Income Tax Appellate Tribunal: In an appeal filed challenging the impugned final assessment order 2022 passed under Section 147 read with Section 144-C(13) of the Income Tax Act, 1961, (IT Act) the two member bench of M. Balaganesh (Accountant Manager), and Sandeep Singh Karhail (Judicial Member) quashed the proceedings of reopening of the assessment made by the assessing officer which was sustained by Dispute Resolution Panel and held that the reopening of the assessment is indemonstrable in law as reasons inserted in Section 147 IT Act were not considered as the evidence.
The assessee filed the return of income of amount 9,69,65,080/- on 28-04-2014. Consequently in 2021, the Assessing Officer reopened the assessment in pursuance of the information given by Directorate General of Income Tax (Intelligence & Criminal Investigation) that assessee has sold the property amounting to 2,65,45,504/- during the year under consideration. In this regard proceeding instigated under Section 147 and notice under Section 148 of Income Tax Act, 1961, was issued on 27-03-2021.
In response of notice of Section 148, the assessee filed her return of Income on 11-04-2021 with proclaiming amount 9,69,65,080 which is equivalent to the original income of assessee and also, raised objection against Section 147 of Income Tax Act, 1961. The Assessing Officer rejected the objection raised by assessee and also directed her to comply with the notice issued under Section 142(1) of Income Tax Act, 1961, and enhance the details required. Further, the Assessing Officer added the capital income to the total income of assessee.
Thus, assessee filed an appeal and raised objection by saying that Assessing Officer has not given the lawful reason of reopening the assessment, and the process is invalid and unlawful, since no immovable property was sold during the relevant assessment year by assessee and the capital gain which has been added by the assessing officer in the actual income of the assessee is genuinely the long term gain of the assessee.
The Tribunal said that it is evident that the Assessing Officer was aware and accepted that the assessee has offered capital gains from the sale of property with sale consideration amounting to Rs. 12,80,00,000. However, the Assessing Officer sought to tax the income from capital gains not offered for tax on the transaction of sale of property with sale consideration of Rs. 2,65,45,504. While framing the assessment, instead of computing the long-term capital gains on the said property with the alleged sale consideration of Rs. 2,65,45,504, the Assessing Officer recomputed the capital gains on the property sold by the assessee, during the year, for the sale consideration of Rs. 12,80,00,000, on which the assessee had already offered to tax long-term capital gains amounting to Rs. 9,50,51,636, in her return of income.
Therefore, the income which was initially alleged to have escaped assessment was not ultimately added by the Assessing Officer while passing the assessment order and rather the transaction already disclosed by the assessee was re-examined and the capital gains computed by the assessee was recalculated in the assessment order without issuing a fresh notice under section 148 of the Act
Placing reliance on Hindustan Lever Ltd. v. R.B. Wadkar, [2004] 268 ITR 332 (Bom.), the Tribunal said that, it is trite law that the reasons, as recorded for reopening the reassessment, are to be examined on a standalone basis to determine the validity of proceedings under section 147 of the Act.
Thus, the Tribunal held that the reopening of assessment is unsuitable in law.
[Jowheri Jalaluddin Mullick v Income Tax Officer, 2023 SCC OnLine ITAT 257, decided on 21-03-2023]
Order by: Sandeep Singh Karhail
Advocates who appeared in this case :
For Assessee: Advocate Hari S. Raheja;
For Assessing Officer: Advocate Soumendu Kumar Dash.