Kala Kumar Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, allowed the assessee’s appeal by quashing the reassessment proceedings initiated under Sections 147 and 148 of the Income-tax Act for Assessment Year (AY) 2015-16, holding that the notice issued under Section 148 was barred by limitation. As the reassessment itself was held to be invalid, the Tribunal did not adjudicate the issues on merits.
The assessee had not filed an original return of income for AY 2015-16. Based on information received through the INSIGHT Portal under the Non-Filers Monitoring System, the Income Tax Department noted that the assessee had earned interest income of ₹1,85,579 and had sold an immovable property for ₹1,22,08,000. Proceedings under Section 148A were initiated, followed by issuance of a notice under Section 148 on 02.04.2022. In response, the assessee filed a return declaring total income of ₹19,02,230, including Long-Term Capital Gain (LTCG) of ₹17,44,038 from the sale of the property. The assessee claimed that the property had originally been acquired by her mother in 1967 and was settled upon her in 1995, and accordingly claimed indexed cost of acquisition, indexed cost of improvement, and exemption under Section 54F.
During the reassessment proceedings, the Assessing Officer sought documentary evidence relating to the sale deed, inheritance or settlement of the property, cost of acquisition, cost of improvement, and investment for claiming deduction under Section 54F. According to the Assessing Officer, the assessee failed to furnish the required supporting documents. Consequently, the Assessing Officer rejected the claim that the property was a long-term capital asset, treated the entire sale consideration of ₹1,22,08,000 as Short-Term Capital Gain (STCG), denied indexed cost of acquisition, indexed cost of improvement, and exemption under Section 54F, and completed the reassessment under Sections 143(3), 144B, and 147. The Commissioner of Income Tax (Appeals), NFAC, upheld both the reassessment and the additions, observing that the assessee had failed to produce the necessary evidence despite sufficient opportunities.
