Loading judgment…
Facts
The assessee filed her return for AY 2016-17, but the Assessing Officer noted receipt of foreign income not declared. The AO reopened the assessment under Section 147, and after subsequent proceedings, added a shortfall of foreign income. The CIT(A) confirmed the addition.
Held
The Tribunal held that while the reassessment proceedings were validly initiated, the assessee could not furnish complete evidence before the lower authorities. Therefore, the matter was remanded to the Assessing Officer for a fresh examination.
Key Issues
Whether the reassessment proceedings were validly initiated under Section 147 and Section 148A? Whether the foreign income was correctly assessed and whether the matter should be remanded for fresh examination?
Sections Cited
250, 147, 148, 148A, 143(2), 142(1), 149
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI DUVVURU RL REDDYAND SHRI S.R. RAGHUNATHA
O R D E R
PER DUVVURU RL REDDY, VICE-PRESIDENT:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), Chennai – 18, Chennai dated 16.10.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2016-17.
Besides challenging the legal issue of reopening of assessment under section 147 of the Act, the assessee also raised an effective ground as to whether the ld. CIT(A) is justified in confirming the addition made towards receipt of foreign income pertaining to previous financial year in the facts and circumstances of the case.
Brief facts of the case are that the assessee filed her return of income for the assessment year 2016-17 on 30.07.2016 declaring an income of ₹.5,00,490/-. As per the information available with the Department, the Assessing Officer noted that the assessee was in receipt of foreign income during the financial year 2015-16 relevant to the AY 2016-17 and the said income was not returned by the assessee in the relevant return of income filed for the AY 2016-17. Accordingly, the Assessing Officer reopened the case under section 147 of the Act and issued notice under section 148 of the Act dated 27.04.2021. After following due procedure, after issuing order under section 148A(d) of the Act dated 25.07.2022, the Assessing Officer issued notice under section 148 of the Act dated 25.07.2022 and served on the assessee. The assessee filed return of income on 17.03.2023 declaring total income of ₹.22,53,840/- after incorporating income earned in Norway of ₹.17,53,342/-. Subsequently, notice under section 143(2) of the Act was issued on 23.03.2023. A notice under section 142(1) of the Act was also issued to the assessee calling for various details in connection with the scrutiny assessment. The assessee filed the details as called for. Subsequently, the Assessing Officer issued a show-cause notice dated 01.03.2023 on the assessee requiring her to file return including the foreign income. However, the assessee filed the return of income declaring total income from foreign at ₹.17,53,342/- and paid connected tax. However, the Assessing Officer noted that the assessee has earned foreign income of ₹.21,33,342/-, whereas, the assessee has declared foreign income of ₹.17,53,342/-, thereby resulting in shortfall of ₹.3,80,000/- [21,33,342 – 17,53,342). Hence, the Assessing Officer added the shortfall amount of ₹.3,80,000/- to the return income of the assessee and completed the assessment under section 147 of the Act. On appeal, the ld. CIT(A) confirmed the order passed by the Assessing Officer and dismissed the appeal of the assessee. On being aggrieved, the assessee is in appeal before the Tribunal.
Before us, the ld. counsel for the assessee has filed paper book of the assessee running into 9 pages containing calculation of foreign income, ITR Form filed in Norway for calendar year 2015 and Indian ITR Form filed for AY 2016-17 and submitted that the Assessing Officer has incorrectly added the income earned in the previous financial year as income of the current financial year and prayed to delete the addition. So far as legal issue raised in the grounds of appeal is concerned, the notice issued for reopening assessment under section 148 of the Act is time barred by limitation and the assessment order is liable to be quashed.
5. Per contra, the ld. DR has submitted that as per post amendment to section 147 to 151 of the Income Tax Act by Finance Act, 2021, the Assessing Officer issued notice under section 148 of the Act dated 27.04.2021 proposing for reopening assessment and required the assessee to file the return for AY 2016-17. The ld. DR drew our attention to the amended provisions of section 148A(b) of the Act and in consequence to the decision of the Hon’ble Supreme Court dated 04.05.2022 [2022 SCC Online SC 543], the Assessing Officer provided information and material relied upon for issuance of extended reassessment notice under section 148 of the Act dated 27.04.2021 for AY 2016-17 requiring the assessee to furnish reply and after considering the reply of the assessee, passed order under clause (d) of section 148A of the Act dated 25.07.2022 and also issued notice under section 148 of the Act dated 25.07.2022 after obtaining approval from the competent authority. The ld. DR vehemently argued that by following due procedure as per amended provisions and as per directions contained in the decision of the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal (supra), the Assessing Officer validly initiated the reassessment proceedings and completed the assessment under section 147 of the Act and pleaded to confirm the reassessment order passed by the Assessing Officer.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. We note that in order to bring to tax the income chargeable to tax has escaped assessment within the meaning of section 147 of the Act; the Legislature amended the provisions of section 147 to 151 of the Act by Finance Act, 2021. As per clause (b) to sub-section (1) of section 149 of the Act, the time limit for issuing notice under section 148 of the Act is three years, but not more than ten years. We find that as per para 2 and 2.1 of the assessment order, the Assessing Officer issued notice under section 148 of the Act dated 27.04.2021, whereas, on or after 01.04.2021, the Assessing Officer was required to issue notice under section 148A of the Act. We note that the reassessment notice issued on or after 01.04.2021 under unamended section 148 of the Act, the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal (supra) held that the such notice should not be set aside, rather deemed to have been issued under substituted section 148A of the Act. Thus, the prayer of the assessee that the notice issued under section 148 of the Act is barred by limitation under section 149 of the Act stands ruled out.
We also note from the assessment order that by following the guidelines of the Hon’ble Supreme Court, the Assessing Officer issued order under section 148A(d) of the Act dated 25.07.2022 by obtaining approval of the competent authority and thereafter, issued notice under section 148 of the Act dated 25.07.2022 and served on the assessee. Thus, we find that the Assessing Officer has legally initiated the reassessment proceedings as per amended provisions of section 147 of the Act and completed the assessment under section 147 dated 25.03.2023 and the same stands confirmed. Thus, Grounds No. 5 to 7 raised by the assessee are dismissed.
On merits, so far as assessment of income earned by the assessee, the shortfall due to foreign income declared by the assessee and the information available with the department, the assessee could not furnish any explanation with documentary evidence before the Assessing Officer as well as before the ld. CIT(A). However, before the Tribunal, the assessee furnished copy of calculation of foreign income tallying with Indian ITR and foreign ITR, ITR Form filed in Norway for calendar year 2015 and Indian ITR Form filed for AY 2016-17 (FY 2015-16) and the ld. counsel for the assessee submitted that the Assessing Officer has incorrectly added the income earned in the previous financial year as income of the current financial year and prayed to delete the addition. We note that the authorities below have no occasion to verify the details furnished by the assessee before the Tribunal. Considering the above facts and circumstances of the case and to meet the ends of natural justice, we deem it proper to remand the matter to the file of the Assessing Officer to examine and decide the issue afresh in accordance with law after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish the details before the Assessing Officer as was submitted before the Tribunal. Thus, ground Nos. 2 to 4 raised by the assessee are allowed for statistical purposes.
In the result the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 28th March, 2025 at Chennai. (एस.आर. रघुनाथा) (धु"वु" आर.एल रे"ी) (S.R. RAGHUNATHA) (DUVVURU RL REDDY) लेखा सद"/ ACCOUNTANT MEMBER उपा"" /VICE PRESIDENT