KALYANASUNDARAM BHARATH HARI,CHITTLAPAKKAM,CHENNAI vs. ITO, INT. TAX WARD 1(1), CHENNAI, CHENNAI

आदेश /O R D E R

PER MAHAVIR SINGH, VICE PRESIDENT:

8. The ITO, Int. Taxn Ward 1(1), Chennai / DRP failed to appreciate that the assumption of jurisdiction u/s 147 of the Act was without sanction of law and ought to have appreciated that the consequential re-assessment order accordingly should be reckoned as bad in law.

9. The ITO, Int. Taxn Ward 1(1), Chennai / DRP failed to appreciate that in the absence of fresh and tangible materials, the re-opening of assessment to verify transaction of sale would amount of change of opinion which should be considered as nullity in law.

10. The ITO, Int. Taxn Ward 1(1), Chennai / DRP failed to appreciate that the procedure for conducting reassessment as laid down by the Apex Court in the case reported in 259 ITR 19 were not followed on the facts off the present case thus vitiating the impugned order in its entirety.

2.0 Grounds of Objection No.1: The Assessing Officer has grossly erred in Issuing the notice us 148 of the Income Tax Act 1961 dated I3-04-2021

- 4 - DIN ITBA/AST/S/148/2020-21/1031619292 (2) for the assessment year 2013-14 as it does not comply with the provisions, procedures and limitations prescribed under sections 147,148, 148A and 149 of the Income Tax Act of 1 961. 2.1 Panel: Having considered and perused the submissions of the assessee, the panel is of the considered opinion that the notice issued u/s 148 of the Income Tax Act, 1961, was issued within the stipulated time limits as laid down u/s 149(1)(b) of the Income Tax Act. The same is reproduced below:

Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c): (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if for years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.

2.2 Thus, based on the above, the Panel finds no infirmity in the action of the AO and hence the objection of the assessee is rejected.

Aggrieved, now assessee is in appeal before the Tribunal.

- 5 - that there is no notice available in the above portal as an attachment. The ld.counsel then took us through the notice issued by the AO dated 13.04.2021, which is enclosed at page 3 of assessee’s paper-book and drew our attention to page 2 of assessee’s paper-book wherein this notice issued on 13.04.2021 is available on ITBA portal as download. According to ld.counsel, only one notice u/s.148 of the Act dated 13.04.2021 is available and not that of 19.03.2021. The ld.counsel then took us through the assessment order and stated that the AO has framed assessment in response to notice issued u/s.148 of the Act dated 19.03.2021 and he drew our attention to page 2 of assessment order passed in response to DRP direction u/s.147 r.w.s. 144C(13) of the Act dated 11.01.2023 and the relevant para reads as under:- “In this regard, based upon the information it was ascertained that income from capital gains has been under-assessed within the provision of section 50C and within the meaning of section 147 of the Income Tax Act, for a sum Rs.29,20,000/-.

Therefore, for the year under consideration, the assessee had undervalued his inform from long term capital gains out of the above said transactions and provisions of clause (c) of explanation 2 to sec.147 are applicable to facts of this case and a notice u/s.148 was issued on 19-03-2021 requiring the assessee to file the return in response to section 148. The notice was duly complied and a return was submitted on 05-05-2021. However no additional income was offered.”

In view of the above, the ld.counsel stated that the assessee’s case i.e., issuance of notice either on 19.03.2021 or 13.04.2021 are - 6 - covered by new regime of taxation for reopening of assessment u/s.148 of the Act. The ld.counsel stated that this issue is no res- integra now because the CBDT in its instruction i.e., Instruction No.1/2022 [F.No.279/Misc/M-51/2022-ITJ] has issued clarification for implementation of decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in [2022] 138 taxmann.com 64. The ld.counsel for the assessee stated that the issue before Hon’ble Supreme Court was of extended reassessment notice extended in term of Notification No.20/2021/F.No.370142/35/2020-TPL dated 31.03.2021. He stated that there is no quarrel over the notification issued by CBDT but CBDT in its subsequent notification, issued clarification for implementation of judgment of Hon’ble Supreme Court in the case of Ashish Agarwal, supra and clarified the limitation provided in section 149 and the following clarification was issued and the relevant para 6 of said instruction reads as under:- “6. Operation of the new section 149 of the Act to identify cases where fresh notice under section 148 of the Act can be issued:

6.1 With respect of operation of new section 149 of the Act, the following may be seen:  Hon’ble Supreme Court has held that the new law shall operate and all the defences available to the assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available.

- 7 - Sub-section (1) of new section 149 of the Act as amended by the Finance Act, 2021 (before its amendment by the Finance Act, 2022) reads as under:- 149(1) No notice under section 148 shall be issued for the relevant assessment year – (a) if three years have elapsed from the end of the relevant assessment year unless the case falls under clause (b) (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year.

Further, the ld.counsel also drew our attention to para 7.1 of aforesaid instruction and the relevant reads as under:- “7.1 Hon’ble Supreme Court has directed that information and material is required to be provided in all cases within 30 days. However, it has also been noticed that notices cannot be issued in a case for AY 2013-14, AY 2014-15 and AY 2015-16, if the income escaping assessment, in that case for that year, amounts to or is likely to amount to less than fifty lakh rupees. Hence, in order to reduce the compliance burden of assessees, it is clarified that information and material may not be provided in a case for AY 2013- 14, AY 2014-15 and AY 2015-16, if the income escaping assessment, in that case for that year, amounts to or is likely to amount to less than fifty lakh rupees. Separate instruction shall be issued regarding procedure for disposing these cases.”

In view of the above, the ld.counsel stated that the assessee’s case squarely fall in the aforesaid instruction issued by CBDT and the Hon’ble Supreme Court has already considered the issue where the escaped income is less than Rs.50 lakhs. He stated that in the present case before the Bench, the escaped income is - 8 - Rs.29,20,000/- only. Hence, according to ld.counsel, the issue is fully covered and the AO cannot assume jurisdiction for reopening of assessment under the new regime of taxation u/s.148/148A of the Act.

- 9 - Apart from this, he could not contest the issue or could not controvert the later instruction issued by CBDT clarifying the judgment of Hon’ble Supreme Court in the case of Ashish Agarwal, supra for implementation by lower authorities.

Order pronounced in the open court on 18th April, 2024 at Chennai.