2021 (3) TMI 886 - AT - Income Tax

Tribunal dismisses Revenue's appeal, upholds quashing of re-assessment proceedings for multiple years.

The ACIT, Central Circle-18, New Delhi Versus M/s. SG Portfolio Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision to quash the re-assessment proceedings for the assessment years 2007-2008 to 2010-2011. The Tribunal found that ... Reopening of assessment u/s 147 - CIT(A) challenging the assumption of jurisdiction under section 147/151 of the I.T. Act and that the re-assessment order have been framed without serving mandatory notice under section 148, 143(2) and 142(1) - HELD THAT:- Revenue has not raised any ground of appeal in the present appeal to challenge these findings of the Ld. CIT(A). The Revenue merely contended in the grounds of appeal that since no return was filed in response to notice under section 148 of the I.T. Act, 1961, therefore, there is no question of issuing of notice under section 143(2) of the I.T. Act and that Ld. CIT(A) has ignored the provisions of Section 282BB - Revenue, therefore, did not challenge the Order of the Ld. CIT(A) in quashing the initiation of re-assessment proceedings on both counts i.e., initiation of re-assessment proceedings is without fresh tangible material and that sanction under section 151 is invalid. Therefore, once the Order of the Ld. CIT(A) on this question is not challenged by the Revenue Department, it became final and any result of Departmental appeal cannot change the fate of Departmental appeal, the appeal of Revenue would not be maintainable and is liable to be dismissed on this ground alone. From the date of such letter it would be deemed that assessee filed the return of income under section 148 and as such the A.O. shall have to issue notice under section 143(2) for completion of the assessment accordingly and limitation would be counted from the date of filing of the letter before A.O. in this regard. CIT(A) on verification of the record also found that no notice under section 143(2) is found on record maintained by the A.O. which proves that A.O. has not issued any statutory notice under section 143(2). Therefore, assumption of jurisdiction by the A.O. was totally invalid and bad in Law and as such the same was correctly quashed by the Ld. CIT(A). Reference to provisions of Section 282BB - CIT(A) after examining the record, correctly found the contention of assessee to be correct which fact is further strengthened by the notice of the A.O. under section 142(1) of the I.T. Act Dated 20.10.2014 which is also referred to by the A.O. in the re-assessment order in which the A.O. has called for the explanation of assessee on certain queries in which A.O. has specifically mentioned that assessee has filed return of income for the assessment year under appeal. This notice under section 142(1) Dated 20.10.2014 is issued after issue of notice under section 148 Dated 16.05.2013. Therefore, it is relevant to the re-assessment proceedings. When the A.O. admits in the notice under section 142(1) Dated 20.10.2014 that assessee filed return of income under section 148 of the I.T. Act, it would strengthen the findings of the Ld. CIT(A) that assessee made a request before A.O. that original return filed may be treated as return filed in response to notice under section 148 of the I.T. Act, 1961. Since no notice under section 143(2) have been issued by the A.O. before completion of the assessment within the period of limitation, therefore, the Ld. CIT(A) was justified in quashing the re-assessment proceedings. We, therefore, do not find any infirmity in the Order of the Ld. CIT(A) in quashing the re-assessment proceedings. Departmental appeal is dismissed. Issues Involved:1. Quashing of the assessment order due to the alleged failure of the assessee to file a return of income in response to notice under section 147 of the Income Tax Act, 1961.2. Ignoring provisions of section 282BB of the Income Tax Act, 1961.3. Reopening of the case based on new facts and evidence from a survey action under section 133A and findings during earlier assessment proceedings.Issue-Wise Detailed Analysis:1. Quashing of the Assessment Order:The Revenue raised concerns that the CIT(A) erred in law and facts by quashing the assessment order, arguing that the assessee never filed the return of income in response to the notice under section 147 of the Income Tax Act, 1961. The CIT(A) found that the original return was filed under section 139(1) on 31.08.2007. The CIT(A) observed that the A.O. failed to bring on record how and what income had escaped assessment due to the assessee's failure. Moreover, no tangible material was found to initiate proceedings against the assessee. The CIT(A) noted that once the original assessment under section 153C was quashed, the law does not permit reopening the assessment unless fresh tangible material is available. The CIT(A) also found the sanction granted under section 151(1) to be invalid and quashed the re-assessment proceedings.2. Ignoring Provisions of Section 282BB of the Income Tax Act, 1961:The Revenue contended that the CIT(A) ignored the provisions of section 282BB. However, it was clarified that section 282BB does not exist in the statute. The relevant provision is section 292BB, which deems notice to be valid in certain circumstances. However, this provision does not apply when no notice under section 143(2) has been issued. The CIT(A) verified the assessment records and found no notice under section 143(2) issued by the A.O., rendering the assumption of jurisdiction invalid and the re-assessment proceedings quashed.3. Reopening of the Case Based on New Facts and Evidence:The Revenue argued that the case was reopened based on new facts and evidence from a survey action under section 133A and findings during earlier assessment proceedings. The CIT(A) found that the A.O. relied on observations from the original assessment order, which was quashed due to incorrect jurisdiction under section 153C. The CIT(A) noted that the A.O. failed to present new tangible material to justify reopening the case. The CIT(A) also found the approval for notice under section 148 invalid as it was given mechanically without independent application of mind. Further, the CIT(A) emphasized the necessity of issuing a notice under section 143(2) after the assessee requested the original return to be treated as filed in response to the notice under section 148. The absence of such notice invalidated the re-assessment proceedings.Conclusion:The Tribunal upheld the CIT(A)'s decision to quash the re-assessment proceedings due to the lack of new tangible material, invalid sanction under section 151, and failure to issue a mandatory notice under section 143(2). The Tribunal dismissed the Revenue's appeals for the assessment years 2007-2008 to 2010-2011, affirming the CIT(A)'s findings and maintaining the quashing of the re-assessment proceedings.