Assessee wins appeal due to invalid notice and erroneous assessment premise.

The tribunal found in favor of the assessee, ruling that the reassessment was unsustainable due to the invalid notice under Section 148 and the AO's erroneous premise regarding the alleged income that escaped assessment. The appeal was allowed, and the assessment was set aside on 30th August 2019.

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Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act.
2. Merits of the addition made by the Assessing Officer (AO).

Issue-wise Detailed Analysis:

1. Validity of Notice under Section 148 of the Income Tax Act:

The primary issue pertains to the validity of the notice issued under Section 148 of the Income Tax Act. The assessee argued that the notice dated 26-03-2014 was never served on them. The tracking record indicated that the delivery was unsuccessful due to an insufficient address. The AO's claim that the notice was served by affixture was also challenged, as there was no independent witness to confirm this method of service. The tribunal found that the AO did not make sufficient efforts to ascertain the correct address of the assessee and failed to provide evidence of service by affixture.

The tribunal referred to precedents such as CIT Vs. Avi-oil India Pvt. Ltd. and Anil Kisanlal Marda, emphasizing that a notice must not only be issued but also served within the stipulated period. The tribunal concluded that the absence of a valid notice invalidated the assessment proceedings.

2. Merits of the Addition Made by the AO:

On the merits, the AO had added an income of Rs. 8,06,400/- to the assessee's income, based on the assumption that there was a transfer of property and income earned from it. The AO's assessment was based on an unregistered development agreement and a registered sale deed. The AO held that since the development agreement was unregistered, the title over the property did not pass to the assessee, and thus, the sale consideration of Rs. 13,44,000/- was relevant.

The assessee contended that the land was taken for development under an unregistered agreement, and subsequently, a sale deed was executed to transfer the land in favor of the assessee. The plots were then registered in the name of the landlords/vendors. The assessee argued that there was no exchange of consideration, and thus, no transfer of property occurred. Alternatively, the assessee claimed that if the transaction was considered a sale, the cost of acquisition should have been deducted.

The tribunal found that the AO and CIT(A) failed to consider the transaction as a whole and did not allow the cost of acquisition. The tribunal noted that the land was registered in the assessee's name on 15-11-2006 and re-registered in favor of the landowners on 16-11-2006. This indicated that the assessee had developed the land and sold it back to the landowners, and thus, there was no income from the transaction.

Conclusion:

The tribunal concluded that the reassessment was not sustainable due to the invalidity of the notice under Section 148 and the erroneous premise of the AO regarding the income that allegedly escaped assessment. Consequently, the appeal of the assessee was allowed, and the assessment was set aside. The order was pronounced on 30th August 2019.

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