ITAT Remands Reassessment to AO to Examine Validity of Notice Issued in Another Person’s Name:

The assessee is a non-resident individual, filed his return of income on 20 March 2019, declaring short-term capital gains of Rs. 99,76,950 and paying the applicable taxes. The AO received information that the assessee had sold a property measuring 2,323.20 square yards to M/s Chinni Krishna Builders and Developers for a consideration of Rs. 6,58,15,500. Based on this information, the AO initiated reassessment proceedings under Section 147 of the Income Tax Act and issued a notice under Section 148 dated 31 March 2021.

As the assessee did not respond to the notice under Section 148 or the subsequent notice issued under Section 142(1), the AO completed the assessment under Section 144 read with Section 147 of the Act. The AO treated the return as belated and alleged suppression of short-term capital gains amounting to Rs. 83,95,037. Accordingly, the AO assessed the total short-term capital gains at Rs. 1,83,71,987 and raised a tax demand of Rs. 59,13,286.

Aggrieved by the assessment order dated 11 May 2022, the assessee approached the CIT(A) which partly allowed the appeal. Subsequently, a corrigendum dated 17 December 2025 modified the findings of the original appellate order, resulting in additional capital gains being assessed in the hands of the assessee.

Before the Tribunal, the assessee primarily challenged the validity of the reassessment proceedings on the ground that the notice issued under Section 148 dated 31 March 2021 was not issued in his name or against his PAN.

On the validity of the reassessment proceedings, the Tribunal took note of the notice dated 31 March 2021 and observed that, prima facie, the notice did not appear to have been issued in the name of the assessee but in the name of another individual. The Tribunal noted that this important legal issue had not been examined by the lower authorities. It further observed that without serving a valid notice, an assessment cannot be completed. Therefore, the question of whether the notice under Section 148 was properly issued and served required examination before the reassessment proceedings could be sustained.

Considering the facts and circumstances, the Tribunal remitted the matter to the file of the AO with a direction to examine the validity of the notice under Section 148 first.

The AO was also directed to examine all other issues raised by the assessee during the remand proceedings and pass an appropriate order after providing due notice and an opportunity of hearing to the assessee. Accordingly, the Tribunal set aside the matter to the file of the AO for fresh examination of the validity of the Section 148 notice and other issues raised by the assessee.