Filing belated return & non-registration u/s 12AA no valid reasons to issue notice u/s 148

Filing belated return & non-registration u/s 12AA no valid reasons to issue notice u/s 148 in absence of other tangible material other than  return filed

ABCAUS Case Law Citation
ABCAUS 3442 (2021) (01) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the initiation of reassessment proceedings under section 147 of the Income Tax Act, 1961 (the Act) by the Assessing Officer (AO) and the consequent reassessment order passed.

In the instant case, the appellant assessee was not registered u/s 12A of the Act for the year under consideration. The assessee had filed belated return of income (ITR) in Form No. ITR7 meant for the assessee claiming benefits of exemption u/s 11 and 12 of the Act.

The Revenue from the ITR filed observed that as per the Income and Expenditure account the assessee had claimed expenses on account of ‘Donation’ and claimed capital expenditure in its computation of income. Since the assessee was not eligible for benefits of section 11 and 12 of the Act, the Revenue was of the view that it had resulted in claim of excessive expenditure which was required to be added back to the total income of the assessee.

In view of the above, the AO in reasons for reopening recorded that he had reason to believe that income chargeable to tax had escaped assessment within the meaning of provision of section 147 of the Act and issued the notice u/s 148 of the Act.

The Tribunal noticed that the notice u/s 148 had been issued much after the date of expiry to issue notice u/s 143(2) in the regular course of assessment proceedings.

The Tribunal observed that the sine qua non for issue of notice u/s 148 for reassessment of escaped income is that the Assessing Officer should have reasons to believe that the income chargeable to tax has escaped assessment. 

The Tribunal noted that in the instant case, the Revenue Authorities having lost the opportunity to issue notice u/s 143(2) had resorted to issue of notice u/s 148 in the absence of any other tangible material other than the return filed by the assessee before them.

The Tribunal held that filing of a belated return and non-registration of the entity u/s 12AA cannot be held to be valid reasons good enough to issue notice u/s 148.

Accordingly, the Tribunal allowed the appeal in favour of the assessee.

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