The Chennai Bench of Income Tax Appellate Tribunal (ITAT) recently held that the valid satisfaction is required to initiate reopening of assessment under section148 of Income Tax Act.
The assessee,RamdossRamvijay Kumar filed his return of income for the assessment year 2006-07, admitting total income of Rs. 1,84,740/-. The case has been subsequently re-opened under section147 of the Income-tax Act, 1961, for escaped assessment, and notice under section 148 dated 31.03.2013 was issued on the assessee.
During the course of assessment proceedings, the assessee raised an objection for non-serving of notice under section 148. The objections filed by the assessee have been disposed of by the assessing officer with relevant evidence. The notice has been served on the assessee, as per the acknowledgment of Postal Department
The assessing officer completed the assessment under section 144 read the section with 147 of the Income Tax Act,1961, on 27.03.2014 and determined total income of Rs. 16,45,420/- by making additions of Rs. 13,49,975/.
Being aggrieved, the assessee preferred an appeal before the commissioner of income tax (CIT (A)).The appeal rejected and held that the arguments of the assessee on reopening of assessment by holding that serving of notice under section 148 of the Income Tax Act 1961, is valid in law, because the acknowledgment of the postal department clearly indicates that notice has been served on the assessee even though there is no signature and date of receipt in the acknowledgment.
Counsel for the assessee, submitted that notice under section148 was not served on the assessee which is evident from the fact that the assessee has not acknowledged receipt of noticein the postal department acknowledgment with date of receipt.
He further submitted that reopening of assessment is bad in law, because there is no fresh tangible materials in the possession of the assessing officer to form a reasonable belief of escapement of income.
He added that the consequence of re-assessment order suffers from infirmity, because there is no proper satisfaction from the authority who is granting approval for issue of notice under section 148 of the Income Tax Act 1961 Act.
Counsel for the department contended that the notice under section 148 served that is clearas per the acknowledgment of the postal department, and the dispatch register. The subsequent notice issued under section 142(1) of the Income Tax Act 1961, also received by the assessee and his wife.He further submitted that, there is fresh tangible material with the assessing officer to form a reasonable belief of escapement of income.
The Coram comprising the judicial member V. Durga Rao and the account member G. Manjunatha observed that on the basis of reasons submitted by the assessing officer, ‘the said satisfaction’ constitutes a valid satisfaction as required under law. Therefore we reject the argument of the assessee. The bench further added that ‘’ in our considered view, once the assessee objects for adopting full value of consideration and requests for reference to DVO, it is the duty of the assessing officer to refer the matter to the DVO and find out correct fair market value of the property as on the date of sale. We set aside the issue to the file of the Assessing Officer and direct the assessing officer to reconsider the issue of computation of capital gains and also refer the matter to the DVO to determine the correct fair market value of the property as on the date of sale, and decide the issue in accordance with law and the appeal filed by the assessee is partly allowed for statistical purposes’’.
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