DCIT Vs Peyusha Shukla (ITAT Raipur)
Conclusion: Issuance of a valid notice under section 143(2) was mandatory and non-issuance or belated issuance vitiated the assessment. Accordingly, Tribunal quashed the reassessment order passed under section 147 r.w.s. 144B as being void ab initio.
Held: During survey proceedings conducted in the case of M/s Greenwood Four Seasons Pvt. Ltd., of which assessee was Managing Director, it was found that she had claimed deduction of ₹3,05,19,169 under section 54F. Based on her statement recorded during survey, wherein she allegedly admitted to have utilized the capital gains for construction of a farmhouse and business purposes, AO reopened the assessment under section 147 and made an addition of ₹3,05,19,169 as taxable capital gain, holding that the deduction under section 54F was wrongly claimed. CIT(A) deleted the addition, holding that assessee had constructed a residential property (Van Awas) within the prescribed period, and that conversion of the property from residential to commercial use occurred only in FY 2017–18. Assessee had already offered the said capital gain to tax in AY 2018–19, which had been accepted in scrutiny assessment. Denial of deduction in AY 2015–16, therefore, would lead to double taxation. Revenue appealed against the deletion, while assessee filed a cross objection challenging the validity of reassessment for want of a valid notice under section 143(2). Assessee contended that the reassessment order was void ab initio as notice under section 143(2) was issued on 20.11.2021 — beyond the statutory period of three months from the end of the financial year in which the return in response to notice under section 148 was filed. It was held that the return in response to notice under section 148 was filed on 31.03.2021, and notice under section 143(2) was issued only on 20.11.2021. In view of the proviso to section 143(2), effective from 01.04.2021, the notice had to be issued within three months from the end of the financial year in which the return was furnished, i.e., by 30.06.2021. Since the notice was issued beyond the prescribed period, Tribunal held that the reassessment proceedings were barred by limitation and, therefore, invalid. It relied on the Supreme Court rulings in Hotel Blue Moon (supra) and Laxman Das Khandelwal (supra), and the Madras High Court ruling in Amec Foster Wheeler Iberia SLU – India Project Office v. DCIT (2023) 251 ITR 117 (Mad.), to hold that issuance of a valid notice under section 143(2) was mandatory and non-issuance or belated issuance vitiated the assessment. Accordingly, the Tribunal quashed the reassessment order passed under section 147 r.w.s. 144B as being void ab initio.
