2021 (7) TMI 1246 - AT - Income Tax

Appeal allowed for fresh examination of notice legality under Section 148 by CIT(A)

The Tribunal allowed the appeal for statistical purposes, directing a fresh examination by the CIT(A) due to the improper addressing of specific grounds ... Reopening of assessment u/s 147 - legality of the notice issued u/s 148 - No service of notice u/s 148 of I. T. Act 1961 within the period of limitation - as argued AO Noida had no jurisdiction to issue notice u/s 148 of the Act for re-opening of the assessment - HELD THAT:- This approach of CIT(A) is not proper and is against the settled principle of law. CIT(A) ought to have passed a speaking order considering the all submissions and averment made before him by the assessee or his counsel. Therefore, we set aside the impugned order and restore this issue to the file of Ld.CIT(A) to decide the issue after obtaining Remand Report from the AO as to when notice u/s 148 of the Act was issued to the assessee by the AO at Delhi i.e. ITO, Ward-63(3), New Delhi. - CIT(A) would give a clear finding about the reasons recorded by the AO at Delhi. Ld.CIT(A) would decide the issue raised before him regarding non-receiving of reasons by the Assessing Officer at Delhi and also issue of limitation qua issuance of notice u/s 148 of the Act by the Assessing Officer at Delhi. Since, the impugned order is set aside therefore, all other grounds of assessee’s appeal are set aside to the file of Ld.CIT(A) for decision afresh. Appeal of the assessee is allowed for statistical purposes only. Issues Involved:1. Validity of Notice under Section 148 of the Income Tax Act, 1961.2. Jurisdiction of the Assessing Officer.3. Grounds for re-opening the assessment.4. Applicability of Section 50C of the Income Tax Act, 1961.5. Reference to the Valuation Officer under Section 50C(2)(a) of the Income Tax Act, 1961.6. Failure to dispose of objections before making the assessment.Detailed Analysis:1. Validity of Notice under Section 148 of the Income Tax Act, 1961:The appellant argued that the notice under Section 148 was not served within the period of limitation, as required under Section 149(1)(b). The notice was issued to an incorrect address, which was never the appellant’s address. The appellant contended that the issuance and service of notice under Section 148 are jurisdictional requirements that must be mandatorily complied with. The Assessing Officer (AO) at Noida issued the notice to the wrong address despite having the correct address. The appellant cited the Delhi High Court decision in CIT vs. Chetna Gupta and the Allahabad High Court decision in Suresh Kumar Sheetlani vs. ITO, which held that proper service of notice is a jurisdictional precondition to finalizing the reassessment.2. Jurisdiction of the Assessing Officer:The appellant contended that the AO at Noida had no jurisdiction to issue the notice under Section 148, as the appellant was assessed to tax at Delhi. The correct jurisdiction lay with the AO at Delhi. The issuance of the notice by the AO at Noida was, therefore, ab-initio without jurisdiction, rendering the subsequent assessment by the AO at Delhi illegal. The appellant cited cases such as Smiriti Kedia vs. UOI and ITO vs. Rajinder Prasad Gupta to support the argument that the reassessment notice and subsequent proceedings were without jurisdiction.3. Grounds for Re-opening the Assessment:The appellant argued that the grounds for reopening the assessment did not exist after relief was granted by the CIT(A). Specifically, the addition under Section 50C was not part of the reasons to believe for reopening the assessment. The appellant also contended that the objections raised against the reopening were not properly disposed of before making the assessment, making the assessment null and void.4. Applicability of Section 50C of the Income Tax Act, 1961:The appellant contended that the variation between the circle rate and the actual sale consideration of the property was only Rs. 5,50,000, which is 9.09% of the circle rate. This variation should be ignored for the applicability of Section 50C. The appellant argued that the addition under Section 50C was unjust, illegal, and arbitrary.5. Reference to the Valuation Officer under Section 50C(2)(a) of the Income Tax Act, 1961:The appellant argued that the CIT(A) made an addition under Section 50C without referring to the Valuation Officer, despite the appellant’s request under Section 50C(2)(a). This action was deemed unjust, illegal, and against the facts and circumstances of the case.6. Failure to Dispose of Objections Before Making the Assessment:The appellant argued that the objections raised against the reopening of the assessment were not disposed of by the AO before making the assessment, rendering the assessment null and void.Tribunal's Decision:The Tribunal found that the CIT(A) did not properly address the specific grounds regarding the legality of the notice issued under Section 148. The CIT(A) dismissed the ground in a casual manner without a detailed examination of the appellant’s submissions. The Tribunal set aside the impugned order and restored the issue to the file of the CIT(A) to decide after obtaining a Remand Report from the AO regarding the issuance and recording of reasons for the notice under Section 148 by the AO at Delhi. The Tribunal directed the CIT(A) to give clear findings on the reasons recorded and the issue of limitation for the notice issued by the AO at Delhi. All other grounds of the appellant’s appeal were also set aside for fresh decision by the CIT(A).Conclusion:The appeal was allowed for statistical purposes, with the Tribunal directing a fresh examination of the issues by the CIT(A), including obtaining a Remand Report from the AO and addressing the appellant’s specific grounds in a detailed and speaking order.