2022 (10) TMI 1111 - AT - Income Tax

Reopening of assessment u/s 147 - ITO, Ward-35(4), Kolkata jurisdiction to issue notice u/s. 148 - HELD THAT - Since the valid notice u/s. 148 of the Act was not issued by the respective AO(Assessing Officer) having jurisdiction over the assessee, the said notice was invalid and the assessment proceedings carried out thereafter u/s.143(3)/147 of the Act are void ab inito and liable to be quashed. Thus, the legal issue raised by the revenue is dismissed.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act.
2. Jurisdiction of the Assessing Officer (AO) over the assessee.
3. Compliance with Section 124(3) of the Income Tax Act.
4. Validity of reassessment proceedings under Sections 143(3) and 147 of the Income Tax Act.
5. Merits of the additions made by the AO.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:
The primary issue was whether the notice issued under Section 148 by the ITO, Ward-35(4), Kolkata was valid. The assessee contended that the notice was invalid as the ITO, Ward-35(4), Kolkata did not have jurisdiction over the assessee. The jurisdiction had been transferred to ACIT, Circle-13(2), Kolkata, as per an order dated 15.11.2014. The Tribunal noted that the notice under Section 148 was indeed issued by an officer who did not hold valid jurisdiction over the assessee, rendering the notice and subsequent proceedings ab initio void.

2. Jurisdiction of the Assessing Officer:
The Tribunal examined the jurisdictional issue and found that the ITO, Ward-35(4), Kolkata, did not have jurisdiction over the assessee when the notice under Section 148 was issued. The jurisdiction lay with ACIT, Circle-13(2), Kolkata. The Tribunal referred to the case of M/s. Chankya Finvest Pvt. Ltd. vs. ITO, where it was held that a notice issued by an officer without jurisdiction is invalid and any proceedings based on such notice are void.

3. Compliance with Section 124(3) of the Income Tax Act:
The Department argued that the assessee's challenge to the jurisdiction was invalid as it was raised beyond the one-month period stipulated under Section 124(3). However, the Tribunal observed that the jurisdictional defect was fundamental and could not be cured by the lapse of time. The Tribunal cited the Supreme Court's decision in Kiran Singh v. Chaman Paswan, which held that a decree passed by a court without jurisdiction is a nullity and its invalidity can be set up whenever and wherever it is sought to be enforced.

4. Validity of Reassessment Proceedings Under Sections 143(3) and 147:
The Tribunal held that since the notice under Section 148 was issued by an officer without jurisdiction, the reassessment proceedings under Sections 143(3) and 147 were void ab initio. The Tribunal referred to the case of ITO vs. Anamika Dealcom Pvt. Ltd., where it was held that an assessment without a valid notice under Section 148 is invalid.

5. Merits of the Additions Made by the AO:
Given that the Tribunal quashed the reassessment proceedings on jurisdictional grounds, the merits of the additions made by the AO were rendered academic and dismissed as infructuous.

Conclusion:
The Tribunal dismissed the revenue's appeal, confirming the order of the Commissioner of Income-tax (Appeals) that quashed the assessment framed under Sections 143(3) and 147 of the Income Tax Act. The Tribunal emphasized that the issuance of a valid notice under Section 148 by an officer having jurisdiction is a mandatory condition for valid reassessment proceedings. The order was pronounced in the open Court on 26-10-2022.