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2024 (9) TMI 1622 - AT - Income TaxJurisdiction to issue notice u/s. 143(2) - AR has submitted that the notice was issued by ACIT, Circle-5(1), Delhi who had no jurisdiction over the assessee - DR has submitted that the assessee has not challenged the jurisdiction of the AO within the time allowed u/s. 124(3) - HELD THAT - From the perusal of the order of the Ld CIT(A) it is evident that the first notice was issued on 06-08-2013 by ACIT circle 5(1) which was within time. The case of the assessee was transferred to the jurisdictional assessing officer, who issued the second notice on 28-11-2014. The notice issued by the ACIT was not time barred. Grounds are decided accordingly. Assessee has submitted that the CIT(A) has erred and acted beyond jurisdiction - In the instant case the addition was sustained by changing the provision of the Act, without giving the show cause notice to the assessee which is the mandatory requirement under sub-section of section 251 of the Act. The Ld. CIT(A) has made the addition. Addition u/s 68/69C - In the instant case the CIT(A) has deleted the addition u/s. 68 of the Act and made the addition u/s 69 of the Act without giving the notice to the assessee. The books of account were never rejected by the AO. AO had not made any effort to verify the sundry creditors which details were provided by the assessee. The disallowance of corresponding purchase u/s 68 of the Act cannot be made when the assessee has disclosed the sales and purchases as well as gross profit, and which were accepted by the AO. CIT(A) has made the addition u/s 69 of the Act as the purchases were not made through banking channels. The books of account and audit report were accepted by the AO and entire alleged bogus transaction cannot be disallowed when the sales have been accepted. The assessee s gross profit rate was also increased 4.39% for the current year. Hence, the addition made by CIT(A) u/s 69C of the Act is liable to be deleted. From the above discussion, we are of the view that CIT(A) has wrongly made the addition u/s 69 of the Act. The addition made by the Ld. CIT(A) u/s.69C of the Act is deleted. Hence, the appeal of the assessee is liable to be allowed.
Issues Involved:
1. Validity of the assessment order under Section 143(3) of the Income Tax Act, 1961. 2. Jurisdiction of the Assessing Officer (AO) and issuance of notice under Section 143(2). 3. Addition of Rs. 6,51,70,866/- under Section 69C of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of the Assessment Order under Section 143(3): The assessee challenged the validity of the assessment order passed under Section 143(3) of the Income Tax Act, 1961, arguing that it was void ab initio due to improper issuance of notice under Section 143(2) by a non-jurisdictional Assessing Officer. The assessee contended that the notice issued by the ACIT, Circle 5(1), New Delhi, was without jurisdiction and time-barred. The Tribunal observed that the initial notice under Section 143(2) was issued by the ACIT, Circle 5(1), who did not possess jurisdiction over the assessee. Following the transfer of jurisdiction to the ITO, no fresh notice under Section 143(2) was issued by the ITO. The Tribunal held that the assessment framed under Section 143(3) was void ab initio due to the invalidity of the initial notice issued by a non-jurisdictional officer. 2. Jurisdiction of the Assessing Officer and Issuance of Notice under Section 143(2): The Tribunal referred to the CBDT Instruction No. 1/2011, which specifies the monetary limits for assigning cases to ITOs and ACs/DCs. For corporate returns, the jurisdiction should lie with ACIT/DCIT if the returned income exceeds Rs. 30,00,000/-. In this case, the assessee's returned income for A.Y. 2012-13 was Rs. 2,10,529/-, and therefore, the jurisdiction should have been with the ITO. The Tribunal cited the decision in YKM Holdings Pvt. Ltd. vs. ACIT Circle 4(1), New Delhi, where it was held that an assessment framed by an officer without jurisdiction is void ab initio. The Tribunal concluded that the notice under Section 143(2) issued by the ACIT was invalid as he did not possess jurisdiction over the assessee, rendering the assessment void. 3. Addition of Rs. 6,51,70,866/- under Section 69C: The CIT(A) treated the purchases amounting to Rs. 6,51,70,866/- as unexplained under Section 69C of the Income Tax Act, 1961, on the grounds that the parties from whom purchases were made did not respond to notices, and the bills lacked TIN and transportation details. The Tribunal noted that the AO accepted the trading results and did not reject the books of account. The Tribunal emphasized that the CIT(A) made the addition under Section 69C without issuing a show-cause notice to the assessee, which is a mandatory requirement under Section 251 of the Act. The Tribunal referred to various judgments, including the Delhi High Court's decision in Ritu Anurag Aggarwal, which held that disallowance of corresponding purchases cannot be made when sales, purchases, and gross profit are accepted by the AO. The Tribunal concluded that the addition made by the CIT(A) under Section 69C was not justified and deleted the addition. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the assessment framed under Section 143(3) due to the invalidity of the initial notice issued by a non-jurisdictional officer. The Tribunal also deleted the addition of Rs. 6,51,70,866/- made under Section 69C, holding that the CIT(A) acted beyond jurisdiction without issuing a show-cause notice to the assessee. The appeal was allowed, and the order pronounced in the open court on 25.09.2024.
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