ITO v. Champaklal Mathurdas Mehta

Case snapshot

Sections / provisions: 147

Questions before the Court / Tribunal

• S. 147 : Reassessment- Notice – Recorded reasons stating that the return was not filed – On the facts the assessee had filed the return and informed to the Assessing Officer in response to notice – Reassessment was quashed on the ground that the recorded reason was based on the incorrect facts hence the reassessment is bad in law. [S. 143(3), 148] The Assessee is a Senior Citizen of 90 years old. The Assessing officer has issued letter NMS for non filling of return of Income for AY. 2010 –; Against the said letter the assessee filed reply stating that he has filed income tax return for AY . 2011 –; The Assessee…
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

ITA No.2253/Mum/2022 (Assessment Year :2011-12) Income Tax Officer-Ward- Vs. M/s. Champaklal Mathurbhai 23(1)(1) Mehta Mumbai 17, Aradhana Society, Patkar, st Room No.106, 1 Floor Blocks Turner Road Matru Mandir, Grant Road Bandra, Mumbai – 400 050 Tardeo, Mumbai – 400 007 PAN/GIR No.AEJPM6909D (Appellant) .. (Respondent)

PAN/GIR No.AEJPM6909D (Appellant) .. (Respondent)

Assessee by Shri K. Shivaram Revenue by Ms. Sujata Iyengar

“1 Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) had erred in holding that the AO has issued notice u/s 148 without bringing any tangible material on record without considering that assessee purchased property and source of investment in immovable property is unexplained recorded in the reason.

3 Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) had erred in not deciding the issues on the basis of finding of the assessing officer and without appreciating the fact that assessee failed to explain source of funds of Rs. 10,99.750 used for the purchase of the immovable property.

Appellant / assessee submissions

3.2 The appellant has objected to the reasons for reopening vide his letter dated 25.10.2017. He has submitted that there are no provision in ITR-2 to disclose relevant details in respect of purchase of property. He has also informed the AO that property has been purchased jointly with his wife Mrs. Sarojben C Mehta. No action has been taken in the case of wife of appellant after inquiry by the department. The AO disposed off the objections vide his letter dated 27.10.2017. The objections were disposed of summarily without dealing with the main issues raised by the appellant. The appellant again objected to the reopening vide his letter dated 24.11.2017 pointing out that the reply of the A.O dated 27.10.2017 does not addressed to the appellant. The AO again vide his letter dated 28.11.2017 informed that appellant has not given any explanations for the purchase of immovable property hence the investment in the said property remains unexplained. Ground of appeal no. 1 is relates to the appellant raised the issues that reopening by the AO is not valid. The arguments of the appellant in this regard are as under-

6. Moreover, Mr. Gandhi submitted that despite repeated requests for copy of the sanction under Section 151 of the Act, the same has not been provided. The averment to that effect in the petition has not even been denied in the affidavit in reply and respondent, in the affidavit in reply has not even bothered to annex the sanction obtained which gives us a feeling that the said Mr. Ramesh C. Meena who issued notice under Section 148 of the Act containing errors of facts and who has filed affidavit in reply does not wish to produce the same. We have to, therefore draw adverse inference against respondent that if it is disclosed it may be prejudicial to the interest of Revenue.

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

3. We have heard rival submissions and perused the materials available on record. We find that assessee is an individual and had filed his return of income for the A.Y.2011-12 on 21/07/2011. The ld. AO obtained information from ITS / AIR/ CIB available with the Income Tax Department that during the year under consideration, the assessee had purchased immovable property to the tune of Rs.2,13,61,851/-. The ld. AO had a mistaken opinion that assessee had not filed his return for A.Y.2011-12. Accordingly, since there was financial transaction carried out by the assessee and no return has been filed by the assessee, the ld. AO observed that income of the assessee had escaped assessment and sought to reopen the same by issuance of notice u/s.148 of the Act on 31/03/2017 after recording the reasons. The reasons recorded by the ld. AO are as under:-

