2019 (3) TMI 1941 - AT - Income Tax

Reopening of assessment u/s 147 - ITO Phagwara jurisdiction to issue notice - HELD THAT - As the term Assessing Officer used in Sec. 147 of the IT Act cannot be accorded any other meaning except that envisaged in Sec. 2(7A) as per which the same has to be construed as the AO vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) of subsection (2) of Sec. 120 or any other provision of the IT Act. There is neither anything borne from the records nor any material has been produced before us during the course of hearing of the appeal, which would reveal that the ITO, Ward-4, Phagwara was at the time of issuing the notice under Sec. 148 of the IT Act was exercising either exclusive or concurrent jurisdiction over the case of the assessee. On the basis of our aforesaid observations, it can safely be concluded that the notice issued under Sec. 148, dated 27.03.2015 by the ITO, Ward- 4, Phagwara who was not vested any jurisdiction over the case of the assessee would have no existence in the eyes of law. We thus in the backdrop of the aforesaid facts are constrained to observe that the assessment framed by the ITO, Ward-3, Phagwara under Sec. 147 r.w.s 143(3) of the IT Act, dated 29.03.2016 in the absence of a valid notice issued under Sec. 148 cannot be sustained and is liable to be quashed. As we have quashed the assessment framed by the A.O under Sec. 147 r.w.s. 143(3), dated 29.03.2016 for want of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the merits of the addition made in the hands of the assessee. - Decided in favour of assessee.

Summary

Issues involved:
1. Validity of reopening assessment under Sec. 147/148 of the Income Tax Act, 1961.
2. Jurisdictional error in assessment proceedings.
3. Merits of the additions made by the Assessing Officer.

Analysis:
1. The appeal challenged the CIT(A)'s decision upholding the AO's action in reopening the assessment under Sec. 147/148 of the IT Act for A.Y. 2009-10. The appellant contended that the CIT(A) disregarded jurisdictional tribunal orders and failed to quash the reassessment proceedings due to the notice being issued by an ITO without jurisdiction. The grounds of appeal raised questions on the legality of reopening the assessment.

2. The appellant's return of income for A.Y. 2009-10 was initially processed under Sec. 143(1) of the IT Act. Subsequently, the AO reopened the assessment based on cash deposits in the appellant's bank account. The AO determined undisclosed business receipts, resulting in an addition to the appellant's income. The CIT(A) reduced the addition but upheld the AO's jurisdiction to reopen the assessment.

3. The appellant challenged the jurisdictional error in the assessment proceedings, arguing that the notice under Sec. 148 was issued by an ITO lacking jurisdiction over the case. The ITAT found that the notice was issued by an ITO without jurisdiction, rendering the assessment invalid. The ITAT emphasized the importance of jurisdiction in assessment proceedings and concluded that the assessment under Sec. 147 r.w.s. 143(3) was unsustainable due to the lack of a valid notice under Sec. 148.

4. Since the assessment was quashed on jurisdictional grounds, the ITAT refrained from delving into the merits of the additions made by the AO. The appeal was allowed based on the jurisdictional flaw in the assessment process, leading to the assessment's invalidation.

This detailed analysis highlights the key legal issues raised in the appeal and the ITAT's decision to quash the assessment due to jurisdictional errors, without delving into the merits of the additions made by the Assessing Officer.