Re-Assessment cannot be Based on Incorrect Facts: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that reassessment cannot be based on incorrect facts.

The aforesaid observation was made by the Delhi Income Tax Appellate Tribunal when an appeal was preferred before it by the Assessee, as against the order of the Commissioner of Income Tax (Appeals), Noida (CIT(A) arising from the assessment order passed by the Assessing Officer (AO) under Section 147/148 of the Income Tax Act, 1961, concerning the AY 2009-10.

The issue involved in the appeal being lack of jurisdiction under Section 147 of the Income Tax Act, the brief facts of the case were that the assessee was a civil / criminal lawyer, who had filed the return of income for Assessment Year 2009-10 on 31.03.2009, declaring total income at Rs.2,39,651/- for which intimation was issued under Section 143(1).

During the year, the assessee sold agricultural land with constructed area for actual consideration of Rs.24,69,000/- which represented 1/4th of total consideration of Rs.98,76,000/- where 3/4th share belonged to one Shri Mashroof Ali.

The Assessing Officer reopened the assessment by issuing notice under Section 148, alleging escapement of income, with the allegation that the assessee had sold residential/ agricultural land of Village Dasana for Rs.98,76,000/- as against the circle rate of Rs.1,56,99,500/-. It was alleged that capital gain was derived from the said transaction but ITR was not filed resulting in escapement.

The income was assessed at Rs.72,11,880/- by an ex-parte order under Section 144 r.w. Section 147 of the Income Tax Act. Being aggrieved, the assessee preferred an appeal before the CIT(A).

The CIT(A) however upheld the assumption of jurisdiction assumed under Section 147 but granted partial relief on merits. And it is being further aggrieved, that the assessee has preferred the present appeal before the Tribunal.

Hearing the opposing contentions of both sides as presented by Shri Akhilesh Kumar, the Advocate on behalf of the Assessee, and by Shri Anuj Garg, the Sr.DR, on behalf of the Revenue, the ITAT observed:

“The reopening proceedings itself being not permissible on the basis of inherently wrong facts, we do not consider it necessary to delve the merits of the addition.”

“We thus set aside the action of the CIT(A) and quash the re-assessment proceedings giving rise to the present appeal. In the result, the appeal of the assessee is allowed”, the coram of Chandra Mohan Garg, the Judicial Member, along with Pradip Kumar Khedia, the Accountant Member, held.

The aforesaid observation was made by the Delhi Income Tax Appellate Tribunal when an appeal was preferred before it by the Assessee, as against the order of the Commissioner of Income Tax (Appeals), Noida (CIT(A) arising from the assessment order passed by the Assessing Officer (AO) under Section 147/148 of the Income Tax Act, 1961, concerning the AY 2009-10.

The issue involved in the appeal being lack of jurisdiction under Section 147 of the Income Tax Act, the brief facts of the case were that the assessee was a civil / criminal lawyer, who had filed the return of income for Assessment Year 2009-10 on 31.03.2009, declaring total income at Rs.2,39,651/- for which intimation was issued under Section 143(1).

During the year, the assessee sold agricultural land with constructed area for actual consideration of Rs.24,69,000/- which represented 1/4th of total consideration of Rs.98,76,000/- where 3/4th share belonged to one Shri Mashroof Ali.

The Assessing Officer reopened the assessment by issuing notice under Section 148, alleging escapement of income, with the allegation that the assessee had sold residential/ agricultural land of Village Dasana for Rs.98,76,000/- as against the circle rate of Rs.1,56,99,500/-. It was alleged that capital gain was derived from the said transaction but ITR was not filed resulting in escapement.

The income was assessed at Rs.72,11,880/- by an ex-parte order under Section 144 r.w. Section 147 of the Income Tax Act. Being aggrieved, the assessee preferred an appeal before the CIT(A).

The CIT(A) however upheld the assumption of jurisdiction assumed under Section 147 but granted partial relief on merits. And it is being further aggrieved, that the assessee has preferred the present appeal before the Tribunal.

Hearing the opposing contentions of both sides as presented by Shri Akhilesh Kumar, the Advocate on behalf of the Assessee, and by Shri Anuj Garg, the Sr.DR, on behalf of the Revenue, the ITAT observed:

“The reopening proceedings itself being not permissible on the basis of inherently wrong facts, we do not consider it necessary to delve the merits of the addition.”

“We thus set aside the action of the CIT(A) and quash the re-assessment proceedings giving rise to the present appeal. In the result, the appeal of the assessee is allowed”, the coram of Chandra Mohan Garg, the Judicial Member, along with Pradip Kumar Khedia, the Accountant Member, held.

To Read the full text of the Order CLICK HERE

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