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2024 Supreme(Online)(ITAT) 3930
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
NARENDRA KUMAR BILLAIYA, AM, RAHUL CHAUDHARY, JM
PANKAJ SURECH RACH MUMBAI – Appellant
Versus
INCOME TAX OFFICER INT TAX WARD 4(1)(1) MUMBAI – Respondent
I.T.A. No. 2290/Mum/2024
For the Appellants/Petitioners: Ms. Kinjal Bhuta, A/R
For the Respondents: Shri Anil Sant, Addl. CIT D/R
Notices issued under section 148 must adhere to amended provisions, with jurisdiction strictly applied according to the law at the time of issuance.
Headnote:(A) Income Tax Act, 1961 - Sections 147, 148, 148A, 149, 151 - Reassessment proceedings - Assessee contended that the reopening notice was invalid due to lack of jurisdiction as it was issued beyond the stipulated timeframe without proper sanction - The court ruled that notices issued after the applicable date must comply with the amended provisions of the Act and could not rely on prior provisions. (Paras 8, 31, 54)
(B) Reopening of assessment - Validity of notices under section 148 - The court discussed the legal principles governing reassessment, emphasizing that proper authority and timelines must be adhered to, reinforcing the importance of following procedural law. (Paras 31, 38, 54)
Facts of the case:
The appeal concerns re-opening of assessment for AY 2017-18 due to alleged sale below market value contrary to Section 50C. The substantial delay and inadequate authority raised jurisdictional questions.
Findings of Court:
Reopening notices were declared invalid as they did not follow the required procedural safeguards or current legal stipulations, making resulting orders null and void.
Issues: The key issue was whether the reopening notices complied with the legal provisions regarding time limits and authority.
Ratio Decidendi: The court found that failure to follow the amended statute that was in force at the time of issuance rendered the notices invalid.
Result: Appeal allowed.
| Table of Content |
|---|
| 1. invalidity of notices due to jurisdiction issues. (Para 2 , 4 , 6) |
| 2. reassessment procedures and requirements. (Para 5 , 7) |
| 3. enforcement of procedural compliance in notices issued. (Para 8) |
| 4. outcome of the appeal. (Para 9) |
आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dt. 13/03/2024 framed u/s 147 r.w.s. 144C(13) of the Act, pertaining to Assessment Year 2017-18.
2. The grievance of the assessee reads as under:-
“1. The Ld. Assessing Officer erred in re-opening the assessment u/s. 147 of the Income Tax Act, 1961 , that the order is illegal, void and bad in law and ought to be quashed.
2. The Ld. Assessing Officer erred in passing the final and draft assessment order without giving sufficient opportunity to the assessee of being heard, that the order passed without giving adequate opportunity is against the principles of natural justice and ought to be quashed.
3. The Ld. Assessing Officer erred in not allowing cost of improvement on sale of properties and computing the capital gains from the flats at Rs.1,08,76,618/- instead of Rs.8,69,539/- as declared by the appellant in the return of income by not appreciating the facts of the case.
4. The Ld. Assessing Officer erred in not referring the matter to the Department Valuation Officer for determining the fair value of the property, ignoring the specific request of the appellant during the assessment proceedings.
5. The Ld. Assessing Officer erred in not allowing the deductions claimed under Chapter- VIA amounting to the Rs.1,82,619/- and Advance Tax amounting to Rs.94,807/-, the same ought to be claimed as in the returned income.
6. All of the above grounds are without prejudice to each other. The appellant craves leave to add, amend, alter, or delete any of the above grounds of appeal.”
3. Representatives were heard at length, case records carefully perused and the relevant documentary evidences considered in light of Rule 18(6) of the ITAT Rules, 1963.
4. Briefly stated, the facts of the case are that on the basis of specific information received from the office of Pr. CCIT, Mumbai with reference of DIT (I&CI), Mumbai, letter date 25/03/2019, that assessee had, during the year under consideration sold the immovable property at a consideration of Rs.48,00,000/- below the stamp duty value of Rs. 57,01,500/- in violation of Section 50C of the Act. After recording the reasons for re-opening and after obtaining necessary approval from appropriate authorities, assessment was re-opened vide issuance of notice u/s 148 of the Act on 01/05/2021.
5. Honoring the decision of Hon’ble Supreme Court in the case of Ashish Agarwal vs. UOI in Civil Appeal No. 3005/2022 vide order dt. 04/05/2022, the AO issued notice u/s 148A(b) of the Act. In compliance to the decision of the Hon’ble Supreme Court (supra), the underlying material and the documents on which the show-cause notice is based, were provided to the assessee on 28/05/2022. The entire quarrel revolves around this notice.
6. The bone of contention is the sanction accorded u/s 151 of the Act. As the assessment was reopened beyond three years, sanction is required from Pr. CCIT whereas in the case of assessee, sanction has been obtained from Pr. CIT. this issue has been considered by the Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd. vs. DCIT [2023] 154 taxmann.com 159 (Bom.). The relevant findings of the Hon’ble High Court reads as under:-
“28. The interpretation placed by the CBDT in paragraph 6.1 of Instruction No. 1/2022 dated 11th May 2022 cannot be countenanced as it is not open to them to clarify that the law laid down by the Apex Court means that the extended reassessment notices will travel back in time to their original date when such notices were to be issued and, then, the new section 149 of the Act is to be applied as this is contrary to the judgment of this court in Tata Communications Transformation Services (P.) Ltd. (supra)
