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Facts
The assessee, engaged in business and a partner in firms, filed a return for AY 2013-14. An earlier assessment under Section 143(3) was made. Subsequently, a notice under Section 148 was issued due to the sale of an immovable property, leading to a best judgment assessment under Section 144, alleging undisclosed capital gains.
Held
The Tribunal held that the CIT(A) was empowered to set aside the ex-parte assessment and remand the case to the AO for a fresh assessment. Any grievances regarding the notice or additions would be open for consideration before the AO during the de novo assessment.
Key Issues
Whether the CIT(A) erred in not quashing the notice under Section 148 and the subsequent assessment order, and whether the matter should be remanded for de novo consideration by the AO.
Sections Cited
143(3), 148, 147, 50C, 142(1), 144, 144B, 250, 251(1)(a), 54
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 31/07/2025 Date of Order – 05/08/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 10/01/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2013-14.
When the appeal was called for hearing, no one appeared on behalf of the assessee, nor was any application seeking adjournment filed. Accordingly, we proceed to decide the present appeal on the basis of the material available on record and after hearing the submission of the learned Departmental Representative.
In this appeal, the assessee has raised the following grounds:
– “1. On the facts and circumstances of the case and in law, the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) ['the learned Commissioner (Appeals)] erred in not adjudicating the jurisdictional grounds challenging the validity of the notice dated 31.03.201. Thus, the matter may be remanded back before the learned Commissioner (Appeals) for the adjudication of the grounds 1 and 2 preferred in the Form 35.
2. On the facts and in the circumstances of the case and as per the law, the learned assessing officer erred in issuing the notice dated 31.03.2021 under section 148 of the Act on the incorrect premise that the income from the sale of the said property was not disclosed in the return of income. Since the consideration of Rs. 3,35,00,000/- was duly included in the return of Income, there was no question of escapement of income in the facts under consideration. Thus, the notice dated 31.03.2021 being Invalid, bad in law and without jurisdiction may be quashed along with the assessment order and the impugned order dated 10.01.2025.
3. On the facts and in the circumstances of the case and as per the law, the notice dated 31.03.2021 under section 148 of the Act was Issued after four years from the end of the assessment year and there was no failure on the part of the Appellant to disclose fully and truly all material facts necessary for the assessment. The proviso to section 147 of the Act applies to the present case and the notice dated 31.03.2021 Issued under section 148 of the Act was barred by limitation. Thus, the said notice being invalid, bad in law and without jurisdiction may be quashed along with the assessment order and the impugned order dated 10.01.2025.
4. Without prejudice to the above, on the facts and circumstances of the case and in law, the learned Commissioner (Appeals) is erred in setting aside the assessment order instead of deleting the addition of Rs.3,36,49,000/- as it is unsustainable in law. Thus, the said addition may be deleted.”
4. The brief facts of the case are that the assessee is an individual and is engaged in business activity under the trade name of M/s. Eco Properties. The assessee is also a partner in firms. For the year under consideration, the assessee filed its return of income on 30.09.2013, declaring a total income of Rs.55,73,956/-. The return filed by the assessee was selected for scrutiny and vide order dated 14.03.2016 passed under section 143(3) of the Act, the total income of the assessee was assessed at Rs.73,98,520/- after disallowing the excess exemption claimed under section 54 of the Act, amounting to Rs.18,24,561/-. Subsequently, on the basis of the information received from the office of Chief Commissioner of Income Tax that the assessee had sold an immovable property on 01.12.2013 for an amount of Rs.3.35 crore which attracts the provisions of section 50C of the Act for computing the capital gains, notice under section 148 of the Act was issued on 31.03.2021 and proceedings under section 147 of the Act were initiated. In response to the aforesaid notice, the assessee submitted that the return of income filed originally on 30.09.2013 be treated as a return filed in response to the notice issued under section 148 of the Act. Thereafter, statutory notices under section 142(1) of the Act were issued and served on the assessee calling for various details. However, the assessee did not respond to any of the notices, and the long-term capital gain earned by the assessee on the sale transaction remained undisclosed and unsubstantiated. Accordingly, the Assessing Officer (“AO”) proceeded to complete the assessment on the best judgment under section 144 of the Act on the basis of the material available on record. Vide order dated 30.03.2022 passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, the total income of the assessee was assessed at Rs.4,10,47,520/-, after making an addition of Rs. 3,36,49,000/- as undisclosed capital gain.
The learned CIT(A), vide impugned order, set aside the ex-parte assessment order and restored the matter to the file of the AO with a direction to frame a fresh assessment in accordance with law. Being aggrieved, the assessee is in appeal before us.
Having considered the submissions of the learned Departmental Representative and perused the material available on record, it is evident that in the present case, the assessment was concluded on a best judgment basis as the assessee failed to respond to the statutory notices issued under section 142(1) of the Act. It is pertinent to note that by the Finance (No.2) Act, 2024 w.e.f. 01.10.2024, the learned CIT(A) has been empowered under section 251(1)(a) of the Act to set aside the assessment and remand the case back to the AO for making a fresh assessment, in case the assessee files an appeal against the order made under section 144 of the Act. We find that, as in the present case, the assessment order was passed under section 147 r.w.s. 144 r.w.s. section 144B of the Act, i.e., being an ex-parte order, the learned CIT(A) in exercise of its aforementioned power restored the case to the file of the AO to frame a fresh assessment in accordance with law. We are of the considered view that once the assessment order has been set aside and the matter is restored to the file of the AO for framing a fresh assessment in accordance with law, then any grievance relating to the notice issued under section 148 of the Act should be taken before the AO, as he is the primary officer. Thus, we are of the considered view that once the matter is restored to the file of the AO for de novo consideration pursuant to the appeal filed by the assessee before the learned CIT(A) against the ex-parte assessment order, all the contentions of the assessee, on jurisdiction as well as on merits of the addition, are open. Therefore, we do not find any reason to interfere with the findings of the learned CIT(A). Accordingly, the grounds raised by the assessee are dismissed.
In the result, the appeal by the assessee is dismissed. Order pronounced in the open Court on 05/08/2025