ASHISH MANSUKHLAL GOKANI,MITHAPUR vs. COMMISSIONER OF INCOME TAX (APPEALS), DELHI

Brief facts qua the issue are that assessee is an individual and has filed return of income u/s 139 of the Income Tax Act, 1961 (hereinafter 'the Act') for the year under consideration, that is, 2014-15, on 20.02.2014, declaring total income of Rs.1,85,850/-. In assessee`s case, information was uploaded by the DDIT(Inv.), Jamnagar, on Insight portal of Department that the asseessee has deposited substantial cash in his bank account. On the basis of this information, the proceedings u/s 147 of the Act were initiated after obtaining necessary approval from Page 2 of 10 the competent authority as required u/s 151 of the Act. The reasons for reopening are reproduced as under: 1. "Brief details of the Assessee: The brief details of the assessee are mentioned above. The assessee filed return of income on 30/12/2014, declaring total income Rs. 1,85,850/- and agricultural income of Rs. 2,48,610/-for A. Y. 2013-14. As per information available on records, the asssesssee has carried out significant financial transactions.

Basis of forming reason to believe and details of escapement of income: In this case, the assessee filed return of income on 30/12/2014, declaring total income Rs. 1,85,850/- and agricultural income of Rs: 2,48,610/-for A. Y. 2013-14. On perusal of report of ADIT(Inv.), Jamnagar available at INSIGHT Portal, it is found that the assessee made high value transaction in bank accounts during the F. Y. 2012-13. The notices were issued to the below mentioned banks and asked to furnish the copy of bank statement of the assessee for F. Y. 2012-13 which were furnished and deposits are summarized as under- Sr. No. Name of the Bank Account No. Total credits Page 3 of 10

Escapement of income chargeable to tax in relation to any assets located outside India:- NA 8. Applicability of the provisions of section 147/151 to the facts of the case: In this case, a retum of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above in paragraph -6. 9 It is it is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but not assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed w/s 143(1) of the Act, In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be case where income, chargeable to tax has escaped assessment 10. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained Page 4 of 10

Accordingly, notice u/s 148 of the Act, dated 31.03.2021, was issued and served upon the assessee through his e-mail id. In response, the assessee filed 'unverified" hence "invalid" return of income on 29.05.2021. Also, the return has been filed by beyond time allowed as per the notice. Thus, the assessment proceedings were carried on u/s 144 of the Act. A notice u/s 142(1) of the Act was issued on 13.01.2022, calling for certain details from the assessee. The assessee filed his response on 20.01.2022 and requested to provide reason for re-opening his case.Thereafter, the assessment proceedings were carried on u/s 144B of the Act, that is, 'Faceless Assessment'. The assessee was provided reason for reopening vide letter dated 02.02.2022. The notice u/s 142(1) of the Act was issued on 02.02.2022 calling for certain details. In response to notices u/s 142(1) of the Act, the assessee filed his reply on ITBA portal on 24.02.2022, which is as under:

However, the assessing officer rejected the above contention of the assessee and observed that credits is out of sales generated in his business of trading in grains. However, as per the sales register provided by the assessee the total cash sales is Rs.98,37,029/- whereas the total credit by assessee in his bank accounts is Rs. 1,68,75,146/-. Hence, the source of credits by assessee of Rs.70,38,117/- (Rs. 1,68,75,146-Rs.98,37,029) remains unexplained. Therefore, assessing officer held that since the assessee has failed to file any explanation with documentary evidences for nature, source and genuineness of credits of Rs.70.38,117/-, therefore, the same was treated as unexplained cash credit u/s 68 of the Act.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the assessing officer observing as follows:

Aggrieved by the order of the Ld. CIT(A), assessee is in further appeal before this Tribunal.

The Ld. Counsel for the assessee submitted that in the assessee’s case under consideration, the assessment year involved is the assessment year (A.Y.) 2013-14 wherein the last date for issue of notice u/s.148 of the Act, is 31st March, 2020. However, the assessing officer issued notice on 16th April, 2021 u/s.148 of the Act. Therefore, notice issued by the assessing officer is invalid, and consequently, the Page 7 of 10 reassessment order framed by the assessing officer under section 147/148 of the Act is also invalid, hence, reassessment proceedings may quashed.

The Ld. Counsel for the assessee also submitted that the assessee’s case was reopened after 3 years. Therefore, sanction should be given by the Chief Commissioner of Income Tax. However, in the assessee’s case, the permission was given by the Principal Commissioner of Income Tax. Therefore, it is not a valid permission under the Act and hence, the order passed by the assessing officer may be quashed.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard both the parties and perused the materials available on record. I note that in the assessee’s case under consideration the assessment year involved is the A.Y. 2013-14, wherein notice u/s. 148 of the Act can be issued up to 31st March, 2020. However, in the assessee’s case under consideration notice u/s.148 of the Act was issued on 16th April, 2021. Therefore, notice issued by the assessing officer u/s.148 of the Act, is invalid. Thus, the notice is time barred, hence the assessing officer has not followed mandatory process specified u/s. 148 of the Act, and the notice is issued on 16/04/2021 at online portal is time barred and for that the assessee has submitted the relevant evidence to this effect before the Bench. Besides, the sanction for issue of notice u/s 148 of the Act, has been obtained by the assessing officer from Principal Commissioner of Income Tax (PCIT) instead of Principal Chief Commissioner of Income Tax (PCCIT). Hence, the notice is defective and Page 8 of 10 invalid. Since the pre-requisite condition for issuance of notice u/s 148 of the Act is not fulfilled in the assessee`s case under consideration, and therefore, the notice may be treated as invalid and cannot be cured by resorting to provisions of section 292BB of the Act, therefore, I quash the reassessment proceedings and allow the appeal of the assessee.

Since I have quashed the re-assessment proceedings, on the issue that re- assessment was carried out without prior approval of proper higher authority u/s 151(1) of the Act. Therefore, other technical grounds raised by the assessee, and grounds raised by the assessee, on merit, have become infructuous, therefore, do not require adjudication.

In the result, appeal filed by the assessee is allowed.