The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order against the assessee, citing a time-barred reopening of assessment and an incorrect assumption of property ownership.
Pradip Chandra Roy,appellant-assessee,was a retired Group-D staff member of the PWD Department, Government of West Bengal, with no taxable income. He did not file an income tax return for Assessment Year (AY) 2014-15, as his income was below the taxable limit, nor did he register his PAN on the Income Tax Portal.
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The Assessing Officer ( AO ) issued a notice under Section 133(6) of the Income Tax Act on 29.08.2016, based on information about a property transaction in Financial year (FY) 2013-14. Despite reminders, the assessee did not respond, and a notice under Section 148 was issued on 31.03.2021, after obtaining approval from the Principal Commissioner of Income Tax ( PCIT ), Siliguri. The notice was served by affixation on 28.12.2021, as no email address was registered.
The AO assessed the assessee by considering the entire stamp duty value of the sold property, Rs. 16,83,600, as undisclosed capital gain instead of 66.67% of the value. The assessee’s appeal to the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed due to lack of response.
The assessee being aggrieved by the decision appealed before the tribunal.
The two member bench comprising Pradip Kumar Choubey ( Judicial Member ) and Rajesh Kumar ( Accountant Member ) reviewed the case and found that the assessee had bought a residential flat with his wife, Smt. Kalpana Roy ( who had passed away, and her death certificate was submitted ). It was stated that Kalpana Roy died intestate, leaving her property to her husband and two sons, who inherited it equally. The assessee submitted the sale deed, confirming his co-ownership of the property.
The AO had reopened the assessment, mistakenly assuming the assessee was the sole owner of the property and liable for tax on 100% of the sale value. The sale deed showed that the property was sold by the assessee and his two sons.
The appellate tribunal noted that the AO reopened the assessment for AY 2015-16 beyond the four-year limit. The AO had claimed to have credible information about the sale, but the tribunal referenced Supreme Court and Calcutta High Court rulings stating that the AO must verify certain conditions before reopening assessments beyond four years.
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The AO did not verify the sale deed before issuing the notice, which confirmed the property was sold by the assessee and his sons. Additionally, the AO signed the notice on 31.03.2021 but only issued it on 28.12.2021, well past the deadline. The tribunal cited rulings from the Chhattisgarh and Allahabad High Courts, which clarified that merely signing the notice does not constitute issuing it.
Based on these findings, the tribunal concluded that the notice was issued incorrectly and that all subsequent actions were invalid, setting aside the orders.
Ultimately,the appeal filed by the assessee was allowed.
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