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Income Tax Appellate Tribunal, DELHI “G” BENCH: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI PRADIP KUMAR KEDIA
The captioned appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 27.06.2024 passed by Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“CIT(A)”] under s. 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 27.12.2019 passed under s. 147/143(3) of the Act pertaining to assessment year 2012-13.
2. The grounds of appeal
raised by the assessee are twofold:- (i) challenge the legality of jurisdiction assumed under s. 147 r.w.s 151 of the Act and (ii) challenge the action of the Revenue for making additions of INR 1,59,20,700/- towards unexplained expenditure.
3. When the matter was called for hearing, the Ld. Counsel for the assessee, at the outset, challenged the action of the AO in usurping the jurisdiction under s. 147 of the Act wrongfully. The Ld. Counsel for the assessee contended that the reasons recorded by the AO do not meet the pre-requisites of assumption of jurisdiction and therefore, the notice issued under s. 148 of the Act pursuant to reasons spelt out is bad in law. It was thus essentially submitted that consequent re-assessment order under challenge is without authority of law owing to lack of jurisdiction under s. 147 of the Act. For this purpose, the Ld. Counsel for the assessee adverted our attention to the reasons recorded under s. 148(2) of the Act and made multifold submissions:- (a) the reasons recorded are vague and non-descript and solely relies upon the purported tax evasion petition without any background supportable material and therefore, jurisdictional requirements of main provision of s. 147 are not met. (b) As per para 3 of the reasons recorded, the AO has proceeded with a knowledge that no assessment was made in the instant case and therefore, he is required to meet the conditions stipulated in main provision of s. 147 only. To rebut such knowledge, the Ld. Counsel for the assessee referred to the assessment carried out under s. 143(3) of the Act vide order dated 15.01.2015 to contend that in the instant case, the assessment was earlier framed under s. 143(3) of the Act, contrary to the assertions made in the reasons recorded. In view of such assessment under s. 143(3) of the Act, the notice issued under s.148 dated 13.03.2019 stands time barred in view of the embargo placed in first proviso to s. 147 of the Act. (c) The reasons recorded would make it manifest that there is no allegation leveled against the assessee towards failure to disclose material facts fully and truly. Thus, in the absence of any allegation to this fact, the conditions embodied in first proviso to s. 147 are clearly not fulfilled. The notice issued under s. 148 is time barred on this score too. (d) The Pr.CIT has granted mechanical approval without being privy to the vital facts of assessment having been already framed under s. 143(3) of the Act and thus the approval granted is also without due diligence expected to be exercised by the approving authority under s. 151 of the Act.
3.1. The Ld. Counsel for the assessee submitted before the Tribunal that despite repeated efforts, the so-called copy of ‘tax evasion petition’ etc. were provided only at the fag end and therefore, the assessee was prevented from filing proper objection before the AO to assail such wrongful exercise of jurisdiction. 3.2. The Ld. Counsel for the assessee also addressed the case on merits and submitted that while the AO has proceeded without any justifiable basis, the expenditure incurred are fully explainable on merits and thus additions made are uncalled for.
4. The Ld. Sr. DR for the Revenue referred to and relied upon the orders of the lower authorities.
5. The reasons recorded giving rise to jurisdiction under s. 147 of the Act is a pivotal for appreciating the controversy towards lack of jurisdiction under s. 147 of the Act and therefore is reproduced in verbatim as under:- “Reasons for reopening of assessment in the case of Sh. Shankar Lal Singhal, A.Y. 2012-13 u/s 147 of Income Tax Act, 1961 In this case, return of income was filed for the year under consideration declaring income of Rs. 5,18,520/-on 30.03.2013. In this case, TEP has been received in the office of the undersign wherein the applicant has mentioned that the aforementioned assessee i.e, Sh. Shankar Lal Singhal has made huge expenditure of Rs. 1.77 crore in the marriage of his daughter named Smt. Sheetal Singhal. As per TEP Sh. Shankar Lal Singhal has given jewellery of Rs. 25 Lac and Rs. 5 Lac on silver utensils. He also paid Rs. 7.80 Lacs in cash on party at Shangrela Hotel, New Delhi and gave Rs. 21 Lac as cash as gift. Further he spent Rs. 27 Lac on food and tent at the time of marriage. Further, gave Rs. 3 Lac for honeymoon and Rs. 13 Lac for down payment of Audi Car and remaining amount was spent on various item on marriage rituals from time to time.
