The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) ruled that failure in issuing a notice and reporting reason for reopening a case will invalidate the proceeding under section 148 of the Income Tax Act, 1961.
The assessee was represented by Sh. Vishal Gupta and the revenue was represented by Smt. Runi Pal.
The assessment was completed u/s 144 by the AO and an addition was made under the long-term capital gain at Rs. 92,70,000/- for the sale of land. The assessee filed additional evidence before the CIT(A) and the same was forwarded to the AO. The AO stated that the assessee had sold a land bearing Khasara No.326 & 327 situated at Village Sumel, Agra Road, Jaipur on 08-05-2008 for consideration of Rs.8640000/- the value of which has been taken by the Collector (Stamps), Jaipur at Rs.9840000/- for stamp purposes. The land was situated within the municipal limit of Jaipur Nagar Nigam, thus, the land has been ascertained as a capital asset in the meaning of Section 2(14) of the Income Tax Act,1961 and as per provisions of section 50-C of the amount of Rs.9840000/- was liable to tax under Capital Gain Tax.
The AO initiated proceedings U/s 147 of the IT Act believing that the income to the tune of Rs.9840000/- has escaped assessment and issued notice U/s 148 where the assessee failed to file the return.
It was observed that no notice was with the file of the Assessing Officer and no reasons were recorded for reopening. Further observed that the department has failed to issue notice and to take the approval of the appropriate authority before as initiation of proceedings u/s 147 of the I.T. Act.
Shri Sandeep Gosain, JM & Shri Rathod Kamlesh Jayantbhai, AM found the notice as illegally issued and held that the proceedings were also not valid in the eye of law. The appeal of the assessee was allowed on technical grounds.
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