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Facts
The assessee purchased an immovable property, and the stamp duty value exceeded the sale consideration. The Assessing Officer added the difference to the total income under 'income from other sources'. A reassessment notice under section 148 was issued beyond 3 years.
Held
The Tribunal held that the reassessment notice was issued beyond the 3-year period and that the Assessing Officer failed to obtain prior approval from the PCCIT as required under Section 151 for cases exceeding 3 years but within 10 years. The notice was deemed invalid.
Key Issues
Whether the reassessment notice issued under Section 148 beyond 3 years was valid, and if prior approval from PCCIT was obtained as per Section 151.
Sections Cited
139(1), 56(2)(vii), 148, 149(1)(b), 151(1), 250
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
order
: January 01, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 27.06.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The assessee is an individual and filed his return of income u/s 139(1) of the Act by declaring total income of Rs.3,52,310/- during the relevant assessment year. The assessee purchased an immovable property at Rajarhat at sale consideration of Rs.25,00,000/-. However, the stamp duty value of the property as per deed of conveyance dated 05.09.2016 was Rs.35,36,655/-. The difference of Rs.10,36,655/- was splitted between the assessee and his spouse amounting to Rs.5,18,327/-. Accordingly, the Assessing Officer invoked section 56(2)(vii) of the Act and added Rs.5,18,327/- to the total income of the assessee as ‘income from other sources’ while framing assessment. The Assessment Year: 2017-18 Arnab Kumar Goswami Assessing Officer issued notice u/s 148 of the Act for reassessment. The assessee in response to the notice reiterated the earlier disclosed income and furnished computation of total income, bank account statements and supporting documents relating to the property purchased.
Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A), where, the appeal of the assessee was dismissed by upholding the order of the Assessing Officer.
Dissatisfied with the above order, the assessee is in appeal before the Tribunal contending that the reassessment notice u/s 148 of the Act was beyond 3 years from the end of the relevant assessment year as per section 149(1)(b) of the Act which specified the limitation period of 3 years. The ld. AR stated that in the case of the assessee, the notice u/s 148 of the Act was issued under the extended period under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions Act) (TOLA) 2020 which was upheld by the Hon’ble Supreme Court in the case of Union of India vs Ashish Agarwal reported in 2022 SCC Online SC 543. The ld. AR further contended that the addition in the case of the assessee was below 50 lakh and as per section 151(1) of the Act, prior approval should be obtained from Principal Chief CIT (PCCIT) and not Principal CIT (PCIT), which was wrongly done in the case of the assessee. Therefore, he stated that the impugned order of the ld. CIT(A) by sustaining the order of the Assessing Officer be liable to be set aside by deleting the addition made by the Assessing Officer.
On the other hand, the ld. DR relied the decisions of the authorities below.
We, after hearing the rival submissions and perusing the materials available on record, find that the notice u/s 148 was issued after the expiry of 3 years from the end of the relevant assessment year which Assessment Year: 2017-18 Arnab Kumar Goswami makes it subject to compliance with the mandate of the provision of section 149(1) of the Act. We note that in the present case, the income alleged to have escaped assessment was Rs.5,18,327/- which was below the threshold limit of Rs.50 lakh, hence, prior approval should require to obtain from PCCIT as per section 151 of the Act for the cases which exceeds 3 years but within 10 years. However, in the present case, the Assessing Officer obtained approval only from PCIT which is contrary to the statutory requirement. We place reliance in the decision of Hon’ble Jurisdictional High Court in the case Subhra Basu vs. Union of India in WPA 18828 of 2022, wherein, the Hon’ble High Court held that reassessment notice issued without prior approval as mandated u/s 151 of the Act is invalid and liable to be quashed. We further note that since in the present case the Assessing Officer failed to obtain requisite approval from PCCIT for issuance of reassessment notice beyond 3 years, the proceedings are deemed to be non-compliance to the statutory requirement under the law and the consequent additions made by the Assessing Officer are also not justified. Therefore, the additions made by the Assessing Officer are quashed. In view of the above, we hold that the notice issued u/s 148 of the act is invalid due to non-compliance of section 151 of the Act. Accordingly, we delete the impugned addition made by the Assessing Officer.
In the result, the appeal of the assessee is allowed.
Kolkata, the 1st January, 2025.