BALUBHAI NARSINHBHAI PATEL,SURAT V. INCOME TAX OFFICER, WARD-2(3)(1), SURAT

ITA 700/SRT/2024

AI Insights

The case involves Balubhai Narsinhbhai Patel, the appellant, who contested the reassessment order issued by the Income Tax Officer under sections 144 and 147 of the Income Tax Act, 1961, for the assessment year 2013-14. The reassessment was based on the sale of immovable property, where the sale consideration was significantly lower than the fair market value determined by the Stamp Valuation Authority. The appellant argued that the notice under section 148 was issued improperly and was time-barred, citing a relevant judgment from the Gujarat High Court and a Supreme Court decision that influenced the issuance of such notices. The tribunal's decision to allow the appeal was based on the invalidity of the reopening of the assessment and the subsequent actions taken by the Assessing Officer, which were deemed void ab initio.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29819 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-11-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 24-06-2024
• Other Referred Cases: Keenara Industries Pvt. Ltd. vs. ITO, Union of India vs. Ashish Agarwal, Union of India vs. Rajeev Bansal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVISH BHATT
• Assessee Lawyers: P. M. JAGASHETH; REFERRING
• Keywords: Set aside; Fair market value
• Section: 148; 144; 271(1)(c)

Judgement Text

" आयकर अपीलीय अिधकरण, सूरत Ɋायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 700/SRT/2024 (AY 2013-14) (Physical court hearing) Balubhai Narsinhbhai Patel 101 Brahman Faliyu, Jiav Bhestan, Surat-395 023 [PAN : ATKPR 4906 R] बनाम Vs Income Tax Officer, Ward-2(3)(1), Surat, Aayakar Bhawan, Majura Gate, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri P.M. Jagasheth, CA राजˢ की ओर से /Revenue by Shri Ravish Bhatt– Sr-DR अपील पंजीकरण/Appeal instituted on 24.06.2024 सुनवाई की तारीख/Date of hearing 12.11.2024 उद ्घोषणा की तारीख/Date of pronouncement 14.11.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 27.05.2024 for assessment year (AY) 2013-14, which in turn arises out of assessment order passed by Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 20.05.2023. The assessee has raised the following grounds of appeal:- “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax(Appeals) has erred in confirming the action of the Assessing Officer in re-opening the assessment u/s 147 of the Act and issuing notice u/s 148 of the Act. ITA No.700/SRT/2024 (A.Y.13-14) Balubjhai N Patel 2 2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax(Appeals) has erred in confirming the action of the Assessing Officer erred in notice u/s 148 of the Act was time barred and without jurisdiction on the basis of judgment of Honourable Gujarat HC in the case of Keenara Industries Pvt. Ltd. vs. ITO, R/Special civil Application No.17321 of 2022. 3. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax(Appeals) has erred in confirming the action of the Assessing Officer erred in making addition of Rs.34,12,500/- on account of alleged undisclosed long term capital gain on sale of immovable property without calculating cost of purchase of property. 4. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax(Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 5. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of the Income Tax(Appeals) has erred in confirming the action of the Assessing Officer erred in initiating penalty proceedings u/s 271(1)(c) rws.274 of the Income Tax Act, 1961. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.” 2. Rival submission of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that case of the assessee for AY 2013-14 was re-opened under section 147 of the Act on 21.04.2021. Notice under section 148 issued on 21.04.2021 for filing revised return of income for assessment year 2013-14. The case of assessee was reopened after seven years from the end of relevant assessment year. The ITA No.700/SRT/2024 (A.Y.13-14) Balubjhai N Patel 3 case was reopened on the basis of information that assessee along with other eight persons sold immovable property at Bhestan. The sale consideration of each of the co-owners was Rs. 28,51,000/-. The Stamp Valuation Authority has determined the fair market value (in short, ‘FMV’) of each of co-owners for the purpose of registration at Rs.68,25,000/-. Neither notice under section 148 was served upon the assessee nor any other notice allegedly issued was served upon the assessee. The address of assessee mentioned on the assessment order is not correct. Thus, assessee was unable to make any compliance before Assessing Officer. The Ld. AR for the assessee by referring the contents in para-2 of the assessment order held that notice under section 148 was issued by Assessing Officer by making basis of decision of Hon’ble Supreme Court in Civil Appeal No.3005/2022 and others dated 04.04.2022 i.e., Union of India vs. Ashish Agarwal. After judgment of Ashish Agarwal (supra), the Central Board Direct Taxes/ CBDT, issued Circular No.02/2022 dated 11.05.2022 wherein it was held that notice under section 148 for assessment years 2013-14, 2014-15 and 2015-16 can be issued, with the approval of specified authority, only if the cases falls under clause-(b) of sub- section (1) of section 149 as amended by Finance Act, 2021. As per amended provisions, noticed under section 148 could be issued only if escaped income is more than Rs.50,00,000/-. Admittedly, in case of assessee, the alleged escaped income is less than Rs.50,00,000/- as evident from para-1 of the assessment order itself, therefore neither issuance of notice under section 148 was valid nor the assessment completed therein is sustainable. The Ld. AR for the assessee further submits that in a recent decision of Hon’ble Supreme ITA No.700/SRT/2024 (A.Y.13-14) Balubjhai N Patel 4 Court in case of Union of India vs. Rajeev Bansal [TS-725-SC-2024] darted 03.10.2024 also held that reopening notice under section 148 for assessment year 2013-14 is not valid, if escaped income is less than Rs.50,00,000/-. The Ld. AR for the assessee submits that the action of the assessing officer in reopening is not valid thus subsequent order passed by Assessing Officer is void-ab-initio. 3. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. 4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We find that there is no dispute that notice under section 148 dated 21.04.2021 was issued by making basis of decision of Hon’ble Supreme Court Ashish Agarwal (supra), the case of assessee was reopened for assessment year 2013-14 which falls within clause- (b) of Section 149(1) i.e., income escaped less than Rs.50,00,000/-. Thus, the reopening is not valid. Even otherwise, the case of assessee is squarely covered by the Circular of CBDT No.1/2022 dated 11.05.2022. Hence, ground of assessee for re-opening is not valid, therefore subsequent action initiated or completed thereon is void and ab initio. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14/11/2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member सूरत / Surat Dated: 14/11/2024 Dkp Outsourcing Sr.P.S* ITA No.700/SRT/2024 (A.Y.13-14) Balubjhai N Patel 5 आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to :  अपीलाथŎ/ The Appellant  ŮȑथŎ/ The Respondent  आयकर आयुƅ/ CIT  िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाडŊ फाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत "