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Facts
The assessee sold two properties in 2012 for a total consideration of Rs. 86,27,000/-, leading to a notice under section 148 of the Income Tax Act for AY 2013-14 due to alleged undisclosed income. The assessee clarified her 1/6th share amounted to Rs. 14,39,500/-, supported by sale deeds, but the AO made an addition for this amount. Following a Supreme Court judgment and CBDT instruction, the initial notice was converted to a show-cause notice, and a subsequent notice under section 148 was issued.
Held
The Tribunal held that the notice issued under section 148 for reopening the assessment for AY 2013-14 was legally unsustainable and contrary to law, as it was based on income below Rs. 50,00,000/-. Consequently, the directions of the DRP and the final assessment order were declared illegal and set aside.
Key Issues
Whether the notice issued under section 148 for reopening the assessment was legally valid and within the prescribed limits, and whether the subsequent assessment order was sustainable in law.
Sections Cited
Section 147, Section 144, Section 144C(5), Section 148, Section 148A(b), Section 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’ NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER (Assessment Year : 2013-14) Anju Basundhra Vs. Circle Int. Tax 1(1)(2) C/o. Deepal Sehgal and Co., Minto Road, Chartered Accountants New Delhi – 110 002 Trikuta Nagar, Jammu and Kashmir – 180 020 PAN : AULPB 3709 J (Appellant) (Respondent) Assessee by Shri Rohit Kapoor, A.R. Respondent by Shri Vijay B. Vasanta, CIT-D.R. Date of Hearing 26.11.2024 Date of Pronouncement 20.12.2024 O R D E R PER VIMAL KUMAR, JM:
The appeal filed by assessee challenging the final Assessment order under section 147 read with section 144 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 22.03.2024 of the Asst. Commissioner of Income Tax, Circle Int. Tax 1(1)(2) [hereinafter referred as (‘Ld. AO’)] in pursuance to the direction of learned Dispute Resolution Panel-1, New Delhi under section 144C(5) of the Act for the Assessment Year 2013-14.
Anju Basundhra vs. Circle Int. Tax. 1(1)(2) for A.Y. 2013-14 2. Brief facts of the case are that on 25.06.2021 notice under section 148 of the Act was issued to the assessee for not disclosing true facts of her income in ITR. The reasons were recorded mentioned as the assessee sold two properties on 30.12.2012 at Katra for a sale consideration of Rs.62,06,000/- and Rs.24,21,000/- respectively. The tax liability thereon remained unverified and unexplained and Rs.86,27,000/- had escaped assessment within the meaning of section 147 of the Act. The assessee in response to notice on 31.10.2021 clarified that the assessee share in the property was 1/6th, amounting to Rs.14,39,500/-, against a total sale consideration of Rs.86,27,000/- in the reasons recorded vide reply dated 31.10.2021 vide acknowledgement number 768563991311021. The copies of two sale deeds submitted before the AO and DRP clearly mentioned assessee’s share as 16.69% or 1/6th. The remaining consideration was attributed to other co-owner, namely Ashok Puri (brother), Anil Puri (brother), and Anuja Puri (sister). Copies of sale deeds were enclosed at pages 21-29 of paper book. Learned AO in compliance with judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Aggarwal and pursuant to CBDT Instruction No.1 dated 11.05.2022, converted the notice under section 148 of the Act into a deemed show-cause notice under Clause (b) of Section 148A of the Act by issuing fresh notice dated 01.06.2022. Assessee submitted that notice issued under section 148 of the Act on 28.07.2022 was legally unsustainable. Learned DRP rejected the Anju Basundhra vs. Circle Int. Tax. 1(1)(2) for A.Y. 2013-14 objection and issued directions dated 26.02.2024. Learned AO passed order dated 22.03.2024.
Being aggrieved, appellant/assessee preferred present appeal.
Learned Authorized Representative for appellant/assessee submitted that notice under section 148 of the Act is barred by period of limitation. Order of learned Assessing Officer is illegal. No notice under section 143(2) of the Act was issued. Assessment order under section 147 read with section 144 of the Act is void ab initio and illegal as notice under section 148 was issued without validity. No reasonable opportunity was afforded by learned AO before passing final assessment order. The learned AO grossly erred in making addition of Rs.14,39,500/-.
Learned Departmental Representative of the Department of Revenue submitted that assessee had sold properties worth Rs.86,27,000/- and failed to explain the source of investment for proper adjudication of Long Term Capital Gain (LTCG).
From examination of record in light of aforesaid rival contentions, it is crystal clear that as per notice dated 25.06.2021 under section 148 of the Act, assessee sold two properties for sale consideration of Rs.86,27,000/- (Rs. 62,06,000 + 24,21,000). Assessee in reply dated 31.10.2021 claimed that assessee had 1/6th Anju Basundhra vs. Circle Int. Tax. 1(1)(2) for A.Y. 2013-14 share in the property amounting to Rs.14,39,500/- against the total sale consideration of Rs.86,27,000/-. Copies of sale deeds dated 30.12.2012 clearly mentioned assessee’s shares as 1/6th i.e. 16.69%. The learned AO in compliance of judgment of Hon’ble Supreme Court of Union of India vs. Ashish Aggarwal and CBDT Instruction No.1 dated 11.05.2022 converted notice under section 148 into a deemed show-cause notice under Clause (B) of Section 148A of the Act and issued fresh notice dated 01.06.2022. Notice dated 28.07.2022 under section 148 of the Act for reopening of A.Y. 2013-14 based on income below Rs.50,00,000/- is contrary to law. Therefore, the directions of DRP dated 26.02.2024 and assessment order dated 22.03.2024 are illegal and are set aside.
In the result, appeal filed by the assessee is allowed.
Order pronounced on this day 20th December, 2024