3.2. Aggrieved, the Revenue is in appeal before us. From the perusal of the reasons recorded reproduced supra, we find that the reopening was made on the mistaken assumption that assessee had not filed his return of income for A.Y.2011-12. Factually, the return of income was already filed by the assessee on 21/07/2011. Moreover, there was a letter dated 25/07/2015 issued by the ld. AO to the assessee for A.Y.2010-11 calling for reasons for not filing income tax return for A.Y.2010-11. This letter is enclosed in page 13 of the paper book. In response to the said letter, the assessee’s representative had vide letter dated 03/08/2015 had addressed to the ld. AO stating that assessee is a senior citizen aged about 83 years old and had filed his income tax returns from A.Y.2011-12 onwards and had enclosed the copy of ITR acknowledgement thereon. This letter is enclosed in page 14 of the paper book. We find that the ld. AO had referred to the aforesaid two letters in the reasons recorded stating the same as the reason to conclude that assessee had not filed return of income for A.Y.2011-12. This fact is evident from the reasons recorded reproduced supra. Factually, the notice dated…

3. We have considered the petition with documents annexed thereto, reply filed by respondent and also heard Mr. Gandhi and Mr. Pinto.

Operative decision and relief

8. In the circumstances, petition is allowed in terms of prayer clause (a) which read as under :

(a) That this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of 'Certiorari", calling for the records of the case and, after satisfying itself as to the legality thereof, quash and set aside the Notice u/s 148 dated 26.03.2019, Ex. "H" herein, the order disposing objections dated 22.10.2019, Ex. "K" herein passed by the Respondent and also the Notice/summons dated 22.10.2019, Ex. "L" herein issued by the Respondent.

incorrect, the Revenue simply cannot hope to salvage the impugned notice. Through the affidavit-in-reply a faint attempt has been made to entirely shift the centre of the reasons to a completely new theory, viz., the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was Rs. 50 lakhs and that the assessee had by filing the return offered his share of such proceeds by way of capital gains. In the result, the impugned notice is quashed. The petition is disposed of.”

4. In the result, appeal of the Revenue is dismissed and Cross objection of the assessee is dismissed as infructuous.

Ratio and legal principle

• The packaged judgment addresses S. 147 : Reassessment- Notice – Recorded reasons stating that the return was not filed – On the facts the assessee had filed the return and informed to the Assessing Officer in response to notice – Reassessment was quashed on the ground that the recorded reason was based on the incorrect facts hence the reassessment is bad in law. [S. 143(3), 148] The Assessee is a Senior Citizen of 90 years old. The Assessing officer has issued letter NMS for non filling of return of Income for AY. 2010 –; Against the said letter the assessee filed reply stating that he has filed income tax return for AY . 2011 –; The Assessee…. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with s. 147 : reassessment- notice – recorded reasons stating that the return was not filed – on the facts the assessee had filed the return and informed to the assessing officer in response to notice – reassessment was quashed on the ground that the recorded reason was based on the incorrect facts hence the reassessment is bad in law. [s. 143(3), 148] the assessee is a senior citizen of 90 years old. the assessing officer has issued letter nms for non filling of return of income for ay. 2010 –; against the said letter the assessee filed reply stating that he has filed income tax return for ay . 2011 –; the assessee… Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

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Section / provision impact

• 147 - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Ashish Gems v. ACIT - ITAT Mumbai
• Annamma Samkutty v. ITO - ITAT Pune
• Sanket Vinayak Nagvekar v. ITO - Bombay High Court

Different outcome / possible distinction

• Pr. CIT v. Jas Trading Pvt. Ltd. - Operative order controls
• Mrunmayee Priyadarshini Pattnaik v. ITO - Disposed

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Source class: Sanitized local full-judgment copy; official primary replacement pending · Repository status: Published