Letter has been issued on 22.03.2019 to the assessee for furnishing the information u/s 133(6) of the Act after taking necessary approval from the Competent Authorities. In response to the notice, the assessee filed his reply dated 28.03.2019 through mail submitting the nature of business activity, copy of ITR for A.Y. 2012-13 and bank details. On verification of the ITR it has been revealed that the assessee is filing his return of income merely of Rs. 5,18,520/- which does not commensurate with the information/details provided in the TEP.
In this case, return of income was filed for the year under consideration declaring income of Rs. 5,18,520/- on 30.03.2013 and no assessment was made and the only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded above. Page | 3
Consequently, considering the facts of the case, I am satisfied and have reasons to believe that the income of Rs. 1.77 crore chargeable to tax has escaped assessment for which notice u/s 148 is required to be issued within the meaning of the section 147 of the I.T. Act, 1961 in the case of the above mentioned assessee for Α.Υ. 2012-13.
It is pertinent to mention here that in this case the assessee has concealed. income while filling return of income for the year under assessment although the total income of the assessee had exceeded the maximum amount which is not chargeable to tax as discussed in paragraph 5 above and the assessee was assessable under the Act. In view of the above, provisions of clause (b) of Explanation 2 to section 147 are applicable to the facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case, more than 4 years have elapsed from the end of assessment year under consideration. Hence necessary sanction to issue the notice u/s 148 is solicited from the Pr. Commissioner of Income Tax, Delhi-12, New Delhi as per the provisions of section 151 of the Act. Sd/- (Income Tax Officer) Ward 36(2), New Delhi 6. As pointed out on behalf of the assessee, notice dated 31.03.2019 issued under s.148 for re-opening the completed assessment for AY 2012-13 is under challenge. It is inter-alia the case of the assessee that assessment in the instant case was previously carried out under s. 143(3) of the Act. Consequently, the case of the assessee is also covered by the additional embargo placed by the first proviso to s. 147 of the Act. It is the case of the assessee that the assessment has been re-opened without meeting the requirement of the first proviso to s. 147 of the Act besides the non-compliance of main provision thereof. 7. From the body of reasons recorded, a bare reading thereof would show a total absence of any allegation towards failure of assessee to disclose material facts or to attract the first proviso to s. 147 of the Act. No allegation has been made against the assessee that there is a failure on the part of the assessee to disclose fully and truly all the material facts as necessary for completing the assessment. In the absence of such allegations at the threshold, the notice issued under s. 148 of the Act beyond four years is time barred and thus without jurisdiction and hence, bad in law. The legal proposition in this regard is well-settled by a long line of judicial precedents viz: Page | 4 (a) CIT V/s. Foramer France (264 ITR 566) (SC) (b) Hindustan Lever Limited V/s. R.B. Wadkar (268 ITR 332) (Bom) (c) Mercury Travels Limited. Vis. Dy. CIT(258 ITR 533) (Cal) (d) JSRS Udyog Limited & Ors. V/s ITO (313 ITR 321(Del) (e) Bombay Stock Exchange Ltd. V/s. DDIT(E) (361 ITR 160) (Bom) (f) Grindwell Norton Ltd v ACIT (2004) 267 ITR 673 (Bom) (g) Shriram Foundry v DCIT (2012) 350 ITR 115 (Bom) (h) Sound Casting Pvt. Ltd. v DCIT (2012) 250 CTR 119 (Bom) (i) Voltas Ltd v ACIT (2012) 70 DTR 433 (Bom) (j) Pr.CIT, Central-11 vs DSC Ltd. [2023] 153 taxmann.com 535 (Delhi) 8. In the instant case, the AO has clearly mentioned in the reasons recorded that ‘no assessment has been carried out’ which is contrary to facts on record. No allegation has been made against the assessee towards failure to disclose material facts contemplated in the first proviso to s. 147 of the Act. Thus, in the light of judicial dicta listed above, the notice issued under s. 148 of the Act is clearly time barred and deserves to be quashed. The jurisdiction assumed under s. 147 is thus clearly without legal foundation. Consequent re- assessment framed based on nonest time barred notice under s. 148 of the Act is therefore, bad in law. The additions made in such re-assessment order thus requires to be cancelled and deleted at the threshold.
In such view of the matter, we do not consider it necessary to examine other legal and factual aspects raised as per the grounds of appeal