JAHANGIR SYED,HYDERABAD vs. INCOME TAX OFFICER, WARD-8(2), HYDERABAD

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ITA 646/HYD/2023Status: DisposedITAT Hyderabad30 June 2025AY 2012-1325 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order passed by the AO under Section 143(3) read with Section 147 of the Act is unsustainable and liable to be quashed for want of valid assumption of jurisdiction. The Tribunal found that the AO erroneously treated the return of income filed by the assessee on December 11, 2019, in response to the notice under Section 148 dated March 27, 2019, as invalid. Based on this incorrect premise, the AO dispensed with the statutory obligation to issue a notice under Section 143(2) of the Act. The Tribunal relied on Supreme Court and various High Court judgments, including CIT Vs. Laxman Das Khandelwal and ACIT Vs. Hotel Blue Moon, to establish that the failure to issue a notice under Section 143(2) renders the assessment order void, even if the assessee participated in the proceedings. The deeming provisions of Section 292BB of the Act were held to cure only infirmities in the manner of service of notice, not the complete absence of notice. Consequently, the assessment order was quashed. The Tribunal refrained from adjudicating the other issues raised by the assessee, leaving them open.

What were the facts?

The assessee, Jahangir Syed, is appealing an order from the Commissioner of Income-Tax (Appeals) - National Faceless Appeal Center (NFAC), Delhi, dated November 7, 2023. This order arose from an assessment completed by the Assessing Officer (AO) under Section 143(3) read with Section 147 of the Income Tax Act, 1961, on December 31, 2019, for Assessment Year 2012-13. The AO initiated reassessment proceedings based on the sale of immovable property by the assessee for Rs. 9,45,000, while the Fair Market Value (FMV) was Rs. 78,93,000. The assessee had not filed a return of income for the year. Upon notice, the assessee filed a return offering income only from 'Other Sources', claiming the property was under litigation and not transferred. The AO disagreed, noting the sale deed stated the property was free from encumbrances and included an indemnity clause, leading to an addition of Rs. 77.93 lacs as Long Term Capital Gains.

What were the issues?

1. Whether the assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, is invalid and without jurisdiction due to the non-issuance of a statutory notice under Section 143(2) of the Act, as argued by the assessee. The assessee contends that the AO erred in issuing notice under Section 142(1)(i) beyond the six-year time limit and completing the assessment without the mandatory Section 143(2) notice. The revenue, through the Senior AR, argued that the assessee participated in the assessment proceedings without objection, and therefore, the non-issuance of the notice under Section 143(2) should be saved by Section 292BB of the Act. 2. Whether the Commissioner of Income-Tax (Appeals) grossly erred in not adjudicating grounds related to the non-applicability of Section 45 read with Section 50C of the Act, and in not considering the details of litigation attached to the impugned property submitted by the assessee. The assessee argued that the property was under litigation and possession of the court, thus not a 'transfer' under Section 45. The judgment does not record specific arguments from the revenue on these points.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 142(1)(i),Section 143(2),Section 45,Section 50C,Section 292BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A‘ Bench, Hyderabad

करदाता का प्रतततितित्व/ : Shri P. Murali Mohan Rao, Assessee Advocate. Represented by राजस्व का प्रतततितित्व/ : Shri Gurpreet Singh Sr.AR Department Represented by सुिवाई समाप्त होिे की ततति/ : 25.06.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 30.06.2025 Date of Pronouncement O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 07.11.2023, 2 Jahangir Syed, Hyderabad. which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short “the Act”) dated 31.12.2019 for A.Y. 2012-13. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1. The order passed by the Ld. CIT(A) is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.

2. The Ld. CIT(A) grossly erred in not adjudicating ground nos. 3 to 8 taken before him on the very issue of notice u/s 148 of the Act.

3.

The Ld. CIT(A) ought to have appreciated the fact that the assessment completed u/s 143(3) r.w.s 147 of the Act on 31.12.2019 is invalid and is without jurisdiction as no statutory notice u/s 143(2) had been issued.

4.

The Ld. CIT(A) ought to have appreciated the fact that the Ld. AO erred in issuing the notice u/s 142(1)(i) of the Act dt. 06.12.2019 for calling for return of income beyond the time limit of six years and completing the scrutiny assessment on the basis of the said notice, which is invalid and is without jurisdiction.

5.

The Ld. CIT(A) ought to have appreciated that the order passed u/s 143(3) r.w.s 147 of the Act dt. 31-12-2019 is invalid ab initio on the ground that no notice u/s 148 of the Act has been issued as seen from the very assessment order.

6.

Without prejudicial to ground nos. 1 to 4, the Ld. CIT(A) grossly erred in not adjudicating ground nos. 9 to 18 taken before him on the non- applicability of the provisions of Section 45 r.w.s 50C of the Act.

7.

Without prejudice to other grounds, the Ld. CIT(A) ought to have appreciated that the details of litigation attached to the impugned property i.e., Civil suit in WP No. 26405/2012 that had been numbered as WP No. 484/2017 on the file of Telangana High Court had been duly submitted to the AO during the course of assessment proceedings on 19.12.2019. 8) a) Without prejudice to other grounds, the Ld. CIT(A) grossly erred in not considering the submission of full details of litigation attached to the impugned sale to the CIT(A)-2, Hyderabad before whom the appeal has been instituted.

3 Jahangir Syed, Hyderabad.

8) b) Without prejudice to other grounds, the Ld. CIT(A) ought to have appreciated that full details of litigation attached to the impugned sale have been duly submitted before the CIT(A)-2, Hyderabad on 18.03.2020 & 29.12.2020 through paper books during the course of hearing before him. 8) c) Without prejudice to other grounds, the Ld. CIT(A) grossly erred in observing at Para no. 6 of his order that the appellant has not filed any documentary evidences to substantiate his claim.

9.

The assessee may add, alter, or modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”

2.

Succinctly stated, the A.O. observed that the assessee had during the subject year sold immovable properties ad measuring 315.69 Sq. Yards in Sy.No.563/1, situated at Amberpet Village and Mandal, Hyderabad, vide document nos.2694/2011, 2695/2011 and 2696/2011 registered with Sub-

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