2024 (9) TMI 1370 - AT - Income Tax

Non-issuance of notice u/s 143(2) by Jurisdictional AO - AO had suo moto transferred the assessment to ITO, Ward 2(2) Noida - appellant has contended that the statutory notice u/s 143(2) was issued by ITO, Ward-40(1), Delhi and another such notice was issued by ITO, Ward-2(2), Noida despite the fact that the assessment proceedings for AY 2014-15 were pending with ITO, Ward-70(2), Delhi at that time - HELD THAT - As in the present case, as assessee had himself mentioned the Noida address in the ITR and on his request only the case was transferred to Delhi, so assessment is not vitiated. The question actually to be examined was if jurisdictional AO had issued notice u/s 143(2) with in time which Revenue has failed to justify and establish the validity of issuance of the notice u/s 143(1) by ITO, Ward 40(1) on 20.09.2016. We find no justification as to how the tax authorities of Noida Office, when transferred the case of the assessee to Ward 40(1), Delhi, even to say on request of assessee, the same ultimately, reached Ward 8(2), Delhi, from where the final assessment order was passed. We are of the considered view that even if it is assumed that in accordance with the order dated 15.11.2014 u/s 120 of the Act, the jurisdiction vested with Ward 8(2), Delhi, then, why the assessment for the previous year AY 2014-15 stood transferred from the ITO, Ward 40(1) to ITO 70(2) from where the assessment order was passed on 31.01.2017. We are of the considered view that it is not a case where the notice was issued and assessment completed by invoking provisions of concurrent jurisdictions, rather, it appears that in whimsical manner the AOs had exercised jurisdiction under the Act and transferred the assessment. There is no substance in the contention that due to sections 292BB or sub-section (3)(a) of section 124 of the Act, the assessee is barred to raise the ground objecting to the assumption of jurisdiction. More particularly when objections were raised at earliest and even considered by assessing officers. Decided in favour of assessee.

Issues Involved:
1. Jurisdiction of the Assessing Officer (AO)
2. Validity of the notice under Section 143(2) of the Income Tax Act, 1961
3. Transfer of case without following proper procedures under Section 127 of the Act
4. Applicability of Section 292BB and Section 124(3)(a) of the Income Tax Act, 1961

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO):
The Assessee filed his return of income for AY 2015-16 with Ward 25(1), Delhi. The assessment for AY 2014-15 was pending with ITO, Ward 70(2), Delhi. Despite this, a notice under Section 143(2) was issued by ITO, Ward 40(1), Delhi on 19-09-2016. The case was transferred to ITO, Ward 2(2), Noida, and subsequently to ITO, Ward 8(2), Delhi, where the final assessment was completed. The Assessee contested the jurisdiction of these notices, arguing that the transfers were not executed following the procedures prescribed under Section 127 of the Act. The CIT(A) dismissed these objections, stating that the Assessee had mentioned his Noida address in the ITR and requested the transfer to Delhi.

2. Validity of the Notice under Section 143(2):
The initial notice under Section 143(2) for AY 2015-16 was issued by ITO, Ward 40(1), Delhi on 19.09.2016, while the assessment for AY 2014-15 was pending with ITO, Ward 70(2), Delhi. The AO transferred the case to ITO, Ward 2(2), Noida, who issued another notice under Section 143(2) on 29.09.2016. The Assessee claimed that this notice was received on 04.10.2016, beyond the limitation period of 30.09.2016. The Tribunal found that the issuance of the notice under Section 143(2) by ITO, Ward 40(1), Delhi was questionable as the jurisdiction for AY 2014-15 was with ITO, Ward 70(2), Delhi. The Tribunal concluded that no valid notice was issued under Section 143(2) by the jurisdictional AO.

3. Transfer of Case without Following Proper Procedures under Section 127:
The Assessee argued that the transfer of his case from one AO to another was done without following the proper procedures under Section 127 of the Act. The Tribunal noted that the ITO, Ward 40(1), Delhi, had transferred the case to ITO, Ward 2(2), Noida, and then to ITO, Ward 8(2), Delhi, without a valid order under Section 127. The Tribunal found that the transfers were done in a whimsical manner and not in accordance with the provisions of the Act.

4. Applicability of Section 292BB and Section 124(3)(a) of the Income Tax Act, 1961:
The AO argued that under Section 292BB, the Assessee is precluded from raising objections regarding the service of notice if he has appeared in any proceeding or cooperated in any inquiry. The Tribunal, however, noted that the Assessee had raised objections at the earliest opportunity and had not acquiesced to the jurisdiction of the AO. The Tribunal also observed that Section 124(3)(a) does not bar the Assessee from questioning the jurisdiction of the AO if objections are raised within the stipulated time.

Conclusion:
The Tribunal quashed the assessment order, holding that the assessment was completed without a valid notice under Section 143(2) by the jurisdictional AO and that the transfer of the case was done without following proper procedures under Section 127. The Tribunal found no merit in the contention that the Assessee was barred from raising jurisdictional objections under Sections 292BB and 124(3)(a). The appeal was allowed in favor of the Assessee.

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