Smt. Maliha Syeda Vs ITO (ITAT Hyderabad)
Conclusion: Reassessment u/s 147 must be completed within one year from end of Financial Year in which notice u/s 148 is issued, unless a TPO reference u/s 92CA was involved in case of non-residents. Extended time under s.153(4) was not otherwise available. Once the statutory time prescribed had expired, AO loses the jurisdiction to pass the reassessment order and since reassessment itself was without jurisdiction, being time-barred, penalty levied under section 271(1)(c) could not survive.
Held: Assessee was a non-resident individual (NRI) who had filed her return of income declaring ₹4,069. During a search under section 132 on Skill Promoters Pvt. Ltd., certain incriminating documents allegedly showed that assessee agreed to purchase commercial space for ₹37 lakh, including ₹19.50 lakh in cash and it was also noted that ₹8 lakh was paid in cash during AY 2014-15, for which the sources had to be ascertained. Therefore, AO issued a notice under section 148 to reopen the assessment and it was completed by the addition of ₹8 lakhs in the absence of verifiable documentary evidence and assessed the total income of the assessee at ₹8,04,069 under section 147 and also imposed a penalty. Assessee carried the matter in appeal before CIT(A). CIT(A) confirmed the action of AO, both in respect of the reassessment order as well as the penalty imposed. On further appeal before Tribunal, assessee challenged the validity of the reassessment on the ground of limitation. Assessee submitted that under section 153(2), where a notice under section 148 had been served, then the reassessment should not be made after the expiry of one year from the end of the financial year in which the notice was served. Since in the present case the notice under section 148 was issued on 29.03.2021, the reassessment should have been completed by 31.03.2022. As the reassessment order was admittedly passed on 25.05.2022, the same was barred by limitation and, therefore, void ab initio. Revenue argued that since assessee was an “eligible assessee” under section 144C(15), AO rightly passed the order and the final order was valid within the time limit of section 153(4). On appeal. It was held that assessee was a NRI and the extended time limit under section 153(4) did not apply to non-residents. Since notice under section 148 was issued on 29.03.2021, the reassessment should have been completed within one year as per section 153(2). The provision of section 153(2) was clear and categorical, and that once the statutory time prescribed had expired, then AO loses the jurisdiction to pass the reassessment order. Tribunal further noted that since reassessment itself was without jurisdiction, being time-barred, the penalty levied under section 271(1)(c) also could not survive. Accordingly, Tribunal held that the reassessment order passed by AO under section 147 was barred by limitation under section 153(2) and quashed the same.
