2012 (9) TMI 471 - AT - Income Tax

Validity of notice issued u/s 148 - Notice u/s 148 was issued by any other ITO on the basis of information from DIT(Investigation), who does not jurisdiction over assessee - Whether the reassessment framed by the AO, in pursuance to a notice u/s 148, issued by ITO, who did not have jurisdiction over the case of the assessee, is valid or invalid - Held that - The basic requirement u/s 147 is that the AO has reason to believe that any income chargeable to tax has escaped assessment. Reason to believe must be that of the concerned AO, having jurisdiction over the case, who has relevant returns and other material in his possession. Such belief can be of jurisdictional AO alone and not of any other AO or authority. Therefore, It is well-settled that if a notice u/s 148 of the Act has been issued without the jurisdictional foundation u/s 147 of the Act being available to the AO, the notice and the subsequent proceedings will be without jurisdiction and thus, liable to be struck down. Decision in favour of assessee

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer (AO) under Section 2(7A) of the Income-tax Act, 1961.
3. Applicability of Section 124(3)(b) of the Income-tax Act, 1961.
4. Non-service of notice under Section 148.
5. Applicability of Section 292BB of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of the Notice Issued under Section 148:
The CIT(A) quashed the reassessment proceedings initiated by the ITO, Ward-2, Gurgaon, on the grounds that the notice under Section 148 dated 31.03.2008 was issued without jurisdiction. The reassessment order dated 10.12.2008, which was based on this invalid notice, was annulled. The Tribunal upheld this finding, emphasizing that the notice under Section 148 must be issued by the AO having jurisdiction over the assessee.

2. Jurisdiction of the Assessing Officer under Section 2(7A):
The CIT(A) found that the jurisdiction over the assessee lay with the ITO, Ward-11(4), New Delhi, as per Section 120 read with Section 124(1) of the Income-tax Act. The ITO, Ward-2, Gurgaon, did not have jurisdiction over the assessee and thus, the notice issued by him was invalid. The Tribunal agreed with this conclusion, stating that the jurisdictional AO alone can issue a notice under Section 148 after recording reasons for reopening the assessment.

3. Applicability of Section 124(3)(b):
The CIT(A) held that Section 124(3)(b) did not apply in this case because the notice under Section 148 dated 31.03.2008 was not served on the assessee. Furthermore, the assessee had informed the correct jurisdiction at Delhi promptly, which was accepted by the ITO, Ward-2, Gurgaon. The Tribunal concurred, noting that Section 124(3)(b) cannot be invoked when the initial notice itself is issued without jurisdiction.

4. Non-service of Notice under Section 148:
The CIT(A) observed that the assessment record did not indicate the manner of service of the notice dated 31.03.2008. There was no evidence of service through speed post or personal service. The Tribunal upheld this finding, noting that the non-service of the notice invalidated the reassessment proceedings.

5. Applicability of Section 292BB:
The CIT(A) concluded that Section 292BB, which was introduced by the Finance Act 2008, did not apply in this case as the assessee had objected to the non-service of the notice before the completion of the assessment. The Tribunal agreed, citing a precedent that Section 292BB does not cure jurisdictional defects.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment order. The notice under Section 148 issued by an AO without jurisdiction was deemed invalid, and the subsequent reassessment proceedings were annulled. The Tribunal emphasized that jurisdictional requirements must be strictly adhered to, and any reassessment initiated without proper jurisdiction is void ab initio.

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