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Before: SHRI H.S. SIDHU
This appeal by the Assessee is directed against the Order of the Ld. Commissioner of Income Tax (Appeals), Haldwani dated 31.1.2018 pertaining to assessment year 2008-09 on the following grounds:-
That the impugned assessment order passed u/s 147/144 of I.T. Act deserves to be quashed inter alia because: (a) As per the reasons recorded, amount of Rs.63,600/- chargeable to tax had escaped assessment and therefore, as per section 149 of I.T. Act, notice u/s 148 of I.T. Act dated 27/03/2015 issued after a lapse of four years on account of escapement of income less than Rs.1,00,000 is illegal.
b) For issuing notice u/s 148 dated 27/03/2015, AO had not taken proper sanction u/s 151 of I.T. Act. c) Provisions of sections 147/148 of I.T. Act in terms have no application to the facts of Appellant’s case as there is no nexus between the reasons recorded and the alleged escapement of income.
2) That without prejudice to ground No. 1 above, the Ld. CIT(A) has erred in law and on facts of the case in confirming the following additions as made by the AO:
(i) Rs.32,000/- on account of undisclosed interest from MIS.
(ii) Rs.63,000/- on account of unexplained repayment of loan.
3) That without prejudice to Ground No. 2 above, the additions as confirmed by the Ld. CIT(A) are very excessive.
4) That the appellant reserves his right to add, amend/modify the grounds of appeal.”
2. The brief facts of the case are that assessee filed return of income on 30.6.2008 declaring returned income of Rs. 2,79,920/-/-. Subsequently, proceedings u/s. 147 of the I.T. Act, 1961 were initiated and notice u/s. 148 of the Act for the aforesaid assessment year was issued on 27.3.2015. In response, the assessee has not filed return of income. However, the assessee has furnished written submission raising objections for issuance of notice u/s. 148 of the Act and the same were disposed off from time to time and discussed in the assessment order. Thereafter, the assessment proceedings were completed u/s. 147/144 of the I.T. Act, 1961 vide order dated 23.3.2016 by assessing the income of the Assessee at Rs. 12,05,540/- by making various additions. Against the assessment order, the assessee appeal before the Ld. CIT(A), who vide his impugned order dated 31.1.2018 has partly allowed the appeal of the assessee. Aggrieved with the impugned order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
3. Ld. Counsel for the assessee has submitted as assessment order passed u/s. 147/144 of the I.T. Act deserves to be quashed, because as per the reasons recorded, amount of Rs. 63,600/- chargeable to tax had escaped assessment and therefore, as per section 149 of the I.T. Act, notice u/s. 148 of the I.T. Act dated 27.3.2015 issued after a lapse of four years on account of escapement of income less than Rs. 1,00,000/- is illegal. He further submitted that AO while issuing the notice u/s. 148 of the Act dated 27.3.2015 had not taken proper sanction u/s. 151 of the Act and lastly he submitted that sections 147/148 of the Act in terms have no application to the facts of assessee’s case as there is no nexus between the reasons recorded and the alleged escapement of income. On merit, he submitted that Ld. CIT(A) has wrongly confirmed the addition as made by the AO amounting to Rs. 32,000/- on account of undisclosed interest from MIS and Rs. 63,000/- on account of unexplained repayment of loan. It was further submitted that other additions as confirmed by the Ld. CIT(A) are very excessive. In view of above, he requested to allow the appeal of the assessee.
4. Ld. DR relied upon the orders of the authorities below and submitted that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part. Hence, he requested that the order of the Ld. CIT(A) may be upheld and the appeal of the assessee should be dismissed.
I have heard both the parties and perused the records especially the impugned order and the submissions made by the Ld. Counsel for the assessee on the legal issue as well as the notice issued u/s. 148 of the Act dated 27.3.2015 and letter dated 28.10.2015 furnishing of reasons for issuance of notice. We find that the reasons for issuance of notice u/s. 148 of the I.T. Act for AY 2008-09 read as under:-
“Information in the possession that the assessee has deposited amount of Rs. 73,600/- during the FY 2007-08 in the transport loan account bearing number 02TR 00032001. The source of Rs. 10,000/- is out of withdrawal from SB Account number 5321. However, the source of remaining amount of Rs. 63,600/- is unverifiable.
Therefore, I have reason to believe that an amount of Rs. 63,600/- chargeable to tax has escaped assessment.”
After perusing the aforesaid reasons recorded for initiating reassessment u/s. 147 of the Act, the amount of escapement is Rs. 63,600/-, hence, the notice issued u/s. 148 of the Act is time barred as per the provisions of Section 149 of the I.T. Act, 1961, as the amount of Rs. 63,600/- is less than Rs. 1 Lakh. Hence, the reopening is not tenable in the eyes of law. This view is fortified by the Judgement of the Hon’ble Allahabad High Court in the case of Amarnath Agrawal vs. CIT & Anr. Reported at (2015) 371 ITR 0183 wherein, the Hon’ble High Court has held that “the reasons so recorded by the AO were not sufficient to initiate proceedings under section 148 as no such reasons had been recorded to the effect that the escaped income was likely to be Rs. 1 lac or more so that the Chief CIT or CIT might record his satisfaction under section 151, the initiation of reassessment proceedings after more than four years was clearly barred by time. The conversion of the rights of the lessee in the property from lease hold to free hold was only an improvement of the rights over the property, which the assessee enjoyed and this would not have any effect on the taxability of capital gains from such property. Since the property was held by the assessee for more than three years, short term capital gains would not applicable. Consequently, the notice issued under section 148 of the Act could not be sustained and was quashed.”
Keeping in view of the facts and circumstances of the case as explained and in view of section 149 of the Act as well as respectfully following the aforesaid precedent, I hold that notice issued under section 148 of the Act could not be sustained and therefore, the same is quashed. Since I have already quashed the notice u/s. 148 of the Act, the reassessment has become null and void. Since the legal issue has been decided in favour of the assessee, therefore, no findings are being given on the other issues raised by the Assessee on merit.
In the result, the appeal filed by the Assessee stands allowed.