2024 (8) TMI 495 - AT - Income Tax

Validity of Reassessment order - validity of jurisdictional order passed by the ITO Ward-2, Bhiwani - HELD THAT - Order passed u/s 127 for transferring the jurisdiction on the assessee from Jalandhar to Bhiwani to enable the ITO,Ward-2, Bhiwani to pass the reassessment order. Several opportunities were provided to the DR to furnish any evidence with regard to the transfer of jurisdiction but no such order/evidence were made available. In absence of any order u/s 127, we can only conclude that the transfer of the jurisdiction from Jalandhar to Bhiwani were made without any order u/s 127 from the competent authority. Therefore, we are of the considered opinion that assumption of jurisdiction by the ITO Ward-2, Bhiwani was without any statutory compliance of law. The reliance of the DR on the case of Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT is distinguishable. The Hon ble Supreme Court was dealing with the effect of provision of section 292BB on the improper service of notice. The question in the instant case is assumption of valid jurisdiction in absence of any order u/s 127. We are of the considered view that the reassessment order passed by the ITO Ward-2, Bhiwani is without assumption of valid jurisdiction and is therefore bad in law and deserves to be quashed.

Summary

Issues:
Jurisdiction to frame order u/s 147 of the Income-tax Act, 1961

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Delhi was against the order of the ld. CIT(A), Ludhiana dated 22.02.2019 for the Assessment Year 2010-11. The primary issue raised by the assessee was the assumption of jurisdiction to frame an order under section 147 of the Income-tax Act, 1961. The Tribunal decided to address this issue first before delving into other grounds of appeal.

The facts of the case revolved around cash deposits made by the assessee in his Savings Bank Account during the relevant year, based on information from the ITS statement on AST. The Assessing Officer issued a notice under section 148 of the Act after obtaining approval from the CIT-2, Jalandhar, as the assessee failed to file the return of income within the stipulated time. Subsequently, a reassessment order was passed considering the cash deposits as income from undisclosed sources, which the assessee contested in appeal before the CIT(A) and now before the Tribunal.

The assessee contended that the reassessment was made without complying with statutory conditions and procedures, rendering it bad in law. The jurisdictional issue was raised concerning the authority of the Assessing Officer who passed the reassessment order. The assessee argued that the AO lacked jurisdiction over the assessee, leading to the reassessment order being void ab initio.

On the other hand, the Department argued that since the assessee participated in the reassessment proceedings, challenging the jurisdiction under section 124 of the IT Act was not permissible. They relied on a Supreme Court decision to support their stance.

The Tribunal analyzed the jurisdictional aspect in detail, focusing on the transfer of the case from Jalandhar to Bhiwani without a valid order under section 127. Despite multiple opportunities, no evidence of jurisdiction transfer was provided. Consequently, the Tribunal concluded that the assumption of jurisdiction by the ITO Ward-2, Bhiwani was without statutory compliance, rendering the reassessment order invalid.

The Tribunal distinguished the Department's reliance on a specific Supreme Court case, emphasizing the unique circumstances of the present matter regarding the assumption of valid jurisdiction. Ultimately, the Tribunal held that the reassessment order was without valid jurisdiction and therefore quashed it, without delving into the case's merits.

In conclusion, the appeal of the assessee was allowed, and the reassessment order was deemed invalid due to the lack of valid jurisdiction, leading to its quashing. The Tribunal did not find it necessary to discuss the case's merits further.