Rampal Vs ITO (ITAT Lucknow)
Reopening Below ₹50 Lakh Without PCCIT Approval Is Void: ITAT Quashes Ex-Parte Assessment
The Lucknow SMC Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for AY 2015-16, condoning the delay in filing the appeal and quashing the reassessment proceedings as being without jurisdiction.
The Tribunal held that where the alleged escaped income is below ₹50 lakh, reopening beyond three years mandates prior approval of the Principal Chief Commissioner of Income-tax (PCCIT) under the post-Finance Act, 2021 regime. As the Revenue failed to produce any evidence of such mandatory approval, the reopening u/s 148 was held to be bad in law.
The Tribunal also noted serious defects in service of notices, including service on an unrelated third person, and accepted the assessee’s explanation that he was not registered on the income-tax portal at the relevant time. On merits, it was further observed that the cash deposits were explained as sale proceeds of agricultural land, which do not give rise to taxable capital gains.
Accordingly, the entire assessment was quashed and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 18.02.2025 pertaining to the assessment year 2015-16. The assessee has raised the following grounds of appeal: –
“1. That Income tax officer Sitapur had passed exparte assessment order u/s 147 r.w.s. 144 without offering any reasonable opportunity, which is arbitrary, bad in law and against natural justice.
2. The Appellant is a small-scale agriculturist and has no 2. taxable income, moreover Appellant was not registered on Income Tax Portal before 07/08/2023 hence not aware about any notice u/s 148, u/s 142(1), order of any penalty proceedings. It is pertinent to mention here that for the first time assesses has online registered on E filing portal on dated 07/08/2023.
3. That without prejudice to the earlier grounds, as per u/s 3. 149 of the income tax Act 1961 the initiation of assessment proceedings under section 147 of the act in the case of the appellant, is without jurisdiction being time barred as the alleged escaped income for the year under appeal did not exceed Rs. 50 lakhs.
3.1 Section 149 of the Income Tax Act 1961 governs the time limit for issuing notice u/s 148 to re-open assessment for 3-1 income that has escaped taxation which explained as under:
3.2 Up to 3 years from the end of the relevant AY; For cases 3.2 where the escaped income is up to 50 lakh (introduced post-Finance Act 2021).
3.3 Requires approval from the Principal Chief Commissioner of Income Tax (Pr CCIT). Up to 10 years from the end of the relevant assessment Year, applies if the escaped income exceeds 50 lakh (in the form of assets, including foreign assets). Requires approval from the. Pr CCIT. In the above case the said escaped income is Rs. 34,22,10,610/- for the assessment year 2015-16. which is much less than 50 lakhs and beyond of three years from the end of the relevant assessment year.
3.4 In light of the above time frame as per u/s 149 of the Income Tax Act 1961, the assessment proceedings u/s 148 or illegal, time barred and deserves to be quashed.
4. That in any case the jurisdictional notice U/s 148A /148 4. Issued by the Ld. Income Tax, Officer, Sitapur was never served upon the appellant which is also apparent from the Page 2 para 3 of assessment order where Ld. Income tax officer has mentioned as “notice issued but no compliance has been received till date” here Ld. Income tax officer has not mentioned about service of notice in the assessment order. Actually, the notice under section 148A dated 29/03/2022 was served upon 80me “Ashish Kumar” on 30/03/2022 (the fact is based on certified information Provided by the Income Tax Officer Sitapur, (copy of the same is enclosed as annexure A). Kindly view the service of Notice on fake identity (ASHISH KUMAR’). The person named Ashish Kumar is neither any family member or relative of appellant, Consequently the Proceedings u/s 148 are baseless and illegal, In light of the above facts it is crystal clear that neither the notice u/s 148 Was served on the appellant either by way of online ( as appellant was registered Of Income Tax Portal on 07/08/2023) (proof of 1sttime registration on Income Tax Portal is enclosed as Annexure “B”) of by way of offline as the said notice u/s148 was not served upon the appellant or any of his finally member), On the grounds of above facts and circumstances it is prayed that the entire assessment proceedings u/s 148 deserves to be quashed.
5. That the assessee had deposited Rs.22,00,500/- in the said bank account out of sale proceeds of his agricultural land. Since no capital gain arises on sale of agricultural land, no income tax liability arises on the part of assessee.
6. That the Ld. Commissioner of Income tax (Appeal) (National faceless Appeal Center, Delhi) via his order dated 18/02/2025 has dismissed the appeal on technical ground ie. delay of 119 days in filing of appeal, which is grossly erred in law and contrary to facts that the assessment order was first time served on the assessee on 07/08/2023 when appellant was first time registered on Income tax portal after making e-mail id [email protected],(Proof of first time registration is enclosed as annexure “B”). AS & vigilant assessee, Appellant has filed an appeal before Commissioner of Income Tax (Appeal) on 25/08/2023 which is within time ie. within 30 days from the date of service of order i.e.07/08/2023, hence there is no question of praying for condonation of delay.”
2. The assessee has raised multiple grounds of appeal challenging the impugned assessment order. Although the grounds of appeal are argumentative in nature, however, the issues that clearly emerge for adjudication are that firstly, the Ld. CIT(A) failed to appreciate that there was reasonable cause for the delay in filing the appeal. The assessee being illiterate and was registered Income Tax Department Portal for the first time only on 07.08.2023, which adequately explains the delay. Secondly, the Ld. CIT(A) grossly erred in not appreciating that the assessment order itself is without jurisdiction. Thirdly, the notices issued by the AO were not duly served upon the assessee, vitiating the assessment proceedings. On merits, it is submitted that the amount was deposited out of the sale consideration of agricultural land, therefore, even otherwise also, same does not attract any tax liability. Thus, it is prayed on behalf of the assessee that the impugned assessment order deserves to be quashed.
