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Facts
The assessee's appeal was filed with a delay of 71 days. The assessing officer received information regarding non-filing of return and identified potential escaped income of Rs. 90,64,850/-. The AO issued a notice u/s 148A and later u/s 148, making additions for unexplained money and income from other sources.
Held
The Tribunal condoned the delay in filing the first appeal. It was held that the notice u/s 148 of the Act was issued beyond the prescribed time limit as the escaped income did not exceed Rs. 50,00,000/-, rendering the reopening void ab initio.
Key Issues
Whether the reopening of assessment u/s 147 and notice u/s 148 were validly issued beyond the limitation period prescribed by Section 149(1) given the amount of escaped income.
Sections Cited
250, 147, 148, 148A, 148A(b), 148A(D), 149(1), 149(1)(b), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 15.10.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2015-16.
At the outset, is it observe by this Court that there was a delay of 71 days in filing of the first appeal before the Ld. Commissioner, on which the Assessee has claimed that she was not keeping well because of blood pressure and other health issues and had been staying at her maternal place, mobile number mentioned on the e-filing portal was of her husband who did not check the messages regarding the notices for the relevant assessment year; however, somehow somewhere in third week of February 2024, while going through the messages, her husband came to know about the assessment order dated 24.11.2023 u/s 147 of the Act and therefore he immediately informed the Assessee’s tax Consultant, who filed the appeal, but with the delay of 71 days. The delay was neither intentional nor malafide and therefore the same may be condoned.
This Court observe that the Ld. Commissioner though considered the aforesaid claim of the Assessee, however, not being satisfied with the explanation and by holding “that the Assessee was not being able to explain the delay/not having any credible vision by way of sufficient cause for delay in filing and she has neither given the details of the health issues nor has she provided any medical document substantiating her claim of being so medically unfit that she was unable to attend the tax matter”, declined to condone the delay and therefore dismissed the appeal of the Assessee in limine for want of limitation. This Court has given thoughtful considerations to the peculiar facts and circumstances of the case. The reasons stated by the Assessee appears to be bonafide, unintentional and reasonable and therefore this Court is inclined to condone the delay of 71 days in filing of the first appeal before the Ld. Commissioner. Consequently, the delay is condoned.
Coming to the merits of the case, this Court observe that the Assessing officer (AO) had received the information through insight portal under non-filing of the return (NMS) under priority in accordance with the risk management strategy formulated by the CBDT, to the effect that the Assessee though has deposited Rs.20,00,000/- or more with a banking company during the assessment year under consideration, but has not filed any return of income and therefore inquiry was conducted and it was found that the Assessee has made financial transactions viz. time deposit of Rs.86,64,850/- and cash deposit of Rs.4,00,000/- during the assessment year under consideration and thus has escaped the income of Rs.90,64,850/-.
Consequently, the AO on the aforesaid information, issued a show cause notice dated 27.03.2020 u/s 148A(b) of the Act.
The Assessee, in response to the aforesaid notice and query raised, filed her reply and claimed that total asset escaping assessment is below than Rs.50,00,000/- and time limit of 03 years would be applicable for issuance of notice u/s 148. She has made time deposit of Rs.37,63,399/- with GP Parsik Sahakari Bank Ltd. on dated 26.12.2012 bearing account number 022/4768/1, which was matured during the assessment year under consideration and the Assessee re-invested the aforesaid amount of Rs.37,63,399/- + interest of Rs.5,69,026/- (total Rs.43,32,425/-) again, as time deposit in account number 022/4768/2.
The AO though considered the said claim of the Assessee, however not accepted the same and vide order dated 07.04.2022 u/s 148A of the Act, ultimately opined that this is a fit case for issuance of notice u/s 148 of the Act and consequently issued a notice dated 07.04.2022 u/s 148 of the Act.
Thereafter, the AO in the assessment proceedings, accepted such claim of the Assessee with regard to the aforesaid amount of Rs.43,32,425/- being principal + interest earned from investment in time deposit and re-deposit during the assessment year under consideration, and made no addition on such count, however he ultimately made the addition of Rs.17,85,848/- on account of variation qua unexplained money u/s 69A of the Act and Rs.4,17,401/- on account of variation qua income from other sources.
The Assessee therefore has claimed that though the said explanation/claim of the Assessee to the tune of Rs.43,32,425/- re- deposited by the Assessee during the assessment year under consideration on account of maturity of time re-deposit and interest thereon, while passing the order u/s 148A(D) of the Act, was not accepted , however, the AO during the assessment proceedings and vide assessment order, accepted such claim of the Assessee and ultimately made no addition on account of such deposit, which goes to show that the income escaping assessment, has not exceeded Rs.50,00,000/- and therefore in view of the provisions of section 149(1)(b) of the Act; after elapsing of three years from the end of the relevant assessment year, notice u/s 148 of the Act could not have been issued and therefore the action of the AO in reopening of the proceedings u/s 147 r.w.s. 148 of the Act, is liable to be quashed being void ab-initio.
On the contrary, the Ld. D.R. supported the orders passed by the authorities below but not the provisions of the law and the claim made by the Assessee.
Heard the parties and perused the material available on record and given thoughtful consideration to the rival claims of the parties. From the determination made by the AO in assessment order, it transpires that the escaped income has not exceeded the limit of Rs.50,00,000/- as prescribed u/s 149(1) of the Act and therefore the reopening of the proceedings u/s 147 of the Act and/or notice dated 07.04.2022 u/s 148 of the Act, would be nullity or invalid, as the provisions of section 149(1) of the Act mandates that no notice u/s 148 of the Act shall be issued, if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause b, according to which , if the escaped assessment amount to or is likely to amount to Rs.50,00,000/- or more, whereas it is not the case here, as observed above. Thus, the notice issued u/s 148 of the Act and in pursuance thereof the assessment order passed, would be nullity; thus the same is quashed being void-ab-initio.
As this Court has quashed the notice u/s 148 of the Act and the assessment order made in pursuance to such notice, hence not delving into the merits of the case, as adjudication of the same would prove futile exercise
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 28.04.2025.