MOTILAL LACHHMANDAS RIJHWANI,THANE vs. ITO, WD-2(2), KALYAN

The assessee is a senior citizen of 72 years of age. The assessee for the year under consideration filed return of income on 28.09.2017 declaring income of Rs. 9,01,350/-. However, this return is considered as invalid by the revenue. The Assessing Officer (AO) has received information that the assessee has made a declaration under Income Declaration Scheme, 2016 (Scheme) wherein an undisclosed income of Rs. 50,78,160/- was declared as Income from Business. Since the assessee failed to pay the tax liability on the income disclosed, the application made under the Scheme was cancelled. Based on this information the AO had reason to belief that the income of assessee has escaped assessment and accordingly issued notice under section 148 of the Act. Since the assessee did not respond to the notice under section 148 and the subsequent notices issued under section 142(1)/144 of the Act. The AO completed the assessment under section 144 r.w.s. 147 of the Act wherein the AO added the income declared under the Scheme as undisclosed income of the assessee. Aggrieved the assessee preferred

There is a delay of 136 days in filing the appeal before the Tribunal. The assessee filed a petition for condonation of delay along with the affidavit and prayed for condonation of delay. The ld. Authorized Representative (AR) of the assessee with regard to the condonation submitted that the assessee is a senior citizen aged 72 years and was not guided properly by the counsel who was handling the tax matters. Considering the age of the assessee and his lack of knowledge on the tax related matter, the ld. AR prayed that the delay may be condoned.

The ld. DR on the other hand vehemently opposed the condonation of delay in filing the appeal before the Tribunal.

Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 136 days in filing the appeal and admit the appeal for adjudication.

The main contention of the ld. AR is that the notice issued under section 148 is not valid. The ld. AR submitted that the notice under section 148 though dated 31.03.2021 is digitally signed on 07.04.2021 and therefore, would clearly fall within the amended provisions of re-assessment as introduced by the Finance Act,

The ld. DR on the other hand submitted that the notice under section 148 is dated 31.03.2021 which is before the introduction of new scheme of re-assessment and therefore, the notices is valid. The ld. DR further submitted that the digital signature date cannot be considered as the date of notice and therefore the assessment cannot be held to be invalid.

We heard the parties and perused the material on record. The Finance Act, 2021 amended the scheme of reassessment under the Act with effect from 01.04.2021 whereby new sections 147, 148, 149 and 151 were substituted and section 148A was introduced in the Act. As per the new scheme of reassessment, the AO is required to issue a notice under section 148A and pass an order under section 148A before initiating the re-assessment proceedings by issuing notice under section 148. This amendment was brought effective from 01.04.2021. In assessee's case on perusal of the below notice issued under section 148 though the date of the notice is stated to be 31.03.2021 the notice is digitally signed on 07.04.2021

We also notice that it is clearly mentioned in the footer of the notice that the date of digital signature may be taken as the date of the document. Therefore based on the perusal of these facts we are unable to agree with the contention with the ld. DR that the date of notice is 31.03.2021 and not 07.04.2021. Since the notice is issued after the introduction of the new scheme reassessment i.e. after 01.04,2021, there is merit in the submission that the AO should have followed the procedure as laid down in the new scheme. In assessee's case it is an undisputed fact that the AO has not followed the procedure laid down under the new scheme of re-assessment

Even if we consider that the impugned notice is covered by the time limit extended by TOLA, then in that case the AO is required to follow the directions as given by the Hon'ble Apex Court in the case of Ashish Agrawal (supra). The AO in the given case has failed to follow the mandate given by the Hon'ble Supreme Court and therefore the notice issued would become invalid on that count also. To summarise, in assessee's case the AO has not followed the procedure laid down either under the new scheme of re-assessment nor has followed the directions given by the Hon'ble Supreme Court. Therefore, on both counts, we are of the considered view that the impugned notice issued under section 148 is invalid. Accordingly, the re-assessment done based on invalid notice is liable to be quashed.

In the result, the appeal of assessee is allowed.