2015 (12) TMI 505 - AT - Income Tax

Reopening of assessment - officer jurisdiction to issue the notice - Held that - The words used in Section 147 of the Act are the Assessing Officer and which clearly means a particular officer who has the jurisdiction, over the case of a particular assessee. It is not the case that the statute has mandated every Assessing Officer to exercise jurisdiction, as per his own sweet will. As per the mechanism provided u/s 124 of the Act, the jurisdiction over the case of the appellant assessee could have been exercised either by the DCIT, Circle 5(1), Delhi, with whom the return of income for the A.Y under consideration was filed or by the A.O Ward 5(3) New Delhi who had been assigned with the jurisdiction over company assessee. Since, this is a case where the assessee had actually filed a return of income with the DCIT, Circle 5(1), New Delhi, on 30/4/2004, the Income Tax Officer, Ward 3, Gurgaon, could not have exercises jurisdiction over this case of the assessee, on the basis of his territorial jurisdiction. It is also not a case where the ld.Assessing Officer questions the principal place of business declared by the assessee company. Therefore, in the light of expressed provisions of Section 124 and Section 147 of the IT Act, the only officer who could have exercised jurisdiction over the case of the assesse, even for the purposes of issue of notice should be the jurisdictional ITO who is at New Delhi. We, therefore, are of the considered opinion that the assessee was correct in holding that the notice issued by the ITO Ward-3, Gurgaon on 13/3/2008 was without jurisdiction Applicability of provision of Section 292BB - Held that - Section 292 BB being prospective in nature cannot be applied to the facts of the present case. Further, we are agreeable to the findings of the Ld.CIT(A) that Section 292 BB cannot be applied in a case where the notice u/s 148 has been issued by the A.O without having proper jurisdiction. - Decided against revenue

Summary

Issues Involved:
1. Legality and jurisdiction of the notice issued under Section 148 by ITO Ward-3, Gurgaon.
2. Applicability of Section 292BB of the Income Tax Act.

Issue 1: Legality and Jurisdiction of Notice Issued Under Section 148 by ITO Ward-3, Gurgaon

The appeal was filed by the Revenue against the order of the CIT(A), which annulled the assessment order passed by the A.O under Sections 147/143(3) of the Income Tax Act. The assessee filed its return of income on 30/4/2004, declaring a total income of Rs. 1,86,100/-. The ITO Ward-3, Gurgaon issued a notice under Section 148 on 11/3/2008 without providing reasons for reopening the assessment. The assessee informed that the jurisdiction for the relevant assessment year was Delhi, and the case was transferred to ITO Ward-5(3), New Delhi. The CIT(A) held that the notice issued by ITO Ward-3, Gurgaon was without jurisdiction and quashed the assessment proceedings, declaring them void ab initio. The CIT(A) emphasized that Section 292BB, which came into effect from 1/4/2008, was not applicable retrospectively and did not cover cases of notices issued without jurisdiction. The Tribunal upheld the CIT(A)'s decision, stating that only the jurisdictional ITO at New Delhi could have issued the notice under Section 148, as per Sections 124 and 147 of the Income Tax Act.

Issue 2: Applicability of Section 292BB of the Income Tax Act

The Tribunal examined whether Section 292BB, which validates notices in certain circumstances, could apply to the present case. Section 292BB deems that any notice under the Act, if the assessee has appeared or cooperated, is valid even if not served properly. However, the Tribunal clarified that Section 292BB pertains to the service of notice and does not confer jurisdiction on an officer who lacks it. The Tribunal cited various judgments, including those from the Allahabad High Court and the Delhi High Court, which held that Section 292BB does not cure the absence of jurisdiction and is applicable only from the assessment year 2008-09. The Tribunal concluded that Section 292BB could not apply to the assessee's case, as the notice under Section 148 was issued without jurisdiction. Thus, the assessment concluded by ITO Ward-5(3), Delhi was invalid, and the appeal filed by the Revenue was dismissed.

Conclusion:

The Tribunal upheld the CIT(A)'s decision that the notice issued by ITO Ward-3, Gurgaon was without jurisdiction, and Section 292BB could not apply retrospectively or cure the jurisdictional defect. The appeal filed by the Revenue was dismissed.