Loading judgment…
Facts
The assessee, a non-resident since 1997, was issued notices under sections 148A(b) and 148A(d) for AY 2018-19 based on high-value bank deposits (Rs. 2.15 Cr) and an immovable property purchase (Rs. 5.51 Cr). The AO concluded that income escaped assessment as no ITR was filed and the assessee's explanations were deemed unsatisfactory. The assessee contended that she had no Indian income, the bank account was joint with her husband, and all investments were from her husband's remittances from his pharma business in the Philippines, with her husband being an assessed taxpayer.
Held
The Tribunal found that the AO's order under section 148A(d) was a non-speaking order, demonstrating a complete non-application of mind. The AO failed to provide reasoned findings for discarding the assessee's factual submissions and evidence regarding her non-resident status and the source of funds. Consequently, the Tribunal held that the assumption of jurisdiction under section 147 could not be sustained.
Key Issues
Whether the assumption of jurisdiction under section 147 was valid when the AO's order under section 148A(d) was non-speaking and failed to consider the assessee's explanations regarding the source of funds and non-resident status. Whether the impugned assessment was non est and void ab initio due to non-application of mind by the AO.
Sections Cited
147, 144C(13), 148A(d), 143(3), 148, 148A(b), 148A(c), Explanation 1 to section 148, 285B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES : D : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI BRAJESH KUMAR SINGH
Assessment Year: 2018-19 Reshma Kamal Abichandani, Vs ACIT, E-367, Ramesh Nagar, Circle (1)(1), Delhi – 110 012. Delhi. PAN: BCQPA3616R (Appellant) (Respondent) Assessee by : Shri Rajesh Dua, CA & Shri J.K. Aggarwal, CA Revenue by : Ms Prajna Paramita, CIT-DR Date of Hearing : 28.10.2024 Date of Pronouncement : 20.11.2024 ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the final assessment order dated 29.01.2024 passed u/s 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ACIT, Circle International Taxation 1(1)(1), Delhi (hereinafter referred to as the Ld. AO) for assessment year 2018- 19.
Heard and perused the record.
2.1 At the outset, it was pointed out by the ld. AR that there was a delay of 123 days in filing of the appeal for which a condonation application has been filed by the assessee. As the reasons cited for delay being that the assessee was pursuing rectification application with the DRP, rejection of which further forms basis for approaching this Tribunal by way of appeal, the delay is well explained and, accordingly, condoning the delay, the appeal is admitted for hearing.
On hearing on merits, it comes up that the assessee was issued a notice u/s 148A(d) of the Act on 31.03.2022 by the AO and the copy of which is available at pages 36-37 of the paper book. On going through the same, we find that the AO mentions that the assessee had not filed return for the relevant year and there was no regular assessment u/s 143(3) of the Act or an action u/s 147 of the Act. However, there was an information of deposit of Rs.2,15,10,769/- in State Bank of India bank account of assessee and a purchase of immovable property worth Rs.5,51,95,912/- by the assessee.
3.1 It comes up from this notice dated 31.03.2022 that earlier a notice u/s 148A(b) of the Act was issued to the assessee on 21.03.2022 requiring the assessee to show cause as to why a notice u/s 148 of the Act should not be issued on the basis of the aforesaid information flagged under risk management strategy as per the provisions of clause (i) of Explanation 1 to section 148 of the Act, prepared by the Board.
3.2 We find that in compliance of this notice u/s 148A(b), the assessee filed reply dated 28.03.2022 which was considered by the AO u/s 148A(c) read with 2 clause (d) and was not found satisfactory. The AO concluded that the assessee has not filed her ITR despite having high value financial transactions involving evasion of tax. Thus, considering that income chargeable amounting to Rs.7,67,06,681/- to tax for AY 2018-19 has escaped assessment so this notice dated 31.03.2022 u/s 148A(d) was issued.
The ld. AR has submitted that in the reply dated 28.03.2022, the assessee had submitted that the assessee is a non-resident in India since 1997 residing in Philippines and does not have any income in India and, for that reason, no ITR was filed in India. Regarding the deposit in the bank account of the assessee with the State Bank of India as reported by the State Bank u/s 285B of the Act, it was explained that the said account is in the joint name with her husband Kamal Kumar Abichandani who operated the account. Copies of bank statement of SBI NRE and NRO accounts were enclosed to establish that the account is in the joint name for the reason of social/legal security. It was submitted that the deposits in the bank account are made out of the bank accounts of her husband in Philippines where he is in the business of trading in pharma sector. It was pointed out that her husband has a PAN and is assessed with International Taxation Circle-2(1)(2), Civic Centre, New Delhi, since FY 1999-2000 and the copy of acknowledgement of the ITRs of her husband for the last three years were filed and which are also placed before us in the paper book at pages 76-78.
As with regard to the source for purchase of immovable property, it was submitted that this property was purchased in the name of her husband Shri Kamal Kumar Abichandani and the assessee was a co-owner, being wife. It was submitted that the construction linked payment plan was executed by the builder and in FY 2017-18, possession was offered and registration was completed. The builder-buyer agreement dated 29.11.2011 was also submitted before the AO by reply dated 28.02.2022. It was submitted before us that the payment for purchase of this property was made by the husband of the assessee out of remittances from Philippines and this payment was made for a period of 8 years starting from FY 2010-11 to 2017-18. Copy of ledger account of this payment was submitted to the AO and a copy of which is also placed before us at pages 79-80 of the paper book.
Although the ld. DR has defended the orders of the ld. tax authorities below, but we find that while passing the order under clause (d) of section 148A of the Act, the AO does not discusses a word of the facts recapitulated above with regard to the reasons for the assessee not filing the return and giving explanation to the flagged information duly supported with evidences. The copy of order under clause (d) of section 148A of the Act available at pages 36- 37 of the paper book leaves no doubt in the mind of this Bench that there is complete non-application of mind by the AO. The new regime u/s 148A of the Act provides for a inquiry if required upon the information before issuing the notice under clause (b) and calling for reply and then clause (c) read with clause (d) of section 148A requires passing of an order according to the mandate of clause (c) read with clause (d) of section 148A of the Act, to show that after considering the material available on record, including reply of the assessee, whether or not it is a fit case to issue a notice u/s 148 of the Act. The decision certainly requires pointing out the reasons for discarding the factual submissions of the Assessee by reasoned findings, if not by evidences. However, here in the case in hand order passed under clause (d) of section 148A is a non-speaking order. The AO should have justified the said order pointing out why the reopening proceedings against the wife should be continued in spite of the fact that an explanation was given that investments in the property and deposit in the bank account were made by the husband who had been independently assessed.
Thus, we are of the considered view that assumption of jurisdiction u/s 147 of the Act cannot be sustained. Accordingly, the ground No.1 of the assessee is allowed and as a sequel to the same, the appeal of the assessee is allowed. The impugned assessment is held to be non est and void ab initio.
Order pronounced in the open court on 20.11.2024. Sd/- Sd/- (BRAJESH KUMAR SINGH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20th November, 2024. dk