2023 (3) TMI 1240 - AT - Income Tax

Reopening of assessment u/s 147 - Reasons for issuing notice u/s.148 - issue of notice by non-jurisdictional officer - undisclosed cash deposits in saving bank account - HELD THAT - As the ITO, Ward-1(1), Bhilai did not have any jurisdiction over the case of the assessee either at the time of recording the reasons to believe, i.e. on 09.05.2016; or at the time of issuance of notice u/s.148 of the Act dated 25.10.2016, therefore, the initiation of proceedings as well as issuance of notice u/s.148 of the Act, dated 25.10.2016 being devoid and bereft of any force of law cannot be sustained and is liable to be quashed. Now when the assessee has assailed the framing of the assessment u/ss.143(3)/147 on the ground that the initiation of proceedings u/s.147 of the Act by the ITO, Ward-1(1), Bhilai is without authority of law and, therefore, wholly without jurisdiction, then, the aforesaid objection of the Ld. DR that the failure of the assessee to call in question the jurisdiction of the A.O within the time limit prescribed under sub-section (3) of Section 124 cannot be accepted. On the basis of the aforesaid deliberations, assessment framed on the basis of reasons to believe recorded on 09.05.2016 a/w. notice u/s.148 of the Act dated 25.10.2016 issued by the A.O, i.e. ITO, Ward-1(1), Bhilai, a non-jurisdictional Officer, cannot be sustained and is liable to be quashed. ITO, Ward-1(1), Bhilai at the time of initiating proceedings and issuance of notice u/s.148 dated 25.10.2016 was not vested with any jurisdiction over the case of the assessee, therefore, the aforesaid notice so issued by him de-hors valid assumption of jurisdiction will have no existence in the eyes of law and would be non-est. Non-est notice u/s.148 dated 25.10.2016 issued by the ITO, Ward-1(1), Bhilai can by no stretch of imagination be validated pursuant to the transfer of the case of the assessee by him on 03.08.2017 to ITO Ward-2(1), Bhilai. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Validity of Reassessment Proceedings under Section 147.
2. Jurisdiction of the Assessing Officer (A.O).
3. Addition of Unexplained Cash Deposit.
4. Legal Validity of the Assessment Order.

Summary:

1. Validity of Reassessment Proceedings under Section 147:
The assessee challenged the initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961, arguing that the mandatory conditions were not fulfilled, making the proceedings bad in law and without jurisdiction. The Tribunal admitted this additional ground of appeal, citing the Supreme Court's judgment in National Thermal Power Company Ltd. Vs. CIT, which allows for the admission of purely legal questions.

2. Jurisdiction of the Assessing Officer (A.O):
The primary contention was that the Income Tax Officer (ITO), Ward-1(1), Bhilai, who issued the notice under Section 148, did not have jurisdiction over the assessee's case as per Notification No.01/2014-15 dated 15.11.2014. The jurisdiction was vested with ITO, Ward-2(1), Bhilai. The Tribunal found that the ITO, Ward-1(1), Bhilai, lacked jurisdiction at the time of recording the reasons to believe and issuing the notice under Section 148, rendering the proceedings and notice void and without legal force.

3. Addition of Unexplained Cash Deposit:
The A.O had made an addition of Rs.24,79,290/- under Section 69 of the Act, treating it as unexplained cash deposit. However, since the Tribunal quashed the reassessment proceedings due to lack of jurisdiction, it did not delve into the merits of this addition.

4. Legal Validity of the Assessment Order:
The Tribunal concluded that the assessment order passed under Sections 143(3)/147 dated 29.12.2017 by the ITO, Ward-1(3), Bhilai, was based on an invalid initiation of proceedings under Section 147 by a non-jurisdictional officer. Therefore, the entire assessment was quashed.

Conclusion:
The appeal was allowed, and the assessment order was quashed due to the lack of valid jurisdiction by the ITO, Ward-1(1), Bhilai, at the time of initiating reassessment proceedings. Other contentions regarding the merits of the case were left open and not adjudicated.