Reopening notice after 4 year when escaped income less than 1 lakh is time barred – ITAT

Reopening notice after 4 year when escaped income less than 1 lakh is time barred and not tenable in the eyes of law – ITAT

ABCAUS Case Law Citation:
ABCAUS 2608 (2018) (11) ITAT

Important Case Laws Cited/relied upon:
Amarnath Agrawal vs. CIT & Anr. (2015) 371 ITR 0183

The instant appeal by the Asessee was directed against the Order of the Commissioner of Income Tax (Appeals) on the grounds that the notice issued u/s 148 and the impugned assessment order passed u/s 147/144 of Income Tax Act, 1961 (the Act) was illegal in terms of section 149 of the Act.

Proceedings u/s 147 of the Act were initiated and notice u/s. 148 of the Act was issued to the assessee. In response, the assessee furnished written submission raising objections for issuance of notice u/s. 148 of the Act and the same were rejected.

Thereafter, the assessment proceedings were completed u/s. 147/144 of the Act by making various additions.

Against the assessment order, the assessee appeal before the CIT(A), who partly allowed the appeal of the assessee.

Aggrieved with the impugned order of the CIT(A), assessee was in appeal before the Tribunal.

The Tribunal observed that as per the reasons recorded for initiating reassessment u/s. 147 of the Act, the amount of escapement was less than Rs. one lakhs.

In view of the above, the Tribunal opined that the the notice issued u/s. 148 of the Act was time barred as per the provisions of Section 149 of the Act, as the amount was less than Rs. 1 Lakh. Hence, the reopening is not tenable in the eyes of law.

The Tribunal noted that this view was fortified by the Judgement of the Hon’ble High Court wherein, it held that

“the reasons so recorded by the AO were not sufficient to initiate proceedings under section 148 as no such reasons had been recorded to the effect that the escaped income was likely to be Rs. 1 lac or more so that the Chief CIT or CIT might record his satisfaction under section 151, the initiation of reassessment proceedings after more than four years was clearly barred by time. The conversion of the rights of the lessee in the property from lease hold to free hold was only an improvement of the rights over the property, which the assessee enjoyed and this would not have any effect on the taxability of capital gains from such property. Since the property was held by the assessee for more than three years, short term capital gains would not applicable. Consequently, the notice issued under section 148 of the Act could not be sustained and was quashed.”

The Tribunal geld that the notice issued under section 148 of the Act could not be sustained and therefore, the same was quashed.

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