2019 (5) TMI 1538 - AT - Income Tax

Tribunal sets aside assessment, restores matter for further proceedings under section 148(1)

Jaspal Singh s/o Swaran Singh Versus Income Tax Officer, Ward-5 (2), Amritsar

Jaspal Singh s/o Swaran Singh Versus Income Tax Officer, Ward-5 (2), Amritsar - TMI Issues Involved:1. Delay in filing the appeal.2. Validity of the assessment under sections 144 and 147 of the Income Tax Act, 1961.3. Non-consideration of the assessee's objection on the quantum of addition.4. Service of notice under sections 133(6), 147/148, 142(1), and 143(2).Detailed Analysis:1. Delay in Filing the Appeal:The appeal was delayed by 87 days. The assessee explained the delay was due to awaiting the outcome of a rectification application under section 154 of the Act. The assessee argued that if the rectification was favorably considered, the need for further appeal would be obviated. The Departmental Representative objected, stating the appeal could have been filed independently of the rectification application. The tribunal found the explanation bona fide, noting the assessee’s conduct was not mala fide and was based on legal advice. Thus, the appeal was admitted.2. Validity of the Assessment:The assessee contested the assessment on the grounds that the reasons recorded for reopening the case were illegal and that the notices were not validly served. The tribunal noted that the Assessing Officer (AO) inferred the assessee did not file a return for the relevant year due to non-response to a notice under section 133(6). The assessee argued the notice was not received as he had changed his address. However, the tribunal highlighted the assessee's failure to update the address as required under section 139A(5)(d). The tribunal found that the AO had a prima facie reason to believe income had escaped assessment, thus the jurisdiction to assess was validly assumed.3. Non-Consideration of Objection on Quantum of Addition:The assessee argued that only Rs. 2.70 lakhs was paid during the year for the shop acquired on an installment basis, and thus the addition should be limited to this amount. The CIT(A) had failed to consider this objection. The tribunal noted that while the assessee's strategy to seek rectification was bona fide, the appeal could have been filed without awaiting the outcome of the rectification application. Nevertheless, the tribunal admitted the appeal and proceeded to hear the matter on merits.4. Service of Notice:The assessee contended that the notices under sections 133(6), 147/148, 142(1), and 143(2) were not validly served. The tribunal found that the notices were sent to an address that was neither the current address nor the address as per the PAN. The tribunal concluded that the service of the notice under section 148(1) was not proper. However, it noted that the lack of proper service did not annul the proceedings but rendered them procedurally infirm. The tribunal decided to restore the matter to the AO to proceed from the stage of issuing the notice under section 148(1), ensuring the assessee is given an opportunity to state his case.Conclusion:The tribunal allowed the appeal for statistical purposes, setting aside the assessment and restoring the matter to the AO to proceed from the stage of issuing the notice under section 148(1). The AO is to take into account the income already returned by the assessee and provide an opportunity for the assessee to present his case. The tribunal’s decision ensures procedural compliance and fair opportunity for the assessee.