2022 (7) TMI 125 - HC - Income Tax

Reopening of assessment u//s 147 - Mandation of Issue of notice where income has escaped assessment - jurisdiction of judicial or quasi-judicial authority to issue notice - first respondent transferred the files pertaining to the appellant to the second respondent - HELD THAT - Admittedly, the appellant is an assessee on the file of the second respondent and hence, the first respondent has no jurisdiction over the appellant to issue notice under section 148 for reopening the assessment for the relevant assessment year, after recording the reasons to believe that some of the income of the appellant has escaped assessment, this court is of the opinion that the notice dated 28.03.2018 issued by the first respondent under section 148 of the Act, without jurisdiction, lacks legal sanctity and hence, the same is held to be invalid. As the first respondent, who recorded the reasons for reopening the assessment under section 148(2), has no jurisdiction over the appellant, to issue notice dated 28.03.2018 under section 148(1). Though the files pertaining to the reassessment proceedings of the appellant were transferred, the second respondent has no authority to continue the reassessment proceedings under section 129 and hence, the notice dated 14.12.2018 issued by him is also held to be invalid. The invalid notices so issued by the respondents vitiate the entire reassessment proceedings initiated against the appellant. Admittedly, no notice u/s 148 was issued by the second respondent, who is the jurisdictional assessing officer, for reassessment of the return of income of the appellant, within the time frame stipulated under the Act. In this case, the limitation period of six years for reopening the assessment for the year 2011-12 under section 147 of the Act, came to an end on 31.03.2018. In such circumstances, there is no requirement for this court to go into the other issue based on the factual matrix projected by the appellant i.e., whether the appellant has disclosed fully and truly all the material particulars that are necessary for assessment for the relevant assessment year. Assessee appeal allowed.

Summary

Issues Involved:
1. Jurisdiction of the first respondent to issue notice under Section 148 of the Income Tax Act, 1961.
2. Validity of reassessment proceedings initiated after the statutory period.
3. Continuation of reassessment proceedings by the second respondent without issuing a fresh notice under Section 148.

Detailed Analysis:

1. Jurisdiction of the First Respondent to Issue Notice under Section 148 of the Income Tax Act, 1961:

The appellant contended that the first respondent lacked jurisdiction to issue the notice dated 28.03.2018 under Section 148 of the Act, as she was not residing within the jurisdiction of the first respondent. The court emphasized that "a jurisdiction can neither be waived nor created even by consent and even by submitting to jurisdiction, an Assessee cannot confer upon any jurisdictional authority, something which he lacked inherently". The court found that the first respondent, who recorded the reasons for reopening the assessment under Section 148(2), had no jurisdiction over the appellant to issue the notice under Section 148(1). Consequently, the notice issued by the first respondent was held to be invalid.

2. Validity of Reassessment Proceedings Initiated After the Statutory Period:

The appellant argued that the reassessment proceedings were initiated after a period of five years from the completion of the original assessment for the assessment year 2011-2012, which was beyond the statutory period. The court noted that the limitation period for initiating reassessment proceedings for the assessment year 2011-12 ended on 31.03.2018. Since the second respondent, who is the jurisdictional assessing officer, did not issue any notice under Section 148 before this date, the reassessment proceedings were invalid. The court held that the continuation of reassessment proceedings by the second respondent, without issuing a fresh notice under Section 148, was invalid.

3. Continuation of Reassessment Proceedings by the Second Respondent Without Issuing a Fresh Notice under Section 148:

The appellant contended that the second respondent could not continue the reassessment proceedings initiated by the first respondent without issuing a fresh notice under Section 148. The court referred to Section 129 of the Act, which applies when there is a change of incumbent within the same jurisdiction. The court found that the second respondent, without issuing any fresh notice under Section 148, continued the reassessment proceedings initiated by the first respondent, who lacked jurisdiction. The court held that the continuation of reassessment proceedings by the second respondent under Section 143(2) r/w 129 of the Act, without issuing a fresh notice under Section 148, was invalid.

Conclusion:

The court concluded that the notice dated 28.03.2018 issued by the first respondent under Section 148, without jurisdiction, lacked legal sanctity and was invalid. Consequently, the continuation of the reassessment proceedings by the second respondent, without issuing a fresh notice under Section 148, was also held to be invalid. The court set aside the notices impugned in the writ petition and the order of the learned Judge, thereby allowing the writ appeal. The court emphasized that if an order is passed by a judicial or quasi-judicial authority having no jurisdiction, it is an obligation of the appellate court to rectify the error and set aside the order passed by the authority or forum having no jurisdiction.