Avanindra Nath Agrawal Vs DCIT (ITAT Raipur)
SEO Title: Reassessment Beyond Four Years Without Disclosure Failure Quashed: ITAT Raipur
Summary: The Income Tax Appellate Tribunal, Raipur Bench, allowed the appeal of Avanindra Nath Agrawal against the order of the CIT(A)/NFAC, Delhi dated 11 February 2025, holding that the reassessment proceedings initiated through a notice under Section 148 dated 31 March 2019 were invalid. The assessee challenged the reopening on the ground that the notice had been issued beyond four years from the end of the relevant assessment year without establishing any failure to disclose fully and truly all material facts necessary for assessment. The departmental report acknowledged that reopening had been undertaken after six years but justified the action on the basis that the alleged escaped income amounted to Rs.61,65,450, exceeding the threshold of Rs.1 lakh. The Tribunal examined the proviso to Section 147 of the Income Tax Act applicable to the relevant assessment year and held that the statutory requirement concerning failure to disclose material facts could not be bypassed merely because the alleged escaped income exceeded Rs.1 lakh.
The Tribunal found that the Revenue had produced no evidence demonstrating any failure by the assessee to disclose fully and truly the material facts necessary for assessment. The Assessing Officer’s reliance on the monetary threshold for issuing a notice within six years did not answer the separate restriction contained in the proviso to Section 147. Referring to Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC), the Tribunal emphasized that statutory authorities must exercise their powers in the prescribed manner and that orders passed without jurisdiction are nullities. It also referred to the Supreme Court’s discussion of the principle that jurisdictional statutory requirements cannot be waived and that consequential proceedings founded upon an invalid exercise of jurisdiction are likewise invalid.
Considering that the reassessment had been initiated beyond the four-year period, that the Revenue had not established the requisite disclosure failure, and that the Assessing Officer’s justification did not satisfy the statutory proviso, the Tribunal declared the reassessment proceedings invalid and void ab initio. The reassessment was quashed, and all consequential proceedings were treated as non-est in law. As the jurisdictional ground was decided in favour of the assessee, the grounds challenging the merits became academic. The assessee’s appeal was allowed. The order was pronounced on 22 July 2025 by Judicial Member Partha Sarathi Chaudhury and Accountant Member Arun Khodpia.
Cases Discussed
- Union of India Vs. Rajeev Bansal, (2024) 469 ITR 46 (SC) — Relied upon for principles concerning statutory jurisdiction, mandatory procedural requirements and invalidity of consequential orders.
- Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University — Referred to in the extracted Supreme Court judgment for the principle that a power or duty conferred upon a particular authority must be exercised or performed by that authority.
- CIT Vs. Anjum M.H. Ghaswala — Referred to in the extracted judgment concerning the prescribed manner of exercising statutory powers.
- State of Uttar Pradesh Vs. Singhara Singh — Referred to for the requirement that statutory power must be exercised in the manner prescribed.
- Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench — Referred to concerning preliminary statutory conditions governing jurisdiction.
- Superintendent of Taxes Vs. Onkarmal Nathmal Trust — Referred to for the principle that jurisdictional statutory requirements cannot be waived.
- Dwarka Prasad Agrawal V. B.D. Agrawal — Referred to concerning the invalidity of orders and consequential actions taken without jurisdiction.
- CIT Vs. Kelvinator of India Ltd. — Referred to concerning the statutory preconditions governing reassessment.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 11.02.2025 for the assessment year 2012-13 as per the grounds of appeal on record.
2. In this case, the assessee has filed both legal grounds as well as grounds on merits. The Ld. Counsel for the assessee submitted that he would assail the legal ground first and if the said legal ground is answered affirmative, then the grounds on merits shall become academic only.
3. The legal issue that has been raised by the Ld. Counsel for the assessee is that in the present case, notice u/s. 148 of the Income Tax Act, 1961 (for short ‘the Act’) for reopening of the assessment is invalid for the fact that the said notice was sent beyond the period of four years without recording any failure on the part of the assessee for disclosing truly and fully all material facts. The case of the assessee pertains to A.Y.2012-13 and the applicability for such assessment year, the reopening u/s. 147/148 of the Act could have been done only within a period four years. However, in the present case, such reopening has been done beyond the period six years and this is an admitted fact.
4. At the same time, the department has failed to bring on record any evidence suggesting any failure on the part of the assessee for disclosing truly and fully all material facts necessary for assessment. In this regard, the Ld. Sr. DR was directed to furnish report from the A.O and the said report was placed by her on record. The relevant submission of the A.O as per the said report is extracted as follows:
“(2) The reassessment proceedings have to be invoked within a span of 4 years however in the case of the assessee the same was reopened after 6 years.
