This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Darshan Kumar Gupta, New Delhi and ITO, Ward-67(6), New Delhi, concerning the assessment year 2011-12. The case number is ITA 2642/DEL/2022, presided over by Judicial Member Shri Kul Bharat.
The appeal filed by the assessee, Darshan Kumar Gupta, was directed against the order dated 02.09.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi, relating to the assessment year 2011-12. The primary issue in this case was the legality of the reassessment proceedings initiated under Section 147/148 of the Income Tax Act, 1961.
During the hearing on 12.01.2023, the Revenue was represented by Shri Ramdhan Meena, Sr. D.R., and the assessee was represented by himself, Shri Darshan Kumar Gupta. The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The assessee raised several grounds of appeal, primarily challenging the legality of the reassessment proceedings initiated under Section 147/148 of the Income Tax Act, 1961. The grounds included the improper issuance of notice, lack of jurisdiction, and incorrect assessment of capital gains.
In this case, the assessment was reopened under Section 147 of the Income Tax Act, and an assessment under Section 143(3) read with Section 147 was framed vide order dated 28.12.2018. The Assessing Officer assessed income at Rs. 27,30,548/- after making an addition of Rs. 22,71,048/- in respect of capital gains. The reopening was based on the information regarding the purchase of a DDA flat at Dwarka, Delhi, costing Rs. 78,00,500/-. The Assessing Officer considered this as new tangible material for reopening the assessment.
The assessee argued that the reopening of the assessment was invalid as there was no tangible material for such action. Furthermore, despite several requests, the Assessing Officer did not supply the reasons recorded for reopening the assessment, depriving the assessee of the opportunity to file objections. The assessee contended that the investment in the DDA flat was made out of the sale consideration of two properties which he had sold, and this was duly disclosed in the return of income.
The Tribunal noted that the Assessing Officer did not supply the reasons for reopening the assessment, which is a legal requirement as per the Supreme Court’s ruling in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer & others (259 ITR 19). The Tribunal found merit in the assessee’s contention that non-supply of reasons deprived him of the right to raise objections against the reopening of the assessment.
The Tribunal quashed the reassessment proceedings, stating that the non-supply of reasons for reopening the assessment invalidated the proceedings. The Tribunal allowed the appeal of the assessee, setting aside the impugned order.
Order pronounced in the open court on 18th January, 2023.
(KUL BHARAT)
JUDICIAL MEMBER
This case underscores the importance of adhering to legal requirements for supplying reasons when reopening assessments. The Tribunal’s decision to quash the reassessment due to non-supply of reasons highlights the necessity for the Revenue to follow procedural correctness and ensure that taxpayers are given a fair opportunity to contest the reopening.
The appellant, Darshan Kumar Gupta, challenged the reassessment proceedings on the grounds of improper notice issuance and lack of jurisdiction.
The appellant contended that the reopening of the assessment was based on information regarding the purchase of a DDA flat, which was already disclosed in the return of income. The non-supply of reasons by the Assessing Officer prevented the appellant from filing objections, making the reassessment invalid.
The Tribunal found that the non-supply of reasons violated the legal requirement and deprived the appellant of the right to contest the reopening. The Tribunal emphasized that procedural correctness is crucial in reassessment proceedings.
The Tribunal’s decision in the case of Darshan Kumar Gupta vs. ITO, Ward-67(6), New Delhi, reaffirms the principle that reasons for reopening must be supplied to the assessee. The quashing of the reassessment highlights the importance of adhering to legal requirements and ensuring procedural fairness in tax assessments.
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