2022 (7) TMI 1042 - AT - Income Tax

Tribunal remands case for fresh consideration after upholding notice service.

The Tribunal upheld the service of notice under section 148 but remanded the case to the First Appellate Authority for fresh consideration of the merits, ... Validity of reopening of assessment - main contention of the assessee is that the notice u/s 148 of the Act had been issued at the wrong address i.e. where the assessee had not been residing - HELD THAT:- Admittedly, the assessee had an address in Ludhiana and she also has an address in Mohali and another address in Chandigarh. From the records also, it is not coming out as to what is the correct address of the assessee as per the PAN records. In such a situation, we are of the considered view that the assessee cannot be allowed to take the benefit of plea of no service of notice u/s 148 of the Act when even as per the various documents filed before us, the assessee was having three addresses. In such a situation, we would concur with the categorical findings of FAA that the notice u/s 148 of the Act had been served on the assessee through affixture. Moreover, it is not the case of the assessee that her case was dismissed ex-parte by the Ld. CIT(A) or her assessment was completed ex-parte by the Assessing officer as at both the Forums her case had been duly represented by some authorised representatives as is apparent from the assessment order as well as the First Appellate order. Here again, the veracity of the assessee’s contention that she had not authorised anybody to represent her, cannot be verified for want of adequate proof. The assessee’s contention that the signature on Form 35 is not hers, is a matter within the realm of Forensic Experts. Further, as per record, even notice u/s 142(1) had been received by the assessee and had been duly responded to. Therefore, we reject the assessee’s legal ground that the subject assessment is liable to be set aside for want of service of notice u/s 148 of the Act. We dismiss the grounds raised by the assessee in this regard. For merits of addition assessee has made several averments in which she has denied that she had ever filed any appeal before the Ld. First Appellate Authority and it has also be averred that she had neither appeared nor engaged any counsel to appear on her behalf either before the Assessing officer or before the Ld. CIT(A). In this affidavit, she has also mentioned about an ongoing matrimonial dispute between her son and his wife and it has also averred that the combined order of the Ld. CIT(A) is in the name of Shri Raj Partap Singh and the assessee and that Shri Raj Paratap Singh is the brother-in-law of her son - As sympathetic view of the fact that the assessee is an elderly warwidow, who might have been put to disadvantage by some unscrupulous elements behind her back, and also keeping in mind the principle of natural justice, we are of the considered opinion that even though we have upheld the findings of the Ld. CIT(A) regarding service of notice u/s 148 of the Act, in the interest of substantial justice, the assessee should be given another opportunity to explain the entire transaction and establish with proof her contention regarding non-taxability of the same before the Ld. CIT(A). Appeal of the assessee stands partly allowed for statistical purposes. Issues Involved:1. Assumption of jurisdiction under section 148 of the Income Tax Act.2. Validity of service of notice under section 148.3. Merits of the addition of Rs. 1,81,25,000/- as Long Term Capital Gains.4. Consideration of additional evidence and affidavit.5. Allegation of fraud and misuse of PAN by unauthorized individuals.Issue-wise Detailed Analysis:1. Assumption of Jurisdiction under Section 148 of the Income Tax Act:The assessee challenged the initiation of proceedings under section 148 on the grounds that no notices under sections 148 or 143(2) had been received or served. The Assessing Officer (AO) had issued a notice under section 148 dated 22.02.2010 based on the belief that income amounting to Rs. 32,00,000/- had escaped assessment. The notice was served through affixture at the last known address and also through speed post. The AO observed non-compliance by the assessee and proceeded with the assessment, concluding that the full value of consideration accrued to the assessee was Rs. 1,81,25,000/-.2. Validity of Service of Notice under Section 148:The assessee contended that the notice was not served at the correct address, as the family resided in Mohali and not at the Ludhiana address where the notice was affixed. The Tribunal noted conflicting addresses in the records: Mohali, Chandigarh, and Ludhiana. The Tribunal concluded that the assessee had multiple addresses, and the notice served through affixture at the Ludhiana address was valid. The Tribunal rejected the assessee’s claim of non-receipt of notice, noting that the assessee's case was represented by authorized representatives during the assessment and appellate proceedings.3. Merits of the Addition of Rs. 1,81,25,000/- as Long Term Capital Gains:The AO added Rs. 1,81,25,000/- to the assessee’s income as Long Term Capital Gains, based on the Joint Development Agreement (JDA) and the resolution of the General Body of the Society. The assessee argued that the JDA had not been implemented, as necessary approvals were pending, and no development work had commenced. The assessee claimed that only initial installments were received, and the balance amount was uncertain. The Tribunal noted the conflicting statements and lack of concrete evidence to support the assessee’s claims.4. Consideration of Additional Evidence and Affidavit:The assessee submitted additional evidence, including an affidavit, to substantiate the claim of non-receipt of notice and non-involvement in the assessment proceedings. The Tribunal admitted the additional evidence in the interest of substantial justice. The affidavit stated that the assessee never resided at the Ludhiana address and was unaware of the assessment proceedings. The Tribunal acknowledged the affidavit but noted that verification of the claims was beyond its scope.5. Allegation of Fraud and Misuse of PAN by Unauthorized Individuals:The assessee alleged that someone else had filed the return and appeal using her PAN, and a fraud had been committed. The Tribunal considered the affidavit and the complaint lodged with the SSP Mohali regarding the alleged fraud. Given the complexity and the potential involvement of unauthorized individuals, the Tribunal decided to remand the case to the First Appellate Authority for fresh consideration, allowing the assessee to present documentary evidence and substantiate her claims.Conclusion:The Tribunal upheld the service of notice under section 148 but remanded the case to the First Appellate Authority for fresh consideration of the merits, allowing the assessee to present her case and documentary evidence. The appeal was partly allowed for statistical purposes.