As per old provisions of the Act, Notice u/s. 148 could be issued for 4 years from the end of A.Y. Further, Notice u/s. 148 could have been issued upto 6 years from the end of A.Y in cases where income escaping assessment is Rs.1 lakh or more.
Since, in the case of the assessee income escaping assessment for A.Y.2012-13 is Rs.61,65,450/- which is more than Rs.1 lakh therefore the case of the assessee was rightly reopened within 6 years by issuing notice u/s. 148 of the Act, dated 31.03.2019.”
As evident, it is admitted by the department that the case of the assessee was reopened after 6 years. It is also the contention of the A.O that notice u/s. 148 of the Act can be issued upto 6 years from end of the assessment year in cases where income escaping assessment is Rs.1 lakh or more and since in the case of the assessee income escaping assessment for A.Y.2012-13 is Rs.61,65,450/- which was more than Rs.1 lakh therefore, the case of the assessee was rightly reopened within 6 years by issuing notice u/s. 148 of the Act, dated 31.03.2019.
5. In this regard, let us refer to relevant provision of Section 147 of the Act which deals with the contended issue before us:
“147. Income escaping assessment.—If the Assessing Officer has reason to believe” that any income chargeable to tax has escaped assessment” for any assessment year, he may”, subject to the provisions of sections 148 to 153, assess or reassess” such” income “and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings” under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this ‘section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material fact necessary for his assessment, for that assessment year……”
6. That as evident as applicable to the assessment year in question i.e. A.Y.2012-13 wherein assessment has been completed for the relevant assessment year, no action shall be taken as per this provision after expiry of 4 years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material fact necessary for his assessment, for that assessment year. None of the limbs applies to the case of the assessee nor the revenue has able to place on record any evidence regarding any failure on the part of the assessee “to disclose truly and fully all material facts necessary for assessment.” At the same time, ground taken by the A.O justifying the reopening beyond the period of 6 years saying that whenever there is a case where income escaping assessment is Rs.1 lakhs or more, in such cases, notice u/s. 148 of the Act could have been issued upto 6 years from the end of the assessment year, however, no such limb emanates from the said proviso to Section 147 of the Act and therefore, this reason as stated by the A.O is not emanating from the statute, hence, the said observation is perverse and infructuous and does not contain legal validity. We find that the Hon’ble Supreme Court in its recent order passed in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC) had, inter alia, observed that the order passed without jurisdiction is nullity. It was further observed that if a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. Elaborating further, the Hon’ble Apex Court had observed that any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid. Apart from that, it was observed that as there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment, therefore, any consequential order passed or action taken will be invalid and without jurisdiction. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under:
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30. If a statute expressly confers a power or imposes a duty on a particular authority, then such power or duty must be exercised or performed by that authority itself. (Dr. Premachandran Keezhoth Vs. Chancellor, Kannur University). Further, when a statute vests certain power in an authority to be exercised in a particular manner, then that authority has to exercise its power following the prescribed manner (CIT Vs. Anjum M.H. Ghaswala; State of Uttar Pradesh Vs. Singhara Singh). Any exercise of power by statutory authorities inconsistent with the statutory prescription is invalid………….
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32. A statutory authority may lack jurisdiction if it does not fulfil the preliminary conditions laid down under the statute, which are necessary to the exercise of its jurisdiction. (Chhotobhai Jethabhai Patel and Co. V. Industrial Court, Maharashtra Nagpur Bench). There cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction of assessment. (Superintendent of Taxes Vs. Onkarmal Nathmal Trust). An order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction. (Dwarka Prasad Agrawal V. B.D. Agrawal). Thus, the power of assessing officers to reassess is limited and based on the fulfilment of certain preconditions. (CIT Vs. Kelvinator of India Ltd.)”
Therefore, considering the facts that viz. (i) reopening was done beyond the period of 6 years; (ii) department has not proved any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment; (iii) the A.O has stated frivolous invalid ground justifying the action of the department, therefore, such reassessment proceedings initiated beyond the period of 6 years is invalid, void ab initio, hence quashed.
7. Since the reassessment is quashed thereafter all the other proceedings becomes non-est in the eyes of law. As the legal issue has been answered in favour of the assessee therefore the grounds on merits becomes academic only.
8. As per the aforesaid terms the grounds of appeal raised by the assessee stands allowed.
9. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 22nd day of July, 2025.
