts that notice u/s148A(d) issued by the JAO and not in faceless manner. 8. The Ld.AO erred in law as well as on facts that notice u/s.148 issued by the JAO not in faceless manner.

The relevant material facts, as culled out from the material on record, are as follows. The assessee had purchased a flat bearing No.802 B1 from M/s Six Twenty Reality Pvt Ltd, at a purchase consideration of Rs.16,00,000/-, out of which payment of Rs.3,50,000/- paid in cash during the financial year (F.Y.) 2015- 16. The assessee shown his total income in the income tax return (ITR) filed u/s 139(4), on 24/3/2018, was Rs.3,75,740/- for the assessment year (A.Y.) 2016-17. The assessee did not make any reply in response to Show Cause Notice issued u/s 148A(b) of the Act, hence, source of investment remains unexplained and due to this reason, the re-assessment proceeding u/s.147 had been initiated in this case. After obtaining approval from the Competent Authority, order u/s 148A(d) of the I.T. Act, 1961 was issued to the assessee on 28/07/2022, initiating the Re- assessment Proceeding u/s 147 of the I.T. Act, 1961 for the assessment year (A.Y.) 2016-17, by issuing notice u/s 148 of the I.T. Act, 1961. No Return of Income has been filed by the assessee in response to notice u/s 148 of the Act. Subsequently, notice u/s.142(1) has been issued upon the assessee on 9/1/2023 and 28/1/2023 asking the assessee to furnish the documents. But the assessee failed to furnish any details and documents as asked for. Therefore, assessing officer held that assessee had purchased a flat bearing No.802, B1 from M/s Six Twenty Reality Pvt Ltd at a purchase consideration of Rs.16,00,000/-, out of which payment of Rs.3,50,000/- paid in cash during the F.Y. 2015-16. The assessee shown his total income in the ITR during the A.Y. 2016-17 at Rs.3,75,740/- and as the assessee did not make any reply in response to Show Cause Notice 148A(b) of the Act, hence, source of investment remains unexplained and therefore, assessing officer made addition on account of on-money payment of Rs.3,50,000/-.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the assessing officer. The ld.CIT(A) noticed that assessee had purchased a flat bearing No.802 B1 from M/s Six Twenty Reality Pvt Ltd at a purchase consideration of Rs. 16,00,000/-, out of which payment of Rs.3,50,000/- paid in cash during the F.Y. 2015-16. The assessee shown his total income in the income tax return (ITR) during the A.Y. 2016-17, at Rs.3,75,740/- and as the assessee did not make any reply in response to Show Cause Notice 148A(b) of the Act, hence, source of investment remains unexplained and for this reason, the reassessment proceeding u/s.147 has been initiated in assessee’s case. The ld.CIT(A) noticed that “on- money” payment of Rs.3,50,000/- was paid by the assessee to purchase an immovable property and the source of the same has not been explained by the assessee. Therefore, addition of Rs. 3,50,000/-, u/s 69 of the Income Tax Act, was confirmed by ld.CIT(A), therefore, assessee is in further appeal before this Tribunal.

Shri Brijesh Parekh, Learned Counsel for the assessee argued that in the case of the assessee, under consideration, the assessment year involved is the assessment year 2016–17, and reopening of assessment was made by the assessing officer after a period of six years, that is, on 28.03.2022. Under the new law, in order to reopen the assessment under section 147 of the Act, after a period of three years, the income escaped from assessment should be more than Rs.50,00,000/-, however, in the assessee’s case, the income escaped from assessment is only Rs.16,00,000/- therefore, jurisdiction exercised by the assessing officer to reopen the assessment of the assessee is not valid, as the income escaped from assessment is only Rs. 16,00,000/-, which is below Rs. 50,00,000/- hence, reassessment proceedings initiated against the assessee under section 147 of the Act may be quashed.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 7. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. I find merit in the submissions of learned Counsel for the assessee to the effect that in order to reopen the assessment under section 147 of the Act, after a period of three years, the income escaped from assessment should be more than Rs.50,00,000/-, however, in the assessee’s case, the income escaped from assessment is only Rs.16,00,000/- therefore, jurisdiction exercised by the assessing officer to reopen the assessment of the assessee is not valid, as the income escaped from assessment is only Rs. 16,00,000/-, which is below Rs. 50,00,000/- hence, reassessment proceedings initiated against the assessee under section 147 of the Act should be quashed. In this regard, it is 4 appropriate to examine the provision of section 149 of the Act with respect to time limit for issuance of notice u/s 148 of the Act, which is reproduced below:

In the result, appeal of the assessee, is allowed in above terms.