2021 (12) TMI 1398 - AT - Income Tax

Appellate Tribunal partially allows appeals, refers jurisdictional issue back to CIT(A) for further consideration.

The Appellate Tribunal partially allowed the appeals for statistical purposes and referred the jurisdictional issue of whether the assessment should have ... Admission of additional grounds of appeal - Jurisdictional challenge to mode of assessment (reopening under section 147 vis-a -vis assessment under section 153C) - Restoration for fresh adjudicationAdmission of additional grounds of appeal - Jurisdictional issue - Additional grounds raising the contention that assessment ought to have been initiated under the provisions applicable to seized material were admitted. - HELD THAT: - The assessee sought to raise additional grounds contending that the assessment proceedings should have been initiated under the provisions applicable to material seized during search rather than by reopening under the regular provisions. The Tribunal observed that the additional grounds were pure questions of law and jurisdictional in nature and did not require fresh factual investigation. Relying on the principle that such legal grounds may be entertained at the appellate stage, the Tribunal admitted the additional grounds for both assessment years. [Paras 10]Additional grounds admitted.Jurisdictional challenge to mode of assessment (reopening under section 147 vis-a -vis assessment under section 153C) - Restoration for fresh adjudication - Whether the assessments should be continued under the reopening provisions or ought to have been proceeded with under the provisions governing assessment of seized material was remitted to the Commissioner (Appeals) for fresh adjudication. - HELD THAT: - The Tribunal recognised that the contention as to the correct statutory mode of assessment-whether proceedings should have been under the regular reopening provisions or under the special provisions dealing with seized documents-is a jurisdictional matter that goes to the root of the proceedings. Although the issue had not been raised before the tax authorities, the Tribunal considered it appropriate in the interests of justice to have that question decided first by the Commissioner (Appeals). Consequently, rather than adjudicating the merits itself, the Tribunal restored the additional ground to the file of the CIT(A) for determination; if decided against the assessee, the assessee would be at liberty to file a fresh appeal raising the other grounds. [Paras 10]Issue remitted to the Commissioner (Appeals) for fresh adjudication; merits not decided by the Tribunal.Final Conclusion: The Tribunal admitted the assessee's additional legal grounds and remitted the jurisdictional question as to the correct mode of assessment (reopening under regular provisions versus assessment on seized material) to the Commissioner (Appeals) for fresh decision; the appeals are partly allowed for statistical purposes. Issues:1. Transfer of property leading to capital gains in assessment year 2006-2007.2. Reopening of assessment for assessment year 2007-2008 based on undisclosed income.Issue 1: Transfer of property leading to capital gains in assessment year 2006-2007The appellant, a firm engaged in property development, purchased a piece of land and later sold it to another party. The Assessing Officer concluded that the appellant had transferred the land during the financial year relevant to assessment year 2006-2007, resulting in capital gains. Despite objections from the appellant, the Assessing Officer brought the income to tax in assessment year 2006-2007. The CIT(A) upheld this view, stating that the substantial amount received by the appellant during the relevant year indicated the crystallization of the property sale in 2006-2007.Issue 2: Reopening of assessment for assessment year 2007-2008 based on undisclosed incomeFor assessment year 2007-2008, the Assessing Officer issued a notice for reopening the assessment based on undisclosed income related to the sale of the same property. The appellant raised objections to the notice, but the assessment order was passed bringing Rs.1.15 crore to tax on a protective basis. The CIT(A) confirmed this order, assessing the same figure on a protective basis. The appellant challenged the notice issued under section 148 of the Act, arguing that there was no failure to disclose necessary facts. Additionally, legal grounds were raised regarding the correctness of reopening the assessment under section 147 instead of section 153C r.w.s. 153A of the Act.The Appellate Tribunal admitted additional grounds raised by the appellant, focusing on the jurisdictional issue of whether the assessment should have been completed under section 147 or 153C of the Act. The Tribunal restored this issue to the CIT(A) for adjudication, emphasizing that it is a jurisdictional matter that needs to be addressed first. The appeals were partly allowed for statistical purposes, with the issue raised in the additional grounds referred back to the CIT(A) for further consideration.