Tribunal quashes reassessment proceedings & notice under section 148 due to invalidity. Delhi HC judgment cited.

The Tribunal allowed the appeal filed by the assessee, quashing the initiation of reassessment proceedings under section 147 and the issuance of notice under section 148. The Tribunal found that the notice under section 148 was invalid as the Assessing Officer had not applied his mind properly and had erroneously stated that the assessee did not file a return for the relevant assessment year. The Tribunal relied on a Delhi High Court judgment to support its decision. Consequently, all subsequent proceedings and orders were also quashed, with the appeal being allowed on 13.03.2023.

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Issues Involved:
1. Denial to admit additional evidence under Rule 46A(1)(d) of the Income Tax Rules.
2. Ignorance of the terms and conditions of the collaboration agreement.
3. Rights of the second floor with roof as a result of the transaction.
4. Consideration mentioned in the transfer deed for stamp duty purposes.
5. Ignoring the contents of the order of CIT-Appeals, Aligarh.
6. Opportunity to produce evidence for justice.
7. Issuance of notice u/s 148 without proper application of mind and independent inquiry.

Summary:

1. Denial to Admit Additional Evidence:
The assessee argued that the CIT(A) Ghaziabad erred by denying the opportunity to file additional evidence under Rule 46A(1)(d) of the Income Tax Rules. This denial was claimed to be against the principles of law, natural justice, and humanitarian grounds.

2. Ignorance of Collaboration Agreement:
The assessee contended that the CIT(A) Ghaziabad ignored the terms and conditions of the collaboration agreement, which were fundamental to the transactions between the property owner and the builders/co-builder.

3. Rights of the Second Floor with Roof:
The appellant claimed that they were entitled to the rights of the second floor with roof as a result of the transaction for constructing the building and were not to receive anything else.

4. Consideration in Transfer Deed:
The assessee argued that the consideration mentioned in the transfer deed of the second floor with roof rights was only to ascertain the stamp duty based on the prevalent circle rate, without which the execution of the sale deed was not possible.

5. Ignoring Order of CIT-Appeals, Aligarh:
The assessee pointed out that the CIT(A) Ghaziabad ignored the order of CIT-Appeals, Aligarh, which addressed similar issues regarding the same property and owner, Mrs. Gurbachan Kaur, for AY 2009-10.

6. Opportunity to Produce Evidence:
The assessee emphasized the need for an opportunity to produce evidence, such as confirmations and affidavits from the property owner, to deliver justice. They prayed for the order of the CIT(A) Ghaziabad to be quashed due to undue hardship.

7. Issuance of Notice u/s 148:
The assessee raised an additional legal ground challenging the issuance of notice u/s 148 of the Act without proper application of mind and without conducting an independent inquiry by the AO. The Tribunal, relying on the Supreme Court's judgment in NTPC vs. CIT, allowed this ground for adjudication.

Tribunal's Findings:

Issuance of Notice u/s 148:
The Tribunal noted that the AO erroneously mentioned that the assessee did not file a return for AY 2009-10, whereas the return was indeed filed. This demonstrated non-application of mind by the AO. The Tribunal referred to the Delhi High Court's judgment in PCIT vs. RMG Polyvinyl (I) Ltd., which held that information from the Investigation Wing alone is not tangible material without further inquiry by the AO. Consequently, the Tribunal quashed the notice u/s 148 and the consequent reassessment proceedings.

Conclusion:
The appeal filed by the assessee was allowed, and the initiation of reassessment proceedings u/s 147 and issuance of notice u/s 148, along with all consequent proceedings and orders, were quashed. The grounds on merits were not adjudicated as they became academic. The order was pronounced on 13.03.2023.

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