According to the counsel, it is a prerequisite that reasons to believe recorded by the AO for initiating the proceedings under Section 148 read with Section 147 are to be supplied along with the notice under Section 148 of Income Tax Act.
тАЬSince the jurisdictional issue has been held in favour of the assessee, holding assessment order as not sustainableтАЭ, stated the Kolkata bench
The bench quashed the assessment order as the Assessing Officer (AO) failed to record the тАШreasons to believeтАЩ for initiating the reassessment proceedings under Section 148 of Income Tax At, 1961 and the same was not sent to the assessee.
The assessee, Deepak Bajaj is engaged in the business of television software in the name of тАЬBeyond ReelsтАЩ. Case of the assessee was reopened by issuing a notice under Section 148 of the Act.
The Section 148 of the Income Tax Act of 1961, deals with the issue of a notice by the AO to the taxpayers whose income is presumed to have escaped assessment.
Assessee filed his return in response to the said notice, reporting total loss of Rs. 6,92,232. Reopening proceedings were initiated on the assessee since he failed to furnish return of income. Assessee challenged the proceedings initiated under Section 147 of Income Tax Act.
During the proceedings, the Assessing Officer (AO) noted that the assessee has made certain payments for artist remuneration on which required Tax Deduction at Source (TDS) has not been done and, therefore, he disallowed an amount of Rs. 13,41,360 under Section 40(a)(ia) of the Income Tax Act Act.
Further, a similar addition of Rs. 9,60,363 was made for non-deduction of tax at source in respect of studio hire charges and of Rs. 7,30,832 in respect of interest paid on unsecured loans on which no TDS was done. Another disallowance of Rs. 45,845 was made by taking 5% of the expenses towards car hire charges, conveyance and depreciation, on account of personal use.
The bench noted that the impugned order of the Commissioner of Income Tax (Appeals), which the assessee has claimed to receive on 02.12.2022, which is almost six and half years after the passing of the said order.
According to this, the assessee claimed that the assessee was not aware of the disposal of his appeal since no notices were received by him, fixing the hearing by the CIT(A).
Dilip Chatterjee, the counsel of the assessee submitted that notice under Section 148 of Income Tax Act was served on the assessee without the copy of the reasons to believe, recorded for initiating the proceedings.
According to the counsel, it is a prerequisite that reasons to believe recorded by the AO for initiating the proceedings under Section 148 read with Section 147 are to be supplied along with the notice under Section 148 of Income Tax Act.
After considering the submissions of both sides, the tribunal bench of Sonjoy Sharma (Judicial Member) and Girish Agarwal (Accountant Member) observed that there is no mention about the reasons to believe which were recorded for initiating the proceedings under Section 148 of Income Tax Act. Also, there was no mention about the supply of copies of reasons to believe as recorded by the AO, to the assessee.
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Deepak Bajaj vs ITO
CITATION: 2023 TAXSCAN (ITAT) 846
Counsel for Appellant: Shri Dilip Chatterjee
Counsel for Respondent: Smt. Ranu Biswas, Addl
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